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Manpower Disputes

Employee Dispute Resolution in Indonesia

Employees are an integral part of each business and they play a very important in the ultimate success of a company. It is therefore in the best interest of both the company its employees to keep a good and healthy relationship. However, in reality many employment disputes arise, where there is a difference in opinion between a company and its employees or the labor unions representing the employees.

These labor disputes can be about a variety of subjects, but the most common are:

  • Interpretation of the rights of the company or employee based on the employment agreement;
  • Disagreements about the content of company regulations or collective labor agreements;
  • Termination of employment conflicts; and
  • Performance of the employee

When a labor dispute arises, the company and employee have several dispute resolution options available to them:

  1. Bipartite Dispute Resolution
  2. Tripartite Dispute Resolution
  3. Court Decision

PNB Law Firm is specialized in manpower dispute resolution and can assist and represent clients for all necessary legal support during the dispute resolution process.

Bipartite Dispute Resolution: Negotiation Between Employee and Company

When a company and an employee are in dispute, they first must try to get an amicable solution to the dispute. Amicable dispute resolution results usually in the best outcome for both parties. Therefore we highly recommend both employees and companies to take this initial step seriously.

The bipartite negotiations can result in two outcomes:

  1. The parties reach an amicable agreement. When agreement is reached the parties will draft and sign a collective agreement which needs to be registered at the Industrial Relations Court.
  2. The parties reach no agreement. In case no agreement is reached, the parties can refer the case to the local labor authorities for tripartite dispute resolution.

Tripartite Dispute Resolution: Mediation, CONCILIATION or Arbitration

Tripartite resolution is manpower dispute resolution between the company, the employee and an manpower officer. There are three forms:

  1. Mediation. Mediation is by far the most common choice of tripartite dispute resolution, and can be used for all manpower disputes. The main job of the mediator is to facilitate communications and guiding the direction of negotiations between the company and employee. In addition the mediator can provide guidance and expert advice to the parties at dispute.
  2. Conciliation. Conciliation can only be requested by parties in case of the following types of disputes, 1) disputes regarding employment obligations, 2) disputes which arise when an employee is terminated and 3) when labor unions are in dispute with each other. In the conciliation process, the conciliator plays a more active role in the actual resolution of a dispute and advises the parties how to settle the dispute.
  3. Arbitration. The parties can request arbitration for the following types of disputes: 1) disputes regarding employment obligations and 2) when labor unions are in dispute with each other. During an arbitration the parties present their dispute to a panel of one or more arbitrators, who will decide on the dispute. The arbitration decision is final an binding to the parties at dispute.

Dispute Resolution through Court

When the company and employee fail to resolve their dispute in the mediation or conciliation process, they may submit the dispute to the industrial relations court (labor court). The labor court is a special court within the general court

Not all decisions of the labor court can be appealed. Depending on the type of dispute some decisions are final, while other decisions can be appealed to the Supreme Court.