Yang & Co
NEWSLETTER

August 19, 2016
Procedures for the Imposition of the Administrative Sanctions for the Violations of Wages Payment

On 6 June 2016, the Minister of Manpower issued Regulation No. 20 of 2016 concerning the Procedures for the Imposition of Administrative Sanctions as Regulated in the Government Regulation No. 78 of 2015 concerning Wages Payment  (“Regulation No. 20”).  

Violation of Wages Payment

The Regulation No. 20 stipulates that employers shall be imposed with administrative sanctions, if they commit the following actions:

  1. Failure to pay the religious festivity allowance (Tunjangan Hari Raya or as it is commonly known as “THR”) at the latest seven days before the date of religious holiday takes place;
  2. Failure to distribute service tips to employees who work in hotels or restaurants;
  3. Failure to draw up relevant wages structure and ratio, and failure to inform the same to the employees;
  4. Failure to pay the weekly or monthly wages on time;
  5. Failure to pay any fines resulting from violations of working agreements, company regulations or collective working agreements; and/or
  6. Payroll deductions of more than fifty percent (50%) of the total wages that should be received by the employees. 

(The above actions shall be referred as “Violations of Wages Payment”)

Administrative Sanctions for the Violations of Wages Payment

Based on the Regulation No. 20, if employers commit any of the Violations of Wages Payment, the government can impose the following administrative sanctions to the employers:

  1. Written warning;
  2. Limitation to the employer’s business activities, including: i) limitation to the employer’s production capacity for a certain period; or/and ii) postponement of the issuance of business permits for the employer’s project or business locations;
  3. Temporary suspension of some or all production facilities; or
  4. Temporary suspension of business activities.

The imposition of administrative sanctions will be based on the relevant employer’s infringements and it does not waive such employer’s obligations to pay the wages and fines to their employees.

The Procedures for the Imposition of Sanctions

Pursuant to Regulation No. 20, the administrative sanctions can be imposed based on complaints and/or an investigation conducted by the manpower supervisor.  After conducting the investigation, the manpower supervisor shall inform the employers of the result of the investigation.

If there is any violation found during the investigation, the manpower supervisor shall write an investigation report on such violation and inform the employer. If the employer does not comply with the suggestions in the investigation report, the manpower supervisor will report such non-compliance to the Director General of Manpower Supervision (Direktur Jenderal Pengawasan Ketenagakerjaan) at the Ministry of Manpower or the Head of the Provincial Manpower Agency (Kepala Dinas Ketenagakerjaan Provinsi). Further, the Director General of Manpower Supervision or the Head of the Provincial Manpower Agency will submit a recommendation letter regarding the administrative sanctions to the Minister of Manpower or the Regent in the relevant province to impose the administrative sanction(s) to the violating employer.

The stages for imposing the administrative sanctions will be as followed:

Type of Violations

Type of Administrative Sanctions

Written Warning

Limitation of Business Activities

Temporary Suspension of Production Equipment

Business Suspension

Failure to pay the THR

Once

If the employers fail to pay the THR within three days after receiving the written warning letter

(Applies until the employers pay the THR to their employees)

Not applicable

 

Failure to distribute the service tips

Twice



(The interval period between each of the written warning letter is 7 days)
 

If the employers fail to pay the service tips within seven days after receiving the latest written warning letter

(Applies until the employers pay the service tips to their employees)

Not applicable

 

Failure to draw up the relevant wages structure and ratio and failure to inform the same to the employees

Twice

(The interval period between each of the written warning letter is 15 days)

If the employers fail to inform the employees within fifteen days after receiving the latest written warning letter

(Applies until the employers have notified employees for the wages structure and ratio)
 

Not applicable

Failure to pay wages on time

Twice

 

(The interval period between each of the written warning letter is 15 days)

If the employers fail to pay/return wages within 15 days after receiving the latest written warning letter



(Applies up to 14 days)

If the employers fail to pay/return wages after the business limitation period ends                     




(Applies up to 14 days)

If the employers still fail to pay/return wages after the temporary suspension period ends


(Applies until the employers pay/return the said wages to their employees
 

Payroll deductions of more than fifty percent (50%) of an employee’s wages

Failure to pay fines

Once

(Applies until employers pay the fines to their employees)

Not applicable

In addition, Article 37 of the Regulation No. 20 requires employers to provide employees with a wages payment receipt after paying their employees’ wages. The failure to comply with this obligation may lead to the imposition of administrative sanctions, i.e. written warning letter, to the employers.

The Revocation of Administrative Sanctions

The Minister of Manpower or the Regent in the relevant province will revoke the administrative sanction after receiving the report or evidence from the relevant employers that they have complied with their obligations. The revocation of administrative sanction is also subject to a recommendation from the Director General of Manpower Supervision (Direktur Jenderal Pengawasan Ketenagakerjaan) in the Ministry of Manpower or the Head of the Provincial Manpower Agency (Kepala Dinas Ketenagakerjaan Provinsi).

This Regulation No. 20 came into force as from 6 June 2016 (on the date it was promulgated).

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Related Area of Practices: Labour and Employment
Keywords: Procedures for the Imposition of the Administrative Sanctions for the Violations of Wages Payment
 

 
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