Report in which the committee requests to be kept informed of development - Report No 388, March 2019

Case No 3305 (Indonesia) - Complaint date: 27-FEB-18 - Closed

Allegations: anti-union practices carried out by the management of a restaurant chain, in particular unilateral transfers of trade union members and representatives, intimidation, mass dismissals of workers following a peaceful protest and refusal to implement recommendations of the Labour Department to reinstate the dismissed trade unionists, as well as the Government’s failure to ensure respect for trade union rights

1. 396. The complaint is contained in a communication dated 27 February 2018 from the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF).
2. 397. The Government sent its observations in communications dated 24 September 2018 and 31 January 2019.
3. 398. Indonesia has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), and the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. The complainant’s allegations

1. 399. By its communication dated 27 February 2018, the IUF lodges a complaint against the Government of Indonesia in connection with the alleged anti-union practices by the management of PT Champ Resto Indonesia (hereafter “the company”), a restaurant chain with over 100 outlets.
2. 400. The complainant explains that the workers of the company formed a union which was officially registered as Serikat Pekerja Mandiri Champ Resto Indonesia (SPM CRI) by the Labour Office of Tangerang on 24 March 2014. The union is a member of the Federation of Hotel, Restaurant, Plaza, Apartment, Catering and Tourism Workers’ Free Union (FSPM), affiliated to the IUF. According to the complainant, the management responded to the establishment of the union with anti-union practices, common in Indonesia, due to a lax legal environment. On 8 May 2014, the union General Secretary, Chairperson, Treasurer and a committee member were unilaterally transferred to new locations, far from their residences and trade union members. Three days later, the management had circulated a letter containing the names of union members who, it had claimed, had resigned from the union. The complainant considers that this was intended to intimidate workers. Despite these difficulties, a collective agreement was nonetheless signed on 24 December 2014 in which the company committed to respect the union and the workers’ right to join it. The IUF alleges that this agreement has been consistently and egregiously violated by the company.
3. 401. In January 2015, a woman worker at one of the company’s outlets requested information on maternity leave. In February, the management replied by telling her to resign as the company’s policy on paid maternity leave did not apply to restaurant workers but was limited to back office employees. When the union took up her case, it received the same response. After eight months of pregnancy, the worker submitted a request to take leave as from 6 March 2015 in accordance with the legislation in force, which entitles women workers to 45 days paid maternity leave before the expected date of birth. The management ignored her request and that of the union, and treated her absence as voluntary resignation. On 9 March 2015, the FSPM held a rally at the company’s head office in Jakarta in support of the worker’s right to return to work after giving birth. The union action succeeded in allowing her return to work in June 2015 but the company resumed its pressure on the union and its members.
4. 402. In May 2015, 14 union members were transferred from their jobs in Bandung to the company’s outlets in three other cities. Workers were informed of their transfers, which were ostensibly a response to the closure of an outlet in Bandung, by email, in lieu of transfer letters. According to the complainant, however, ten other outlets remained operating in the city. In August 2015, a trade union officer was informed by email that he was being transferred from an outlet in Bandung to Jakarta.
5. 403. On 11 November 2015, the FSPM filed a complaint with the Ministry of Manpower detailing violations of Indonesian legislation, including anti-union practices designed to intimidate members and prevent the functioning of the union (transfers of union members and officers), discrimination against women workers (failure to provide maternity leave and protection to all company employees), failure to properly compensate overtime, and failure to enrol all employees in the government’s mandatory health insurance scheme for workers and their families (the BPJS). The full extent of the company’s failure to enrol employees and their families in the BPJS became apparent in November 2015 when a newborn baby of another worker, Mr. Kemal, died after essential treatment was refused by the hospital because he could not pay. Union members held a public protest in Bandung on 2 December 2015, demanding that the company register all workers for family coverage. The protest involved only workers who were not on duty. Between 15 December 2015 and 12 January 2016, 83 workers were terminated solely as a consequence of protesting the tragic consequences of the company’s failure to meet its legal obligations. Among the 83 dismissed were the union Chairperson, General Secretary, Treasurer and committee members.
6. 404. On 12 January 2016, the FSPM sent a letter to the BPJS Director regarding the company’s failure to enrol all workers and their families. It received no reply. The FSPM sent a follow-up letter on 17 February 2016, to which there has been no response. On 22 January 2016, the FSPM filed a second complaint with the Ministry of Manpower, informing the Ministry of the mass anti-union dismissals and the ongoing harassment of union members and officers through punitive transfers. The Ministry did not reply. On 28 January 2016, the FSPM sent a formal request to the Ministry of Manpower asking it to mediate the union’s dispute with the company concerning dismissal of 83 union members and leaders following a protest over the death of the child and the company’s failure to enrol employees in the BPJS. In April 2016, the Ministry of Manpower finally responded to the request for mediation by authorizing the Labour Department to mediate the dispute over the dismissals in three provinces: Jakarta, West Java and Banten. On 22 August, the Labour Department in Jakarta issued a recommendation to the company to reinstate five dismissed workers with back wages. On 9 September 2016, the Labour Department in West Java recommended that the company reinstate 32 dismissed workers with back wages. And on 26 September 2016, the Labour Department in Banten recommended that the company reinstate ten dismissed workers with back wages. When the company refused to implement these recommendations, the FSPM filed cases against the company in the Industrial Relations Courts in Jakarta (on 28 November 2016), Serang (Banten) (on 21 December 2016) and Bandung (West Java) (on 5 January 2017).
7. 405. On 30 March 2017, the Jakarta Industrial Relations Court upheld the legality of the five dismissals. The court decision first declared the terminations null and void, but then proceeded to justify the dismissals by considering that the dismissed workers breached the company rules, which provide for immediate dismissal without a termination letter in the event that an employee “undertakes to invite or persuade fellow employees or other parties to take action that may disturb or create an adverse situation at work”. In its ruling, the Jakarta Industrial Relations Court determined that company rules, and thus, according to the complainant, can be arbitrarily interpreted by an employer, take precedence over the Government’s commitments under Convention No. 87. On 26 April 2017, the FSPM appealed this decision to the Supreme Court. On 31 October 2017, the Supreme Court rejected the union’s appeal and upheld the legality of the dismissal of five union members. Faced with the oppressive length and arbitrary nature of a legal procedure which discourages workers from attempting to access their rights, the five workers accepted the severance pay.
8. 406. On 3 May 2017, the Industrial Relations Court in Serang (Banten) determined that the ten dismissals brought before the Labour Department were in fact illegal and the workers should be fully reinstated. On 18 May 2017, the company appealed this decision to the Supreme Court (as of the time of the complaint, there has been no decision in this case).
9. 407. On 8 May 2017, the Industrial Relations Court in Bandung upheld the legality of the dismissals and the workers’ entitlement to separation pay only. The Court, after first stating that the terminations were invalid, null and void, upheld the legality of the dismissals on the grounds that the participation of the workers in the peaceful protest on 2 December 2015 and subsequent protest actions were not in accordance with Law No. 2 (2004) on Industrial Relations Disputes Settlement. This Law stipulates that industrial disputes are to be settled through bipartite meetings between the parties, through mediation under the auspices of the Labour Department or by the Industrial Relations Court. The Court concluded on this basis that the working relationship between the two (parties) will unlikely bring benefits and thus should be duly ended and terminated. Thus, the complainant considers that in its decision sanctioning the dismissal of 32 workers for their peaceful protests, the Industrial Relations Court effectively declared that the right of workers to protest, which forms part of the right to freedom of association, is not protected under Indonesian law and constitutes grounds for dismissal. The FSPM appealed this decision to the Supreme Court on 5 June. The appeal is currently pending.
10. 408. The IUF alleges that while these cases were winding their way through a clearly dysfunctional legal system, the company continued its anti-union aggression. On 29 April 2017, 11 more union leaders and members were unilaterally transferred to outlets in cities far from their residence and other union members.
11. 409. The complainant considers that the events described above testify to the Government’s ongoing failure to ensure respect for its international obligations under Conventions Nos 87 and 98. They also illustrate the indivisibility of rights set out in the ILO Conventions, demonstrating that the right to freedom from discrimination and the right to adequate social security are intrinsically linked to the right to freedom of association. Workers are denied their right to statutory health insurance with tragic consequences and are victimized for bringing these illegal practices and criminal negligence to the attention of the company and the public. Inconsistent actions by various legal bodies responsible for ensuring respect for workers’ rights encourages continued violations by the employer. Labour Department recommendations can be discarded by the employer even when those recommendations uphold basic rights. The system of industrial relations courts produces widely different rulings when confronted with the same events and legal issues.

B. The Government’s reply

1. 410. In its communications dated 24 September 2018 and 31 January 2019, the Government provides its observations on the allegations submitted by the IUF.
2. 411. At the outset, the Government indicates that it is committed to guaranteeing freedom of association in law, which, in Indonesia, refers to Conventions Nos 87 and 98, and that in this respect, it has made efforts to enforce the law through a preventive–educative and conflict resolution system.
3. 412. As concerns the allegation of intimidation of workers, the Government indicates that the management stated that it had never issued a letter containing the names of members of the trade union who resigned from it. In addition, a collective agreement was concluded on 24 December 2014 between the management and the FSPM, which contains a clause guaranteeing the existence of a trade union at the company.
4. 413. The Government indicates that the company refutes the allegation of dismissal of a female worker who applied for maternity leave. In this respect, it indicates that the company ensures this right in accordance with section 82(1) Act No. 13 of 2013 concerning Manpower. The female worker who applied for maternity leave was granted leave for the period between 7 March and 5 June 2015, during which she received her salary. The worker in question returned to work in the same place and position she had before the maternity leave. The Government submits the relevant documents.
5. 414. Regarding the absence of the BPJS health insurance scheme, the Government indicates that the membership in the national health insurance scheme is mandatory and is carried out gradually (in two stages) until it includes all residents of Indonesia. The first began on 1 January 2014 and the second was to be completed by 1 January 2019. During the first stage, the members of the Indonesia National Armed Forces, civil servants of the Ministry of Defense and their family members, members of the Indonesian National Police and civil servants within the Indonesian National Police and their family members, became premium assistance beneficiaries of health insurance. Further, employers of state-owned enterprises, large enterprises, medium enterprises, and small enterprises should have insured their employees by no later than 1 January 2015, followed by employers of microenterprises (by no later than 1 January 2016). Finally, non-wage recipients and non-workers should be insured by no later than 1 January 2019.
6. 415. Previously, the health insurance for the employees of the company in question was organized independently by the management through a partnership with some hospitals. The independent implementation had been approved by the Government through the issuance of a recommendation from the Manpower and Transmigration Agency of West Bandung Regency, West Java. In 2015, the company began to register its workers in the health social security scheme, including Mr Kemal and his family members. The Government explains that Mr Kemal’s two-month-old child required hospital treatment due to leukaemia. The company referred the child to a hospital with which it had a partnership agreement. Despite receiving the treatment, the child passed away. The Government submits the relevant documents regarding the treatment received in Santo Yusuf Hospital. The Government adds that on 18 December 2015, the company was requested by the Manpower Supervisor of Bandung City to register all workers to the BPJS.
7. 416. Regarding the alleged dismissal of workers who conducted the protest and demonstration, the Government indicates that the 89 dismissed workers violated article 51(21) of the company’s rules and regulations on “inviting or appealing fellow employees or other parties to take an action that could cause unrest at work”. The Government explains that the settlement process involving these 89 dismissed workers included bipartite negotiations, mediation, and the recourse to the Industrial Relations Court and the Supreme Court. In issuing a decision in the same case, it is possible that judges issue different decisions, as all depends on the judge’s perspective and interpretation. The Industrial Relations Court and Supreme Court are independent judicial institutions in the processes of which the Government cannot intervene.
8. 417. The Government refers to the settlement process in each region as follows:
   • ■ West Java Province:
     • – The dismissal of 42 workers had been settled by an agreement.
     • – The dismissal of 32 workers had been initially settled through mediation by the West Java Province Manpower and Transmigration Agency, which, on 9 September 2016, recommended that the company re-employ and pay for the workers’ rights that had not been fulfilled. The company rejected the recommendation and filed a lawsuit in the Industrial Relations Court in Bandung (31 workers). One worker has reached a settlement with the company. By its decision dated 8 May 2017, the Industrial Relations Court agreed to the dismissal of workers with a one-time severance pay, pursuant to section 156(2), reward-for-years-of-service pay, pursuant to section 156(3), and compensation pay for rights, pursuant to section 156(4) of Act No. 13 of 2003 concerning Manpower. The union appealed this decision to the Supreme Court, which rejected it on 19 October 2017. Accordingly, the payment of compensation (severance pay, a sum of money as a reward for service rendered during the term of employment, and compensation pay for rights or entitlements) to 25 employees was completed on 25 October and 1 November 2018. Six remaining workers plan to propose a judicial review of the Supreme Court decision. The management of the company has nevertheless indicated that it would pay all severance pay in accordance with the Court decision.
   • ■ Jakarta Province:
     • – The dismissal of five workers was examined by the mediation of the Jakarta Province Manpower and Transmigration Agency, which recommended, on 22 August 2016, their reinstatement. The company rejected the recommendation and filed a lawsuit in the Industrial Relations Court. The latter ordered the termination of employment with severance pay, reward-for-years-of-service pay, compensation for rights, termination of employment process wage and religious holiday allowance for 2016. The five workers in question filed an appeal to the Supreme Court. The latter rejected the appeal on 6 October 2017. On 11 January 2018, both parties agreed on the termination of employment in accordance with the decision of the Supreme Court and had signed an agreement to that effect (enclosed with the Government’s reply). On the same day, the workers received compensation (severance pay and compensation pay).
   • ■ Banten Province:
     • – The dismissal of ten workers was examined by the mediation of the Banten Province Manpower and Transmigration Agency, which recommended, on 26 September 2016, workers’ reinstatement. The company rejected the recommendation and filed a lawsuit with the Industrial Relations Court. In its decision dated 3 May 2017, the Industrial Relations Court ordered the workers’ reinstatement and imposed a fine on the company. The latter filed an appeal to the Supreme Court. On 20 November 2017, the Supreme Court revoked the decision of the Industrial Relations Court of 3 May 2017. The plaintiff (employees) proposed a judicial review.
9. 418. Regarding the alleged transfer of trade union leaders and members, the Government points out that according to section 12 of the company rules and regulations of 27 October 2014, the company may transfer an employee if such are the needs of the company. According to the Government, all employees, whether they are union members or not, are treated equally when transfers are considered necessary. The Government points out that the transfer of employees from the outlet at Piset Square, Bandung was the result of its closure.

C. The Committee’s conclusions

1. 419. The Committee notes that in the present case the complainant alleges anti-union practices carried out by the management of a restaurant chain, in particular, unilateral transfers of trade union members and representatives, intimidation, mass dismissals of workers following a peaceful protest and refusal to implement recommendations of the Labour Department to reinstate the dismissed trade unionists, as well as the Government’s failure to ensure respect for trade union rights.
2. 420. The Committee notes that the questions of denial by the company to provide health insurance and maternity protection benefits to its workers fall outside its competence and therefore will not be the subject of its examination.
3. 421. As concerns the dismissal of 89 workers (83 according to the complainant), the Committee notes that neither the Government nor the company refute that the dismissals were the consequence of the workers’ participation in peaceful protests or demonstrations. The Committee further notes that the peaceful nature thereof is not refuted. While noting that all but 16 workers have already signed settlement agreements with the company and received agreed compensation packages, the Committee nevertheless wishes to make the following observations.
4. 422. The Committee recalls that workers should enjoy the right to peaceful demonstration to defend their occupational interests [see Compilation of decisions of the Committee on Freedom of Association, sixth edition, 2018, para. 208]. It further considers that respect for the principles of freedom of association requires that workers should not be dismissed or refused re-employment on account of their having participated in a protest action. The Committee recalls that the ultimate responsibility for ensuring respect for the principles of freedom of association lies with the Government. It further recalls that it is the responsibility of the Government to ensure the application of international labour Conventions concerning freedom of association which have been freely ratified and which must be respected by all state authorities, including the judicial authorities [see Compilation, op. cit., paras 46 and 49]. The Committee notes that in the present case, the company rules and regulations, as interpreted by the courts, would appear to prohibit any industrial action at the company, in violation of the workers’ right to peaceful protest and demonstration. It would further appear that such rules and regulations in practice take precedence over national law and international obligations. Recalling that the Government has previously indicated that freedom of association, the right to organize and freedom to express opinions in public, including through demonstrations and protests are protected in Indonesia by various pieces of legislation, including the Constitution, Law No. 9 of 1998 on Freedom of Expression in Public, Law No. 21 of 2000 on Trade Unions and Act No. 13 on Manpower [see Case No. 3176, Report No. 380, para. 602], the Committee requests the Government to take the necessary measures, including legislative if necessary, in consultation with the social partners, in order to ensure the full protection of workers’ fundamental rights to freedom of association and the invalidation of any company rules or regulations that might provide to the contrary. It requests the Government to keep it informed of the measures taken to that end.
5. 423. Noting that 16 workers are, according to the Government, seeking judicial review of the Supreme Court decision, the Committee requests the Government to bring the conclusions in this case to the attention of the relevant judicial authorities and to provide information on the outcome of the reviews.
6. 424. Regarding the alleged instances of transfer of trade unionists to other cities, the Committee notes the Government’s indication that the transfers were in conformity with the company’s rules and regulations and were caused by the closure of an outlet in Bandung. The Committee notes that the complainant indicates that there remained ten other outlets operating in Bandung. In this respect, the Committee, while considering that transfers of employees for reasons unconnected with their trade union affiliation or activities are not covered by Article 1 of Convention No. 98 [see Compilation, op. cit., para. 1103], recalls that workers should enjoy adequate protection against all acts of anti-union discrimination in respect of their employment, such as dismissal, demotion, transfer or other prejudicial measures. The Committee requests the Government to engage with the social partners concerned with a view to achieving agreement on policy to recognize the company’s needs while assuring that transfers do not interfere with workers’ right to freedom of association.

The Committee’s recommendations

1. 425. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee requests the Government to take the necessary measures, including legislative if necessary, in consultation with the social partners, in order to ensure the full protection of workers’ fundamental freedom of association rights and the invalidation of any private company rules or regulations that may provide to the contrary. It requests the Government to keep it informed of the measures taken to that end.
   • (b) Noting that 16 workers are, according to the Government, seeking judicial review of the Supreme Court decision, the Committee requests the Government to bring the conclusions in this case to the attention of the relevant judicial authorities and to provide information on the outcome of the reviews.
   • (c) The Committee requests the Government to engage with the social partners concerned with a view to achieving agreement on policy to recognize the company’s needs while assuring that transfers do not interfere with workers’ right to freedom of association.