SHOULD THE EMPLOYER REMAIN OBLIGED TO PAY OUTSTANDING WAGES TO THE EMPLOYEES AFTER THE PERIOD OF WAGE DEFFERAL ENDS?
“After the issuance of Constitutional Court Decision No. 72/PUU-XIII/2015 dated 29th September 2016 on judicial review of Article 90 paragraph 2 and its Explanatory Notes of Law No. 13 Year 2003 concerning Manpower (“Manpower Law”), the employer/company is obliged to pay outstanding minimum wages due to the period of wage deferral.”
Referring to our previous article, “Beware! There is Criminal Sanction for Paying Wages Below Minimum Standard!” We need to convey that after the issuance of Constitutional Court Decision No. 72/PUU-XIII/2015, criminal sanction may be imposed to the employer/company who does not pay outstanding minimum wage to the employees after the period of wage deferral ends.
That is, prior to the issuance of Constitutional Court Decision No. 72/PUU-XIII/2015, non-payment of outstanding wages during the wage deferral period is not deemed as a criminal act. However, after the issuance of aforesaid Constitutional Court Decision, it is subject to criminal sanction.
In the verdict, it can be concluded that: Explanatory Notes of Article 90 paragraph 2 of Manpower Law throughout the phrase “but not obliged to pay outstanding minimum wages during the period of wage deferral” is contradictory to the 1945 Constitution of the Republic of Indonesia and is declared to have no legal binding force.
Therefore, the Employer/Company still remain obliged to pay outstanding wages to the employees after the period of wage deferral ends.
For example: Provincial Minimum Wage (UMP) of DKI Jakarta Province in 2017 is Rp. 3.355.750,00 per month. Due to the inability of employer/company to pay the minimum wage, the employer/company may apply for wage deferral as referred in Article 3 paragraph 1 and paragraph 2 of Minister of Manpower and Transmigration’s Decree No. Kep-231/Men/2003. The employer may apply for wage deferral to the Governor through institution responsible for Provincial manpower no later than 10 (ten) days prior to the effective date of minimum wage and has obtained written agreement between employer and employee or registered workers’ union.
If the application for wage deferral is approved, the employer/company will get a wage deferral for 12 months. This means that Employer/company need not to pay wages according to DKI Jakarta Province’s 2017 UMP which is Rp. 3.355.750,00 per month for 12 months, but paying wages according to DKI Jakarta Province’s 2016 UMP which is Rp. 3.100.000,00 per month.
After the wage deferral period has ended, the employer/company is obliged to pay outstanding wages which is Rp. 255.750,00 per months for 12 months of wage deferral. This amount is obtained from the minimum wage difference of 2017 and 2016.
Thus, the total amount payable by employer/company to the employees after the wage deferral period ends is Rp. 3.069.000,00. If the company does not pay the outstanding wages to the employees, the company may be subjected to criminal sanctions under Article 185 of Manpower Law.
We hope this article is useful.
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