State Administrative High Court Decision on 2017 Labour Intensive Industry Minimum Wage: Why It is More than What It Looks?

On Thursday, 31 May 2018, the Consultative Assembly of the High Council of Judges at the State Administrative High Court of Jakarta decides to annul the Decision of Bandung State Administrative Court Number 108/G/2017/PTUN-BDG, dated 6 February 2018 on the disputed 2017 labour intensive Industry Minimum wage of Bogor Regency, Purwakarta Regency and Bekasi City. While, the state administrative court focus on judicial review, meaning testing the content of the Jawa Barat Governor’s decree against the legal philosophy of minimum wage and sector based minimum wage as stipulates in the National Labor Regulations, the State Administrative High Court focuses on the object of the lawsuit. Whether or not the Governor’s Decree on wages is a legal object that falls into the domain of state administrative courts.

The High Court asserts that the object of dispute in the district level court case has already expired when the district state administrative court issues the decision to annul the 2017 Governor of Jawa Barat decree in question. Starting 1 January 2018, the disputed decree has no longer in effect. It is already replaced by another decree that regulates the same matters. In other words, at the time of the object of dispute was annulled by the District State Administrative Court, it is no longer valid. Thus, the district Court ascertains null decision for an object of dispute that no longer has legality.

The High court also asserts that the District State Administrative Court is not legally authorized to hear a dispute when the disputed object is exempted from Article 2 letter (a) of Law Number 5 of 1986 on State Administrative Courts System, namely the state administration decision which is a private law act. The High Court sees that minimum wage setting is clearly purely an act of private law, because it is based on agreement made between employers  (associations) and employees (or employee association/union) as stipulated by Labour Act No. 13 of 2003 in conjunction with Government Regulation No. 78 of 2015 on Tripartite Institutions; thus, Governor decree on minimum wage is not the domain of the State Administration Court.

The High Court’s decision gives important lesson for legal practitioners and academics in Indonesia. Although Indonesia recognizes the civil law system in which the decision of higher court judges does not necessarily affecting the lower court’s decision in subsequent cases, the decision of the State Administrative High Court in question redraw the connection between object of dispute with jurisdiction of court system. When an object of dispute is invalidly submitted to a court that is not authorized to hear it, the content of the object of dispute is no longer central.

To, then, submit a disputable Governor decision to the private court system, however, is debatable.  Unlike sales and purchase contract, for instance, minimum wage setting includes a third party, although the legal position indicate as playing a consultative role,  whose position is well founded in determining the outcome of agreement which is the Administration (government).  When a third party action is deemed to as tort or superseding the respective Acts, in the private law concept, whether or not it can be considered an act that cancel a contract which private courts oblige to listen to suit filed by one of the parties directly conducted negotiation is problematic. That “the contract” affects many other parties outside the parties that negotiate the contract, ie all and /or some of the workers in Indonesia, is one of the factors that might perhaps cause Governor’s Decree on minimum wage is unlike object of dispute in the private courts system.

Should Governor’s Decree on minimum wage become one of the object of dispute in the Industrial Relations Court? This is an interesting question labour lawyer, state and labour judges should start to discuss. Indonesian Industrial Relations dispute solely authorized to adjudicate cases of disputes between workers /unions and employers or between unions for matters concerning labor norms. Types of dispute that can be brought to the industrial relations court are very limited. Moreover, the process of filing a case to the court in question is distinct compare to any other courts system. It must go through a regulated outside of court dispute resolutions. Questions that need to be discussed next, in a very narrow meaning of Industrial Relations that it is a work relationship between workers and employers, where is the place of government official or administrative agency decision?



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