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Company Regulation Registration

Written by David J. O. Tuhusula on 24/07/2024
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.

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Introduction

For any business, company regulations are essential to ensure that employees adhere to the rules and laws governing their work. These regulations cover various aspects such as working hours, wages, benefits, safety standards, and more. Adhering to these regulations not only ensures that employees perform their duties correctly but also helps companies avoid legal and financial consequences.

Definition

Company Regulations are rules established by the Board of Director within a company and ratified by the Minister or competent officer to achieve the company’s purpose. The regulations should contain details of the businessman’s rights and obligations, employees’ rights and obligations, terms of employment, and the period of validity, as governed in Article 111 of the Law No. 13 of 2003 on Labor (“Labor Law”). Regulations can expire, must be renewed, and may be amended under applicable provisions.

A company with at least ten employees must prepare company regulations, which may take effect upon the approval of the Ministry or Department of Manpower. Company regulations are valid for at least two years and require renewal.

If company regulations do not comply with the applicable provisions, the Minister or competent official notifies the company in writing to revise the regulations. The company must revise and resubmit the regulations within 14 working days of receiving the notification. Company regulations can also be changed before expiration, provided there is an agreement between the company and the manpower representative. The result of the change must be approved by the Minister or competent official. Companies must notify employees of the contents of the regulations and provide a copy of the manuscript of any changes.

The Importance of Company Regulation

Company rules are created with several objectives, including:

Ensuring a Balance Between Rights and Obligations: Company regulations are crucial for maintaining a fair balance between the rights and obligations of both employers and employees. By clearly outlining what is expected from each party, misunderstandings and disputes can be minimized, promoting a fair and just workplace.
Providing Guidelines: These regulations serve as essential guidelines for employees, ensuring that everyone understands the company’s expectations regarding conduct, performance, and compliance with policies. Clear guidelines help employees know their roles and responsibilities, leading to a more organized and efficient work environment.
Creating Harmonious Work Relationships: Well-defined company regulations contribute to creating harmonious work relationships by setting standards for behavior and interactions within the workplace. This fosters a respectful and collaborative atmosphere, reducing conflicts and enhancing teamwork.
Advancing Company Continuity: Adhering to company regulations is vital for advancing the continuity and stability of a business. Consistent application of rules ensures that operations run smoothly, reduces the risk of legal issues, and supports long-term business sustainability.
Improving Employee Welfare: Company regulations are essential for improving employee welfare by ensuring that fair labor practices are followed. This includes providing adequate wages, benefits, and safe working conditions, which contribute to employee satisfaction and overall well-being.

The Best Time to Do

The best time to establish or renew company regulations is when:

Company Formation: When a company is newly established and needs to set foundational rules and guidelines.
Regulatory Changes: When there is the need to change and/or update the regulation based on the directives of the Board of Director. However, such changes must not be fundamental in a way that violates current manpower laws. For example, the number of hours an employee can work in a week cannot exceed 40 hours.
Company Growth: When a company experiences significant growth or changes in its structure, necessitating new or revised regulations to address evolving needs.
Employee Feedback: When feedback from employees indicates the need for new regulations or amendments to existing ones to improve the work environment.

Benefits

Implementing well-structured company regulations offers numerous benefits, including:

Legal Compliance: Ensures that the company adheres to labor laws and other relevant regulations, thereby avoiding legal issues and penalties.
Clear Expectations: Provides clear guidelines on the rights and obligations of both employees and supervisors, reducing misunderstandings and conflicts.
Conflict Resolution: Establishes a framework for resolving disputes and handling disciplinary issues, leading to a more harmonious workplace.

How to/The Process

Creating company regulations involves several key steps:

Drafting: Draft company regulations that outline the rights, obligations, and other necessary conditions. While adhering to Labor Law, companies can add additional regulations that support the company’s continuity.
Advice from a Labor Representative: Seek input and advice from employees to ensure that the regulations are practical, effective, and reflect the needs of the workforce.
Approval: Submit the draft regulations to the Ministry or Department of Manpower for approval. If revisions are required, revise accordingly within 14 days.

How We Can Help

Putranto Alliance can assist with your company regulations to ensure compliance with labor laws and maintain harmony within your workplace. Our team of experts specializes in corporate and company regulations, and we will work with you to create or extend your regulations to avoid unwanted incidents and ensure compliance with the latest ordinances. With our assistance, you can be confident that your company is operating smoothly and following all applicable laws and regulations

Regulatory Compliance Audits
Putranto Alliance can conduct comprehensive audits of your company’s current regulations to ensure full compliance with labor laws. Our experts will identify any gaps and provide actionable recommendations to address them, safeguarding your business from potential legal issues.
Policy Development and Extension
Putranto Alliance can assist in the development and extension of your company’s regulations, tailoring policies to meet the specific needs of your organization. We ensure that your policies are up-to-date with the latest labor laws and industry standards, fostering a compliant and harmonious workplace.
Dispute Resolution Services
In the event of conflicts or disputes, Putranto Alliance provides expert dispute resolution services. We help mediate and resolve issues effectively, ensuring minimal disruption to your business operations and maintaining a positive workplace environment.
Regulatory Updates and Advisory
Putranto Alliance will keep you abreast of any new ordinances and help you adapt your company policies accordingly.

FAQs

Where should the company regulation be submitted?

If the company has branches, submit it online to the Ministry of Manpower. If there are no branches, submit it manually to the Department of Manpower.

What happens if a company fails to revise its regulations within the 14-day period after receiving a notification from the Ministry or Department of Manpower?

If a company fails to revise its regulations within the 14-day period after receiving a notification from the Ministry or Department of Manpower, the submission will be considered withdrawn.

Can company regulations be amended before the two-year validity period expires?

Yes, company regulations can be amended before the two-year validity period expires, provided there is an agreement between the company and the manpower representative. The proposed changes must be approved by the Ministry or Department of Manpower. Once approved, the company must notify employees of the changes and provide a copy of the updated regulations.

What documents are needed for registering company regulations?

To register company regulations, the following documents are needed:

Manuscript of company regulations (three duplicates, if submitted manually).
Authorization letter.
Letter stating submission of the draft to the labor union.
Statement of the structure and scale of wages.
Photocopy of evidence of participation in Social Security Administrator of Health, Social Security Administrator of Health for Manpower, and other insurance (if any).

What should be included in the company regulation?

The company regulation should include the following:

Rights and Obligations of Employees: Employees have rights such as working in a safe environment, receiving fair wages, and getting training. They also have obligations like complying with company policies and maintaining confidentiality.
Rights and Obligations of Supervisors: Supervisors have rights including being respected and obeyed, and they have the authority to establish company regulations.
Working Conditions: Standards for admission and guidelines for selecting potential employees, suppliers, or partners.
Order: Maintaining harmony, structure, and stability in the corporate environment.
Validity Period: Regulations are valid for two years and must be updated thereafter.

What are the penalties for employees violating company regulations?

The penalties for employees include the following:

Warning Letter: Issued for negligence that harms the company. A maximum of three warning letters can be issued before termination.
Fines or Pay Cuts: Imposed for intentional violations.
Demotion: Can be included in company regulations as a penalty for certain mistakes.
Employee Suspension: A serious penalty given as a last warning before termination.
Termination of Employment: A last resort for repeated mistakes, with specific legal conditions and requirements for severance pay.

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