The minimum wage is fluctuating like never before. The governor of Jakarta has set the minimum wage twice, and the governor of West Java seems to have set a minimum wage increase rate for those earning more than the minimum wage. The Management Association says it is illegal and will take legal action, but how should we respond now?

[Illegality from the perspective of minimum wage setting regulations]

It has been decided that the state minimum wage will be set by November 21st, and the prefectural/city minimum wage by November 30th, and will take effect from January 1st of the following year. From this point of view, the second state minimum wage decided by the Governor of Jakarta has expired, so it can only be set to apply from January 1, 2023. The Employers' Association has said it will sue as illegal, but it is currently unclear whether any action will be effective. On the other hand, in Article 24 of Cabinet Order No. 36 of 2021, Paragraph 1 states that the minimum wage is effective for workers with a period of service of less than one year at the company, and Paragraph 2 states that the wage for workers with a period of service of one year or more is based on the wage composition and scale. In other words, wages for employees who have been with the company for one year or more are set by each company, and the government cannot set them. From this point of view, the length of service decided by the Governor of West Java 1 Salary increases for employees over 20 years of age are invalid as the government does not have the authority to determine them.

[Actual annual wage adjustment method]

Even if it is illegal, there is currently no ruling that it is unconstitutional, so from the employee's perspective, they will probably try to use a decision that benefits them. However, I think there is some concern as to whether this is actually legal and has the effect of imposing obligations on the company. On the other hand, as a company, we are willing to comply if it is legal, but if it is not, we would like to proceed in a manner that is effective for the company, so in order to maintain good labor-management relations, we will have no choice but to take our time. We will first make an annual wage adjustment based on the one that is definitely legal, that is, the lower one, but how about making a promise to pay the difference retroactively to the time when it becomes clear that the new decision is legal after a ruling from the unconstitutional court is issued? I think it would be better to calculate how to calculate the difference and agree on the method. For example, in the case of Jakarta, ``all employees will be paid the difference between the minimum wage determined in the first and second decisions,'' and in the case of West Java, ``each individual will calculate the difference between the mandated salary increase rate and the actual salary increase rate and pay it to all employees.'' Some companies do not adjust annual wages at the same salary increase rate for all employees, and there is also an appraisal, so giving all employees the same rate of increase can be detrimental. In that case, it would be possible to set a bear. If the difference between the bare rate and the mandated salary increase rate is paid as necessary, there is no need to restore the amount when a ruling is made that it is unconstitutional. Please consider this.

Related legislation: Decree No. 36 of 2021 PP-36/2021