Industrial relations disputes are a crucial issue in the employment sector. To provide legal certainty for both employees and employers, Law Number 2 of 2004 concerning the Settlement of Industrial Relations Disputes (the “IR Dispute Law”) regulates the types of disputes that may arise and the procedures for resolving them, either outside the court or through the Industrial Relations Court (PHI).
Types of Industrial Relations Disputes
According to the IR Dispute Law, industrial relations disputes are classified into four categories:
- Rights Disputes – disputes arising from the non-fulfillment of rights due to differences in the interpretation or implementation of laws, employment agreements, company regulations, or collective labor agreements.
- Conflicts of Interest – disputes arising from disagreements in establishing or amending working conditions that will be stipulated in employment agreements, company regulations, or collective labor agreements.
- Termination of Employment (Dismissal) Disputes – disputes arising from disagreements regarding the termination of employment by one of the parties.
- Disputes Between Labor Unions – disputes between unions within one company, usually related to membership, rights, or obligations of the unions.
Out-of-Court Settlement Mechanisms
By law, all industrial relations disputes must first be attempted to be resolved through bipartite negotiation, which is a direct discussion between employees and employers. This process must be completed within 30 working days. If one party refuses to negotiate, or if no agreement is reached within this timeframe, the bipartite process is deemed to have failed.
When bipartite negotiations fail, the dispute may be registered with the local manpower office, with evidence that bipartite efforts have been attempted. The manpower office will then offer the parties a choice of settlement through conciliation or arbitration. If no choice is made within 7 working days, the dispute will automatically be referred to a mediator.
To make it easier, please check the following table:
| Mediation | Conducted by an official mediator from the manpower office, applicable to all types of disputes. Mediation must begin within 7 working days and be completed within 30 working days. If an agreement is reached, the parties sign a Collective Agreement registered with the Industrial Relations Court. If not, the mediator issues a written recommendation. |
| Conciliation | Specifically for conflicts of interest, termination disputes, or disputes between labor unions. A conciliator is selected by mutual agreement from a list registered with the manpower office. The process must also be completed within 30 working days. If no settlement is reached, the conciliator issues a written recommendation. |
| Arbitration | Applicable for conflicts of interest and disputes between labor unions, but only if both parties agree in writing. The arbitrator’s decision is final and binding, meaning it cannot be appealed to the Industrial Relations Court. However, annulment may be requested of the Supreme Court if the award contains elements of fraud, false documents, or if the arbitrator exceeded their authority. |
Settlement Through the Industrial Relations Court (PHI)
If out-of-court efforts fail, disputes may be brought to the Industrial Relations Court (PHI), which operates within the District Court system.
- PHI examines and decides rights disputes and dismissal disputes at the first instance
- For conflicts of interest and disputes between labor unions, PHI decisions are final and binding, with no further appeal available.
Cases are heard by a panel of judges consisting of one career judge and two ad hoc judges (one representing workers/unions and the other representing employers). PHI must render its decision no later than 50 working days from the first hearing.
Legal Remedies
The available legal remedies are as follows:
- Conflicts of interest and disputes between labor unions – PHI decisions are final and binding, with no appeal or cassation.
- Rights disputes and dismissal disputes – PHI decisions may be directly appealed to the Supreme Court (cassation) within 14 working days. The Supreme Court must render its decision within 30 working days of receiving the cassation request.
Disclaimer
The information contained in this document is not intended as legal advice, legal opinion, or legal suggestion suitable for your business. The authors have prepared the information in this document in good faith and with reasonable due diligence. However, no representation or warranty, express or implied, is made as to the accuracy, completeness, or timeliness of the information provided. Readers acknowledge that each company operates differently, and the information provided may not be applicable to all business activities.
It is strongly recommended that readers consult with a professional or contact us directly before taking any legal action based on the information provided in this document. By reading this document, the reader agrees to discharge any claim, compensation, lawsuit, fine, or any penalty that might occur according to any information provided herein.