LK International AG (Kjus), Complaint 328

Payment of a living wage

In the complaint, the trade union provided the following series of events:

On 20 November 2012, the provincial Government of DKI Jakarta issued “Governor Regulation Number 189/2012 on the Provincial Minimum Wage for 2013” with a new amount of IDR 2.2 million per month. The factory where the complaint was lodged submitted a proposal to the Government to postpone this minimum wage for its factory on 19 December 2012. The proposal was approved by the Wage Council in a meeting on 20 December 2012. Based on the Wage Council meeting, on 5 April 2013 the Government issued a decision allowing the factory to pay below the new minimum wage. The decision said that the company shall pay wage of IDR 1.978.789/month to the workers.

The largest trade union in the factory brought a case to the State Administrative Court (PTUN) to not have the minimum wage increase postponed and won. The decision was issued on 7 November 2013. Based on above PTUN Decision, the factory appealed on 30 December 2013 but lost. The decision indicated that the earlier Governor Decision to approve the postponed implementation of provincial minimum wage to the factory was cancelled and not valid.

The factory subsequently submitted a Cassation Appeal and lost, with the decision issued on 20 November 2014. After the decision of the Cassation Appeal, the trade union indicated it attempted to send letters and conduct bipartite negotiations with factory management to immediately implement the decision and to pay the difference of the paid wages and the new legal minimum wage level for 2013. The factory indicated that it submitted a legal review on 19 October 2015, but the trade union indicated that they have never been able to find it. In addition, by law a Legal Review can only be submitted within 6 months after the decision in the Cassation Appeal.

The trade union wants to solve this case through non-litigation and mediation and has formed a taskforce. However, if it is not resolved the trade union indicated that it is prepared to take further steps. The difference between earned wages and wages due according to the trade union amounts to IDR 5,407,281,684 (EUR 330,000 at current exchange rates).

Overview of the complaint investigation

2018-01-22 Investigation

The factory confirms that it requested a postponement for the increase in legal minimum wages in 2012. It also confirms that it subsequently lost legal cases brought forward by the largest (and only at the time) trade union. It also agrees that it requested a judicial review on 19 October 2015.

The factory further indicates that this process is taking a long time, and it is still waiting for the outcome of the judicial review. The factory confirms that whatever the outcome of the review is, it will accept it.

2018-02-23 Investigation

As FWF is unable to determine the status of the judicial review and the legality of the decision taking such a long time, it has decided to receive the opinion of an independent legal expert on the following questions:
- What is the legality of the judicial review and the time that it was submitted (more than 6 months after latest appeal)?
- Where is the legal case at in terms of appeals, judicial review, etc.?
- What are the prospects for having the judicial review completed?

In the process of the independent legal analysis, the expert may need to contact and have meeting with both the factory management as well as the trade union.

2018-05-09 Investigation

On the 24 April, FWF received the opinion of an independent legal expert.

The legal expert informed FWF that:
- Upon the administrative high court’s decision case number 10/B/2014/PT.PTUN.JKT, the company filed an appeal to The Supreme Court with case number 395/K/TUN/2014, however the Supreme Court decided to refuse the appeal.
- Upon the State Administrative Court’s decision Case number 62/G/2013/PTUN.JKT; The administrative high court’s decision case number 10/B/2014/PT.PTUN.JKT, and the Supreme Court’s decision case number 395/K/TUN/2014, on 19 October 2015 the company filed a review of court decision or abbreviated PK (Indonesian: Peninjauan Kembali)
- PK is a legal action that can be taken by the person or entity subject to the penalty in a legal case against a court decision of the final and binding on the judicial system in Indonesia. However until this report was made the consultant did not get any information related to the Supreme Court decision regarding to the results of the PK. Reviewing the consistency of all the Court's decision, then the filing of PK by company will also be rejected by the Supreme Court.

- The company has taken various legal effort, but in fact the such effort is clearly unsuccessful. The Administrative Court, The Administrative High Court and The Supreme Court have consistently decided and declared the decision of the Governor of Jakarta no. 510 was null and void. It means the company must remain perform minimum wage payment in 2013 of Rp. 2.200.000,-
- Moreover after the Constitutional Court Decision No. 72/PUU-XIII/2015, which expressly stipulates that although the company has the right to suspend the minimum wage but the shortage of the minimum wage payment remains a payable obligation to the workers.

- However, regardless of the various court decisions, based on the latest information obtained by consultants, as the letter dated April 20, 2018 made by the Management of the company about the realisation plan for minimum wage payment in 2013. The consultant notes that the letter shows a good effort from the company to end the problem of shortage of minimum wage payment and strive to fulfil its obligations to the workers.

- Thus, it is recommended that the union cooperates with the company to discuss the technicality related to the realisation of the wage underpayment. And where deemed necessary, the parties may appoint a Mediator from the Indonesian Mediation Center (Pusat Mediasi Nasional) to assist in facilitating the negotiation process.

2018-05-09 Investigation

Factory management responded that they would inform workers as follows:

1. The payment of postponed minimum wage (UMP) in 2013 will be conducted in three batches :
a. First batch: before 14 May 2018
b. Second batch: before 13 June 2018
c. Third batch: before 14 July 2018

2. The payment will be covering:
a. The gap of minimum wage in 2013 from January until December 2013
b. The gap of overtime payment in 2013
c. The gap of annual leave 2013
d. The gap of menstruation leave 2013
e. The gap of festive allowance/Idul Fitri 2013

3. The payment will be conducted to the workers that have been working from 1 Jan – 31 Dec 2013 who has salary below UMP 2013, IDR 2.200.000.

4. The payment will be transferred to the workers bank account to workers who are still working until now and for the one that already leave the company.

5. For the workers who has left the company, they are asked to register from 16-23 April 2018 by providing the following documents:
- Copy of ID card
- Copy of reference letter
- Copy of bank account with the worker’s name
- Copy of certificate of inheritance right for the workers who passed away
- Power of Attorney if workers ask someone to process the payment

2018-05-09 Investigation

FWF then contacted the trade unions SPN and FSPASI to receive their point of view on the decision of the company.

Although FSPASI agreement to the payment in 3 batches, SPN was not satisfied with the remediation as the notification has been published without their consent and while the discussion is still on-going.

SPN had the following request:
1. They want that the payment of postponed wage will be put in the Perjanjian Bersama/Collective Agreement document that ties both parties: the supplier and SPN.
2. SPN is not worried about the 800 workers that are still working for the supplier. SPN has concerns with regards to the workers who are not working at the supplier anymore (around 1200-1500 workers), on how to reach them if their cell phone number has been changed.
3. SPN would like propose to have the Joint Committee to monitor the payment process. The Joint Committee consist of the supplier, SPN and brands or international organization like FWF and WRC. A special bank account will be opened with this Committee name. SPN said that this mechanism has been done before in other factories.

2018-05-09 Conclusion of the investigation

The company agreed with the trade unions to pay back the legal minimum wage to the workers in three batches.

For the workers that no longer work for the factory, the supplier has given a time frame of one week in which former employees need to report to the factory. This severely limits the right to remedy for those former employees. As the employer needs to execute the decision of the court, it cannot limit the right of the former employees to make their rights effective by providing a time frame of one week.

2018-07-16 Conclusion of the investigation

The FWF complaints handler contacted SPN again, while Kjus contacted the factory.

The following facts were confirmed by both parties:

1) the supplier will pay it in three batches. The payment will be done directly to the bank account of the workers.

2) The factory announced that workers should register within a week to apply before first payment (early May). The factory agreed that workers should be able to bring their claims forward after that week and that the term has no limits.

2019-03-21 Closed

In 2017, the member stopped sourcing from the supplier. Therefore, the member and FWF could no longer follow up. In line with the FWF complaints policy, members should continue follow up until 6 months after they leave a factory.

On the 16 March 2019, FWF received information from SPN that less than half of the workers had received their payment.

Therefore, FWF will not consider the complaint remediated, but closed.