The Differences Between Company Regulations and Collective Labor Agreement for Business Entities in Indonesia

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Company regulation and collective labor agreement regulated in the field of labor law in Indonesia. The legislations of those main topic are The Law of Republic of Indonesia No.13/2003 about Labor and The Regulations of The Ministry of Manpower and Transmigration No.24/2014 about The Procedure of Establishment and Ratification, and Establishment and Registration of Collective Labor Agreement.

Company regulation is a written regulation by the company to regulate the terms of employment and company order for every each employer in the company. The forming of company regulation is formed by the company in the manner of considerate the recommendations by the labor union and became the company liabilities also responsibilities to form and execute the company regulation. The company regulation shall be regenerate every 2 (two) years and be valid for the parties after the ratification. The company regulation is an obligation for a company which have employed 10 (ten) employers or more, unless the company have had a collective labor agreement.


Collective labor agreement is proceeds of negotiatons between a one or more labor unions have listed in the responsible institutions in the field of labor law in Indonesia with one or more companies which have the terms of employment, the rights and obligations of the parties. Collective labor agreement be formed by labor union had listed in the authority instituition with the company. The company could only have one collective labor agreement in one period of time. Principally, collective labor agreement is an agreement in a field of civil law, as of the collective labor agreement be valid to the parties after the parties signed the agreement. Following the validation of the collective labor agreement, the company or any other authorized party shall be registered to the institution. The collective labor agreement regenerate every 2 (two) years and could be extended into 1 (one) year.


The are several differences between company regulation and collective labor agreement, as follows:

  •    Company regulation is an agreement between the company and the employer as an individual which listed the terms of employment, rights, and obligations of the party. Instead, the collective labor agreement is the proceeds of negotiation between the company and the labor union which has listed as company regulation regulates, but the difference is the collective labor agreement is the principal agreement for a company; 
  •       Company regulation be formed by individual party and a company, but the collective labor agreement be formed by a labor union and a company;
  •     Company regulation could be form into two types, written and unwritten, but collective labor agreement should be form in a written agreement;

    ·   Company regulation could be valid for a particular time equitable to the employer (PKWT or PKWTT) but collective labor agreement could only be valid for 2 (two) years and be extended for 1 (one) year.

As the ilation of the topic above, the company regulation and collective labor agreement is two different agreements for a company and employer to execute their main business. The thing which should be emphasized that those two agreements are an obligations for the company and the employer to ensure the existences to enforce the legislations in Indonesia. In terms of a company does not form any company regulation or collective labor agreement, the law has been providing the sanctions of each breach has been done by the company or the employer.


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