The Establishment of Company Regulation

Business people working in officeProvisions on company regulation is stipulated under Article 108 until Article 115 Law Number 13 of 2003 on Employment (“Law No.13/ 2003”) and Ministry of Manpower and Transmigration Regulation Number PER.16/MEN/XI/2011 on Procedures for the Establishment and Legalization of Company Regulation and Procedure for the Establishment and Registration of Collective Labor Agreement (“MOMTR 16/2011”).

Article 1 number (20) Law No.13/2003 defines company regulation as the regulation made in writing by the entrepreneur containing work requirements, company’s discipline and rule of conduct (“Company Regulation”).

Entrepreneur that employs at least 10 (ten) employees/workers is obliged to make Company Regulation. Company Regulation is effectively enacted since the legalization of Ministry of Manpower and Transmigration or the appointed officer.

The obligation to establish Company Regulation is however not applicable if the company already has a collective work agreement. The terms in Company Regulation cannot be incompatible with the prevailing laws and regulations and cannot be lower than prevailing laws and regulations.

Company Regulation shall be legalized by the authorized officer. The mentioned authorized officer are as follows (“Officer”):

  1. head of the institution who is responsible on the field of manpower affairs in the regency/city, for the company domiciled only in 1 (one) district/city;
  2. head of instance who is responsible on the field of manpower affairs in the province for the company domiciled in more than 1 (one) district/city in 1 (one) province;
  3. Director General of the Development of Industrial Relations and Manpower Social Security for the company domiciled in more than 1 (one) province.

Article 111 paragraph (1) Law No.13/2003 stipulates that Company Regulation contains at least:

  1. rights and obligations of entrepreneur;
  2. rights and obligations of employee;
  3. job requirements;
  4. company rules;
  5. the validity period of Company Regulation.

To legalize the Companny Regulation, the entrepreneur shall submit an application for legalization of Company Regulation to the Officer.

Article 8 paragraph (2) MOMTR 16/2011 stipulates that the application for legalization of Company Regulation equipped with the following documents:

  1. draft of Company Regulation in 3 (three) copies signed by the entrepreneur; and
  2. evidence that the recommendation and consideration from the trade union and/or worker’s representative that there is no trade union has been requested.

If the application for legalization of Company Regulation is complete and the material of Company Regulation is not lower than the laws and regulations, then the Officer shall legalize the Company Regulation by issuing the decision not more than 7 (seven) working days since the receipt of application.

Article 11 paragraph (3) Law No.13/2003 stipulates that Company Regulation is valid no later than 2 (two) years and shall be renewed after its expiration. The company may amend the Company Regulation provided that it has been agreed by the employees/workers and does not conflict the prevailing laws and regulations.

The amendment of Company Regulation shall obtain the legalization from the Officer. If the amendment of Company Regulation does not obtain the legalization then the amendment of Company Regulation shall be considered as not applicable.

Dianyndra Kusuma Hardy

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