Asia-Pacific law bulletin 2022
Developments in the in light of COVID-19
In 2020, the Indonesian government focused on containing and curbing the spread of COVID-19 by implementing large scale social restrictions. Subsequently, in 2021, the Indonesian government expanded its efforts by issuing mandatory COVID-19 vaccination regulations, encouraging safe distancing (such as continued social distancing in the workplace and COVID-19 testing at Indonesian borders), and restricting public activities. While these measures are necessary to respond to the pandemic, they have led to a challenging work environment both for employers and employees, as they have increased responsibilities to ensure that the spread of COVID-19 can be minimised.
The Health Ministry has released regulations that require every person designated as a COVID-19 vaccine recipient to receive a vaccination, unless exempted on medical grounds.
Upon vaccination, each vaccinated person will receive a vaccination certificate uploaded onto a mobile application known as ‘PeduliLindungi’. This application also enables the latest number of COVID-19 cases in Indonesia to be tracked. According to the regulations, employees working from offices will need to show proof of vaccination via this application at checkpoints upon entering and exiting the office.
The Indonesian government has adopted a two-pronged approach to vaccinations both to encourage Indonesian citizens to come forward to receive vaccinations and via roll-out through employers. The regulations provide for two vaccination schemes: (i) the Government Vaccination scheme; and (ii) the Private Vaccination scheme. Indonesian citizens are entitled to receive vaccination through the Government Vaccination scheme for free. Foreign employees holding valid stay permits are also entitled to participate in either vaccination schemes. Under the Private Vaccination scheme, employers may arrange vaccinations for their employees as well as their families and individuals who live with them, but at the employers’ cost. The main advantage to employers using the Private Vaccination scheme is that they are able to better control the vaccination timing of their employees.
In order to arrange for Private Vaccinations, employers must report the number of Private Vaccination participants and the particulars of each participant to the Health Minister.
In most workplaces, employees who regularly work in the office are requested by their employers to undergo periodic COVID-19 testing as an added measure to curb COVID-19 transmissions, even though there are no strict requirements which require employers to do so. That being said, employers have a statutory duty to keep their employees safe during working hours and to implement measures to prevent COVID-19 transmissions in the workplace.
Other developments in the workplace
Up to the end of 2021, the Manpower Minister sought to address employer concerns by issuing regulations and adopting policies that may potentially help Indonesian companies to tackle work-related challenges, including allowing employers to make adjustments to employee working conditions.
Working conditions cover a variety of aspects and can include remuneration/salary and place of work. In general, the Indonesian Employment Law only allows changes to be made to an existing employee’s remuneration/ salary and place of work as long as the employee consents and such changes are not contrary to law.
Under a Manpower Minister Decree No.104 of 2021 on Guidelines for Employment Practices during the COVID-19 Pandemic (the “Guidelines”), employers are allowed to take various measures to mitigate the impact of COVID-19 and to avoid employee terminations. However, these measures are meant to be temporary and therefore do not require employment agreements to be amended. Such measures include implementing working from home arrangements; changing working arrangements in the office (i.e. by implementing rotating schedules, rearranging work time into shifts, reducing work hours); and negotiating with employees to reduce certain allowances in stages.
In relation to the changes of employee salary, the Guidelines specifically provide that employers experiencing financial difficulties due to the COVID-19 pandemic are permitted to negotiate with employees to adjust their salaries on a temporary basis “amicably, transparently and in good faith” (again, subject to the parties’ mutual agreement). Following such agreement being reached, the employer is required to submit the agreement (which must include the adjusted salary amount, payment method and agreement validity period) online to the relevant Manpower office. However, the adjusted (lower) salary amount cannot be used as the basis for calculating social security payments or termination severance packages, which instead must be based on the original (higher) salary amount.
Temporary salary changes agreed between employers and employees are still subject to the rule that salaries cannot be agreed to be lower than the statutory minimum level. If any agreed salaries are lower than the statutory minimum, the agreed amount would be considered null and void and the actual salary would be restored to the statutory minimum.
In relation to the place of work, the Guidelines allow companies to implement working from home arrangements or hybrid working. The Indonesian Employment Law does not specifically regulate the place of work, particularly working from home arrangements. Therefore, employee rights in a working from home arrangement can be regulated between the employer and employee in the relevant employment agreement. Employers also have the discretion to determine which employees must work from home or in the office, provided that such determination is not discriminatory (on the basis of gender, ethnicity, religion or political orientation).
It is likely that if and when the COVID-19 pandemic is over or has sufficiently receded, most companies will still continue to allow hybrid working where employees work part of their time in the office and part of their time from home.
It is important to note that if employers decide to make permanent (rather than temporary) changes to the work arrangements and change any benefits for existing employees, they would be required to amend their employees’ working conditions in their existing employment agreements and, if applicable, company regulations. Such permanent changes are likely to involve negotiations between employers and employees because the employees’ consent would be required before any permanent changes can be implemented.