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Workers oppose using Jobs Law to set severance pay after Bata shoe factory closure

CNBC Indonesia - May 7, 2024

Wiji Nur Hayat, Jakarta – PT Spays Bata Ltd. (Bata) has been forced to closed down one of its shoe factories in Purwakarta, West Java. The impact of this policy is that as many as 233 employees or workers will be sacked immediately and no longer work for the factory.

"Based on the letter reporting the termination of factory activities delivered to us by Bata the number of workers who will be laid off is as many as 233 people", said West Java Labour, Transmigration and Social Affairs Offices (Disnakertrans) Industrial Relations and Labour Social Security Division head Firman Desa on the CNBC Indonesia Evening Up news program on Thursday May 7.

"Based on a letter from Bata management saying that this factory must be closed, all of its workers will be laid off. Yes, that's 100 percent true from the letter", Desa confirmed emphatically.

Desa said that the Bata factory in Purwakarta has already stopped production. In the letter sent by Bata along with monitoring by the West Java Disnakertrans, he revealed the reasons why Bata has stopped production completely.

"The Bata factory according to our monitoring has suffered losses since 2020, their orders have declined significantly related to this product. The company has suffered losses, Bata workers also know about it. We only received the letter on May 2, 2024", he said.

Now, the workers and Bata are negotiating the amount of severance pay that will be paid. Desa explained that there was a disagreement between workers and the company regarding the amount of severance pay.

Workers are asking that the amount of severance pay be based on Labour Law Number 13/2003. Under this regulation it stipulates that if layoffs occur because the company has closed down due to continuous losses for two years, or due to force majeure, then the workers are entitled to a severance pay of one times the provisions of Article 156 Paragraph (2), one times the Length of Service Recognition Payment (UPMK) provisions of Article 156 Paragraph (3) and financial compensation in accordance with the provisions of Article 156 Paragraph (4).

The company meanwhile wants severance pay to be based on Law Number 6/2023 on Job Creation or the Omnibus Law on Job Creation, where the calculation of severance pay is far lower than the 2003 labour law.

"The severance pay is being discussed internally between the company and workers. Negotiations on the amount of severance pay have been given until May 8 [to decide] whether the amount is accepted or not. If the workers do not accept it, we are getting ready to facilitate the calculation of severance pay", said Desa.

The West Java Disnakertrans itself is ready to facilitate the severance pay dispute between workers and Bata. So what happens if the result is a deadlock or reaches a dead end?

"There is a collective work agreement at the company. Which one will be used? Will the application of the company's collective work agreement use the Job Creation Law or Law 13/2003", he asked.

[Translated by James Balowski. The original title of the article was "233 Karyawan Kena PHK Massal Pabrik Sepatu Bata Tutup".]

Source: https://www.cnbcindonesia.com/news/20240507110315-4-536319/233-karyawan-kena-phk-massal-pabrik-sepatu-bata-tutu