After 12 years from the enactment of Law No. 13 of 2003 on
Manpower ("Manpower Law"), the Government of Indonesia
has finally enacted Government Regulation No. 78 of 2015 on Wages
("GR 78/2015") as the implementation of Article 97 of the
Manpower Law. GR 78/2015 was enacted to achieve the objective of
sufficient income for workers to have a decent life. As many other
manpower-related regulations, the enactment of GR 78/2015 has
raised several mixed reactions.
We briefly highlight the noteworthy provisions of the GR 78/2015
below.
GENERAL OVERVIEW
Generally, GR 78/2015 covers a wide scope of provisions related
to wages which some of the provisions had been regulated in
previously applicable regulations such as, Government Regulation
No. 8 of 1982 on Wage Protection, Minister of Manpower and
Transmigration Decree No. KEP.49/ MEN/2004 on Wage Structure atnd
Scale, and Minister of Manpower Regulation No. PER-04/Men/1994 on
Religious Festive Allowance.
We can also see further and clearer provisions related to
employers' obligations concerning wages as well as new
noteworthy provisions on the minimum wage formulation in GR
78/2015.
1. Decent Income
Definition
GR 78/2015 provides a definition of decent income that was not
provided by other previous regulations, that is, the worker's
amount of income earned from the worker's work that
sufficiently fulfills the life's need of the worker and his/her
family. GR 78/2015 further provides that a decent income is given
in the form of:
- Wage (with or without allowance); and
- Non-wage income (religious festive allowance, bonus, service pay for certain businesses and payment related to work facilities).
2. Obligation to Use
Rupiah
GR 78/2015 is also in line with the obligation to use Rupiah for
any transaction payment in Indonesia as required by Bank of
Indonesia Regulation No. 17/3/PBI/2015 regarding the Obligation to
Use Rupiah. It clearly states that all wages payment shall be made
in Rupiah.
3. Obligation to Set Out Wages Structure
and Scale
Under GR 78/2015, employer is obliged to set out wages structure
and scale by taking into considerations the division, position,
duration of employment, level of education and competency. This
wages structure and scale shall be attached upon the application of
legalization and extension of Company Regulation, or upon the
registration, extension, and renewal of Collective Bargaining
Agreement.
4. Obligation to Provide Evidence for the Wage
Payment
Employer has to give the worker evidence of payment for the wages paid that should include the details of the wages received by the worker.
5. Minimum Wage
The enactment of GR 78/2015 has brought significant change in the
determination of regional minimum wage which would include
inflation rate and current gross domestic product in determining
regional minimum wage. As we may have known that the previously
applicable regulations did not provide any formula to determine
minimum wage. It was determined by each province without any
specific standard or method of calculation. Under GR 78/2015, the
formula for determining the annual regional minimum wage shall be
as follows:
Explanation: UMn= New minimum wage
UMt = Current minimum wage
Inflation rate = The inflation rate calculated from the last year
September to the current year September %Δ GDP rate = The GDP rate calculated from the growth of last year's 3rdand 4thquarter and the 1stand 2ndquarter of the current year.
UMn= UMt + [UMt x(Inflation rate + %Δ GDP rate)]
TRANSITIONAL PROVISIONS
1. As of the enactment of GR 78/2015, governors are under the obligation to gradually adjust its provincial minimum wage that is still under the decent standard of living that shouldbedonenolater than four (4) years after GR 78/2015 comes into force.
2. For employers who have yet to provide a wages structure and
scale, they should draft and determine the wages structure and
scale and attach it to the application of legalization and
extension of Company Regulation, or upon the registration,
extension, and renewal of Collective Bargaining Agreement at the
latest of two (2) years after the enactment of GR 78/2015.
Let us hope that the enactment of GR 78/2015 can provide a better
standard of living for workers and clearer provisions for employers
to deal with manpower and wages-related issues
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
