Drafting of Company Regulation

Rabu, 27 Juli 2016 | 13:03 WIB oleh Tiara Ika Winarni

In every industrial relation, there will always be a relation between the company and its employees, known as employment relation. According to the Law No. 13 of 2003 on Employment or Employment Act, an employment relation shall be defined as a relationship between an entrepreneur and a worker based on a work/employment agreement, which deals with aspects relating to the job, the worker’s wage, and orders and instructions. Article 50 of the Employment Act, employment relation exists because of the existence of a work agreement between the entrepreneur and the worker. In short, this relation between the employer and employee emphasized by a work agreement. This agreement can either be in permanent term or contract/not permanent term. According to the Article 1320 of Civil Code in addition with Article 52 of Employment Act, this work agreement should hold the basic principles of agreement, namely:

  1. Concession between the parties;
  2. Capabilities/competencies of the parties to enter into the agreement;
  3. Regulating certain object; and
  4. Regulating legal matters.

For a company with employees less than 10 persons, provisions regarding working relationship stipulated in the work agreement. However, according to the Section Six Article 108-110 of Employment Law (UU Ketenagakerjaan) and Kepmenakertrans No. 16 of 2011, companies that hire employees for at least 10 persons are required to draft a company regulation in which the working relationship is regulated. Furthermore, according to the Employment Act, companies that already drafted a collective labour agreement are exempted from the obligation to draft a company regulation. In this article, our discussion will revolve around the company regulation.

In Indonesia, a company regulation defined as a regulation drafted in written form by the producers/entrepreneurs which contains working requirements and code of conduct of the company, according to the Minister of Manpower and Transmigration’s Regulation Permenakertrans No. 28 of 2014 on Drafting and Legalization of Company Regulation and Drafting and Registration of Collective Labour Agreement. According to the Article 188 of Employment Act, companies which violate the obligation to draft a company regulation will be subject for sanction of penalties with the amount of minimum IDR 5.000.000 and maximum IDR 50.000.000. The company regulation should be under responsibility of companies and must be drafted in accordance with advices and opinions from the employee representatives. The purposes and functions of company regulation are:

  1. Regulating rights and obligations;
  2. Acting as a guidance;
  3. Increasing productivity;
  4. Determining standards; and
  5. Providing assurance to perform the job.

In drafting the company regulation, there are structures that the companies must comply. The structures of company regulation according to Article 111 paragraph (1) of Employment Law are as follows:

  1. Rights and obligations of the company;
  2. Rights and obligation of the employees;
  3. Working requirements;
  4. Code of conduct of the company; and
  5. Validity period of the company regulation.

These structures are to be drafted and under the responsibility of the company. The companies must refrain to regulate provisions which contrary to the employment law which prevails in Indonesia. The company regulation must regulate the at least provisions which are in compatible with the prevailing provisions of employment in Indonesia. Nonetheless, companies also allowed to stipulate the matters which are unregulated under the Indonesian regulations as long as they are not contrary to the prevailing regulations. Companies are prohibited from regulating provisions which are lower than prevailing regulations on employment in Indonesia. In general, the draft of table of contents for company regulation can be arranged as follows:

CHAPTER

MATTERS

I

GENERAL PROVISIONS

II

PURPOSES AND SCOPE

III

WORKING REQUIREMENTS

IV

EMPLOYMENT

V

AUTHORITY DELEGATION

VI

WAGES

VII

WELFARE

VIII

WORKING HOURS AND HOLIDAYS

IX

OVERTIME WORK

X

LEAVE, REST, AND ABSENT PERMIT

XI

SOCIAL SECURITY AND OLD AGE BENEFIT

XII

SANCTIONS

XIII

EMPLOYMENT TERMINATION

XIV

CLOSING

 

We also provide a sample for company regulation below:

 

COMPANY REGULATION

OF

PT ABCD EFG

 

CHAPTER I

GENERAL PROVISIONS

 

Article 1

Definiton

 

In this Company Regulation, the following terms shall have the respective meanings ascribed below:

  1. Company is PT ABCD EFG, running its business in the area of .....
  2. Workers of the Company are …..

CHAPTER II

PURPOSE AND SCOPE

 

Article 2

Purpose

The purposes of this Company Regulation are to:

  1. …….
  2. …….
  3. …….

Article 3

Scope

(1)    This Company Regulation contains …..

(2)    This Company Regulation is binding to the Company and the Worker.

 

CHAPTER III

WORKING REQUIREMENTS

 

Article 4

Rights and Obligations of the Company

(1)    Rights of the Company

  1. Exercise …..
  2. Provide …..

(2)    Obligations of the Company:

  1. Provide …..
  2. Engage …..

 

For further queries and consultation regarding company regulation drafting, please contact us through email info@lhrplaw.com