How are employment-status disputes resolved under Indonesia’s Industrial Relations Dispute Settlement Law?

Article 2 identifies four categories of industrial relations dispute.

A rights dispute concerns the non-fulfilment of an existing employment right arising from legislation, an employment agreement, company regulations or a collective labour agreement.

An interests dispute concerns disagreement over the creation or amendment of employment conditions that have not already been established.

An employment-termination dispute concerns disagreement about ending an employment relationship.

A trade-union dispute concerns disagreement between trade unions within the same company regarding membership, representation or the exercise of trade-union rights and obligations.

Before using the formal dispute-settlement procedures, the parties must ordinarily attempt to settle the dispute through bipartite negotiations.

Bipartite negotiations are direct negotiations between:

• the employer and the worker;

• the employer and a trade union; or

• trade unions within the same company.

The negotiations must generally be completed within 30 working days from the date negotiations begin.

If the parties reach an agreement, they must record it in a written Collective Agreement. The agreement is binding and should be registered with the Industrial Relations Court so that it can be enforced if necessary.

If no settlement is reached, the parties must prepare minutes or other evidence showing that bipartite negotiations were attempted and failed.

If bipartite negotiations fail, either party may register the dispute with the local government body responsible for manpower affairs.

The registration should be accompanied by evidence that bipartite negotiations were attempted.

Depending on the type of dispute and the parties’ choices, the matter may proceed through:

• mediation;

• conciliation; or

• arbitration.

If the parties do not select conciliation or arbitration within the applicable period, the dispute is generally referred to a mediator.

Mediation may be used for:

• rights disputes;

• interests disputes;

• employment-termination disputes; and

• disputes between trade unions within one company.

A mediator is a government-appointed official who assists the parties in reaching a settlement. If the parties do not agree, the mediator issues a written recommendation.

Conciliation may be used for:

• interests disputes;

• employment-termination disputes; and

• disputes between trade unions within one company.

A neutral conciliator assists the parties and may issue a written recommendation if no settlement is reached.

Arbitration is available only for:

• interests disputes; and

• disputes between trade unions within one company.

Arbitration requires the parties’ written agreement. The arbitral award is final and binding, subject to the limited statutory procedure for seeking cancellation.

The Industrial Relations Court, commonly referred to as the PHI, is a specialised court established within the District Court system.

The PHI has authority to decide:

• rights disputes at first instance;

• interests disputes at first and final instance;

• employment-termination disputes at first instance; and

• disputes between trade unions within one company at first and final instance.

A PHI decision concerning a rights dispute or employment-termination dispute may generally be challenged by filing for cassation with the Supreme Court.

A PHI decision concerning an interests dispute or a dispute between trade unions within one company is generally final at PHI level.

Law No. 2 of 2004 applies to disputes arising from an employment relationship. A disagreement may therefore begin with the question of whether an employment relationship existed at all.

A freelancer alleging employment may rely on facts indicating:

• personal and continuing performance of work;

• wage-like remuneration;

• instructions or orders concerning how the work was performed;

• mandatory working hours;

• supervision by an internal manager;

• integration into the Client’s organisation;

• application of employee policies; or

• restrictions inconsistent with independent business activity.

The opposing party may rely on evidence that the relationship concerned independent services, including:

• separately agreed Assignments;

• freedom to accept or reject Assignments;

• control over the method of performance;

• payment for services or deliverables;

• responsibility for expenses and commercial risk;

• the ability to serve other Clients; and

• absence of employer-style supervision.

Relevant evidence may include:

• the Direct Client–Vendor Service Agreement;

• individual Assignments;

• employment agreements or proposed employment terms;

• invoices and payment records;

• payslips or wage calculations;

• instructions and communications;

• working-time and attendance records;

• reporting arrangements;

• access to internal systems;

• organisational charts;

• performance assessments;

• company policies;

• tax and social-security records;

• minutes of bipartite negotiations; and

• witness evidence.

No single document necessarily determines the legal classification.

If a court determines that the relationship was employment, the worker may pursue the employment rights connected with the dispute.

Depending on the claim and the applicable law, these may include:

• unpaid wages;

• overtime pay;

• holiday or religious-holiday allowances;

• social-security registration and contributions;

• termination compensation;

• recognition of employment status; and

• other statutory or contractual employment rights.

The precise remedy depends on the claim, the evidence, applicable limitation periods and the substantive employment legislation.