[Permenaker No. 5 Tahun 2023] Adjustments To Working Hours and Wages for Certain Export-Oriented Industrial Companies Affected by Global Economic Changes
Overview
On 8 March 2023, the Ministry of Law of Human Rights promulgated the Minister of Manpower Regulation No. 5 of 2023 concerning Adjustments to Working Hours and Wages for Certain Export-Oriented Labour-Intensive Industrial Companies Affected by Global Economic Changes (“MoM 5/2023”). This regulation intends to provide protection and maintain the work continuity of Workers/Labourers and to maintain the business continuity of certain export-oriented labour-intensive industrial Companies from the impact of changes in the global economy which results in a decrease in market demands.
This ARMA update will discuss concerning the new temporary adjustments of the MoM 5/2023 and how it affects workers/labourers in the export-oriented labour intensive industrial companies (“Affected Companies”).
Criteria of Export Oriented Labour-Intensive Industrial Companies
The criteria of Affected Companies are categorized as the following:
- Possess a minimum of 200 (two hundred) workers;
- Possess the percentage of labour cost in production cost of at least 15% (fifteen percent); and
- Production which is dependent on request from the United States and countries located in the European continent as evidenced by and order request letter.
In addition, the adjustments of working hours and wages as regulated by MoM 5/2023 applies to the industries below:
- Textile and apparel industry;
- Footwear industry;
- Leather and leather goods industry;
- Furniture industry; and
- Children’s toy industry.
Adjustment of Working Hours
Due to being affected by changes in the global economy, Affected Companies may adjust their working ours to be less than the regulated working hours as stated in the manpower laws which are less than:
- 7 (seven) hours in 1 (one) day and 40 (forty) hours in 1 (one) week for 6 (six) business days in 1 (one) week; or
- 8 (eight) hours in 1 (one) day and 40 (forty) hours in 1 (one) week for 5 (five) business days in 1 (one) week.
Decrease in the Payment of Wages
Other than the adjustment of working hours, the MoM enforces a policy in which Affected Companies may make adjustments to the wages where the Affected Companies are able to pay wages only up to 75% of the normal wages earned by its workers.1
Agreement and Enforceability of Adjustments
As regulated in Article 9 of the MoM 5/2023, both adjustments are required to be agreed based on an employment agreement between the Affected Company and its workers which should at least stipulated the following:
- Adjustments to working hours;
- Amount of wage; and
- Validity period.
Further, it is important to note that the enforceability of the MoM 5/2023 based on Article 5 Paragraph (5) and Article 8 Paragraph (3), both adjustments of working hours and wages are only valid for 6 months after the issuance of the MoM 5/2023, therefore the validity of the adjustment are valid until 8 September 2023.
-
Article 8 of MoM 5/2023↩
Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.
Authors
Related Updates
Latest Updates
