Report in which the committee requests to be kept informed of development - Report No 350, June 2008

Case No 2589 (Indonesia) - Complaint date: 01-AUG-07 - Closed

Allegations: The complainant alleges that the PT Cigading Habeam Centre Company locked out and subsequently dismissed 480 workers for negotiating a wage increase and planning to stage a strike; the day after the lock out (5 February 2005), the employer resumed operations jointly with the Baladika cooperative which is owned by the army and used outsourced workers provided by the cooperative while the military guarded the premises to keep away the dismissed workers. The complainant also alleges that the military intimidated workers into resigning from the company and shot blanks at demonstrators who were protesting their dismissal in front of the employer’s premises, injuring two persons

1. 930. The complaint is contained in a communication of the Federation of Metal, Machine and Electronic SBSI Trade Union (Federation of Lomenik SBSI) dated 1 August 2007.
2. 931. The Government sent its observations in a communication dated 1 February 2008.
3. 932. Indonesia has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), and the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. The complainant’s allegations

1. 933. In a communication dated 1 August 2007, the complainant Federation of Lomenik SBSI alleges that on 7 January 2005, 400 workers affiliated to the complainant in PT Cigading Habeam Centre Company which is engaged in steel construction and is located in Kota Cilegon Banten, planned to organize a peaceful strike to demand a 14 per cent wage increase for 2005. They sent the relevant notice to the employer and the district government. The employer brought the case to the Manpower Department for settlement. Military staff from the special forces of Serang Banten were present during the negotiations. There was a negotiation deadlock and the trade union decided to take strike action on 7 February 2005. It sent the relevant notice on 31 January 2005, as required by law.
2. 934. According to the complainant, on 4 February 2005 the employer, PT Cigading Habeam Centre Company, decided to close the company down, thus preventing 480 workers from working, without giving the necessary seven-day notice as required by Act No. 13/2003. The next day, 5 February 2005, the employer started to run production in the company jointly with the Baladika cooperative which is owned by the army, and in particular, the Special Forces Group I of Banten. With military support, the employer started using outsourced workers from the Baladika cooperative while the military guarded and operated the company. By 8 September 2006, almost 420 workers from the Baladika cooperative operated the company guarded by the military.
3. 935. The complainant alleges that on 18 February 2005, the Special Forces Group I Vice-Commander Letkol Sumardi and the Director of PT Cigading Habeam Centre intimidated the members of Lomenik SBSI into resigning from the company. Until 1 August 2007, an average of 250 workers had resigned under duress by the military. For instance, they signed the agreement to resign at the special army office in the barracks of Serang Banten.
4. 936. On 25 September 2005, the National Settlement Department of Manpower in Jakarta decided to accord an 8 per cent wage increase to the workers. However, on 29 September 2005, the National Settlement Department of the Ministry of Manpower decided (decision No. 1547/557/24-8/X/PHK/9-2005) to authorize the employer’s decision to dismiss 480 workers members of Lomenik SBSI in PT Cigading Habeam Centre, contrary to Act No. 13/2003 on strikes and Act No. 2/2004 on the right to organize and collective bargaining as well as Conventions Nos 87 and 98.
5. 937. On 21 March 2006, an average of 60 members of the special forces carried out a military exercise in Cigading Habeam Centre Company while 100 workers were demonstrating in front of the company to protest their dismissal and the illegal operation of the company jointly with the army cooperative. Approximately 60 soldiers with two military vehicles and one helicopter shot blanks at the demonstrators, causing them shock and injuring two of them. The complainant attaches pictures from the incident and adds that the military continued its exercise for a week.
6. 938. On 25 August 2006, the complainant brought the case to the Supreme Court. The complainant adds that most of the dismissed workers have still not found alternative employment and have suffered great prejudice due to their trade union activity.

B. The Government’s reply

1. 939. In a communication dated 1 February 2008, the Government indicates that the dispute in PT Cigading Habeam Centre began when the workers requested a wage increase of 14 per cent while the Governor’s decree for the year 2005 regarding the regional minimum wage stipulated that the maximum increase would be 6 per cent. In response to the workers’ request, the company was willing to agree to an increase of 8 per cent. However, at the bipartite negotiation on 17 January 2005 the workers insisted on a wage increase of 14 per cent. On 31 January 2005 the trade union officer at plant level (PK Lomenik SBSI) sent a letter to the director of PT Cigading Habeam Centre emphasizing that the trade union insisted on its demand and that if within a week it did not receive a response from the company, the workers would stage a strike on 7 February 2005. Based on the union’s letter, the employer agreed to conduct the second round of bipartite negotiations on 2 February 2005 but there was no agreement.
2. 940. To prevent the strike, on 4 February 2005, the Cilegon Manpower Regional Office invited the company as well as the union for mediation. But without company permission the majority of workers left the factory location in order to express solidarity during the mediation. On the other hand, the company considered that the mediation had disturbed the factory working process and cancelled the mediation meeting. To express its disappointment the company sent a letter dated 5 February 2005 to Cilegon Manpower Regional Office informing it that it had closed down as of 4 February 2005 for the following reasons: (1) all workers left the factory at 1.30 p.m. without permission; (2) all company staff resigned due to “inability to overcome the workers”. Following this letter, the company submitted a letter dated 12 April 2005 seeking authorization from P4P to dismiss all 481 workers underlining as the main reason the financial loss suffered for the past two years. The P4P authorized the dismissals in letter No. 1547/557/24-8/X/PHK/9-2005 dated 29 September 2005 which provided that: (i) 186 workers (Mrs Dimyati Darmayadi and colleagues) had received severance pay and other benefits as agreed in the negotiation statement letter; (ii) 295 workers (Mr Saridjo and partners) had received on 28 February 2005: severance pay under section 156(2) of the Labour Act No. 13/2003; reward for length of service under section 156(3) of Act No. 13/2003; compensation for housing allowance, medical and health-care allowance amounting to 15 per cent of the total severance pay and reward for length of service under section 156(4)(c) of Act No. 13/2003; compensation for entitlements such as annual leave under section 156(4)(a) of Act No. 13/2003; wages of February 2005.
3. 941. With regard to the dispute on the workers’ request to increase wages by 14 per cent, the decision of the P4D in Banten Province was to: (i) order the employer to reactivate the company; (ii) order the workers to resume work in the company; (iii) decide a wage increase of 8 per cent for 2005; (iv) order the company to pay the workers salary not received yet by the workers during the dispute settlement process (February, March and April 2005); (v) order the company to sanction those leaving the factory without permission as stipulated under the collective agreement for the year 2004–05; (vi) declare the decision binding for the company and the workers and order that its execution be supervised by the labour inspection of the Cilegon Manpower Regional Office.
4. 942. However, the company lodged an appeal against the P4D decision and the P4P decision No. 96/PHI/P4D/IV/2005 of 27 April 2005 changed the previous one as follows: (i) refused the demand made by the union for a wage increase and granted the company’s offer of an 8 per cent increase; (ii) refused the other demands raised by the union; (iii) ordered that the execution of the decision be supervised by the labour inspection of the Cilegon Manpower Regional Office.
5. 943. The workers appealed this decision of the P4P as well as the decision on the dismissal of 481 workers to the Supreme Court. In its meeting of 2 June 2007, the Supreme Court decided to refuse the application for judicial review concerning the 481 workers.
6. 944. With regard to the allegations of violation of Conventions Nos 87 and 98, the Government indicates that the company denied the allegation of involvement in the dispute of a special forces commander. The company argued that the officer in question had no relation or involvement in the process of settlement of the union’s request to increase wages by 14 per cent.

C. The Committee’s conclusions

1. 945. The Committee recalls that this case concerns allegations that the PT Cigading Habeam Centre Company locked out and subsequently dismissed 480 workers (481 according to the Government) for negotiating a wage increase and planning to stage a strike; the day after the lock out (5 February 2005), the employer resumed operations jointly with the Baladika cooperative which is owned by the army and used some 420 outsourced workers provided by the cooperative while the military guarded the premises to keep away the dismissed workers. The complainant also alleges that the military intimidated workers into resigning from the company by having them sign resignation forms in the army barracks on 18 February 2005, leading to some 250 resignations by August 2007. They add that on 29 September the National Settlement Department of the Ministry of Manpower decided to authorize the employer’s decision to dismiss the 481 workers, despite the fact that four days earlier the same Department had decided to order an 8 per cent wage increase to the same workers. They finally allege that on 21 March 2006 approximately 60 soldiers with two military vehicles and one helicopter shot blanks at workers protesting in front of the employer’s premises, causing them shock and injuring two persons.
2. 946. The Committee notes that according to the Government, on 4 February 2005, instead of attending a mediation meeting organized by the Cilegon Manpower Regional Office in the light of an impending strike, the PT Cigading Habeam Centre Company closed down and sent a letter to the authorities the following day, informing them that the factory’s closure was due to the fact that all workers had left the factory the previous day at 1.30 p.m. to express solidarity outside the mediation meeting. Moreover, on 12 April 2005 the PT Cigading Habeam Centre Company sought authorization from P4P to dismiss all the 481 workers, not on the ground that they had left work without permission, but on the ground that it had been suffering losses. The P4P authorized the dismissals on 29 September 2005, noting that of the 481 workers, 186 had agreed to a negotiated settlement and 295 workers had received severance pay and other benefits as provided for in the Labour Act No. 13/2003. The workers appealed this decision to the Supreme Court, but on 2 June 2007, the Supreme Court refused the application for judicial review. The Committee recalls that although the use of internal legal procedures, whatever the outcome, is undoubtedly a factor to be taken into consideration, the Committee has always considered that, in view of its responsibilities, its competence to examine allegations is not subject to the exhaustion of national procedures [Digest of decisions and principles of the Freedom of Association Committee, fifth edition, 2006, Annex I, para. 30].
3. 947. The Committee deeply regrets that the Government does not provide a reply to the allegations that the company’s closure and subsequent reopening the next day as a joint operation with a cooperative run by the army, using some 420 outsourced workers provided by the cooperative, were aimed at preventing an impending strike and putting a unilateral end to an industrial dispute, notably by dismissing all the 481 workers of the company. Moreover, the Committee observes that in authorizing the dismissals of the 481 workers of PT Cigading Habeam Centre Company, the P4P apparently did not examine the allegations of the anti-union nature of the dismissals nor does it appear that the allegations that an army commander along with the company director had intimidated several workers into signing statements of resignation at the army barracks were examined. With regard to this latter point, the Committee notes that the Government simply forwards a statement by the company denying the allegations.
4. 948. The Committee has always recognized the right to strike by workers and their organizations as a legitimate means of defending their economic and social interests. The Committee further recalls that acts of anti-union discrimination should not be authorized under the pretext of dismissals based on economic necessity and that the application of staff reduction programmes must not be used to carry out acts of anti-union discrimination [Digest, op. cit., paras 521, 795 and 796]. The Committee finally emphasizes that the Promotion of Cooperatives Recommendation, 2002 (No. 193), calls on governments to ensure that cooperatives are not set up or used for non-compliance with labour law or used to establish disguised employment relationships [Digest, op. cit., para. 261].
5. 949. In light of the above, the Committee requests the Government to institute an independent investigation into the allegations that the closure of the PT Cigading Habeam Centre Company and its subsequent reopening as a joint operation with a cooperative run by the army were aimed at putting a unilateral end to an industrial dispute and preventing the staging of a strike, notably by dismissing all the 481 workers of the company. If the allegations are confirmed, it requests the Government to take all necessary measures to reinstate the 481 dismissed workers as primary remedy; if the judicial authority determines that reinstatement of trade union members is not possible for objective and compelling reasons, adequate compensation should be awarded to remedy all damages suffered and prevent any repetition of such acts in the future, so as to constitute a sufficiently dissuasive sanction against acts of anti-union discrimination. The Committee requests to be kept informed in this respect.
6. 950. Finally, the Committee notes with deep regret that the Government does not provide a reply to the allegations that the army has had an extensive involvement in the industrial dispute in question, to the point that: (i) military staff from the special forces of Serang Banten were present during negotiations between the trade union and the company prior to its closure; (ii) since February 2005 the military has guarded the company premises to keep away the 481 dismissed workers; (iii) the Special Forces Group I Vice-Commander Letkol Sumardi intimidated members of the complainant trade union into resigning from the company leading to an average of 250 resignations under duress until 1 August 2007; (iv) on 21 March 2006, in the framework of a military exercise taking place within the company premises, approximately 60 soldiers with two military vehicles and one helicopter shot blanks at workers protesting in front of the company, causing them shock and injuring two persons. The Committee, deeply regretting the allegations of extensive involvement of the army in the industrial dispute at PT Cigading Habeam Centre Company, and the alleged acts of intimidation and violence towards the dismissed workers, requests the Government to institute an independent investigation into the allegations and if they are confirmed, to punish those responsible and issue appropriate instructions so as to prevent the repetition of such acts. The Committee requests to be kept informed in this respect.

The Committee's recommendations

1. 951. In the light of its foregoing conclusions, the Committee requests the Governing Body to approve the following recommendations:
   • (a) The Committee requests the Government to institute an independent investigation into the allegations that the closure of the PT Cigading Habeam Centre Company and its subsequent reopening as a joint operation with a cooperative run by the army, were aimed at preventing the staging of a strike and putting a unilateral end to an industrial dispute, notably by dismissing all the 481 workers of the company. If the allegations are confirmed, it requests the Government to take all necessary measures to reinstate the 481 dismissed workers as primary remedy; if the judicial authority determines that reinstatement of trade union members is not possible for objective and compelling reasons, adequate compensation should be awarded to remedy all damages suffered and prevent any repetition of such acts in the future, so as to constitute a sufficiently dissuasive sanction against acts of anti-union discrimination. The Committee requests to be kept informed in this respect.
   • (b) The Committee, deeply regretting the allegations of extensive involvement of the army in the industrial dispute at PT Cigading Habeam Centre Company, and the alleged acts of intimidation and violence towards the dismissed workers, requests the Government to institute an independent investigation into these allegations and if they are confirmed, to punish those responsible and issue appropriate instructions so as to prevent the repetition of such acts. The Committee requests to be kept informed in this respect.