Introduction

In 2019, a manufacturing company in West Java faced a heated dispute with a group of employees over unpaid overtime. After failed bipartite and mediation efforts, the case escalated to the Industrial Relations Court (Pengadilan Hubungan Industrial – PHI). For the company, this was a critical test of compliance and dispute resolution strategy.

What Is PHI?

The PHI is a specialized court under the general judiciary system in Indonesia, tasked with resolving employment-related disputes, such as:

• Termination disagreements
• Rights disputes (e.g., wages, leave)
• Interest disputes (e.g., collective bargaining deadlocks)
• Union disputes

Legal Framework and Process

The PHI operates under:

• Law No. 2 of 2004 on Industrial Relations Dispute Settlement
• Law No. 13 of 2003 on Manpower

The process generally follows these stages:

1. Bipartite Negotiation – Direct talks between employer and employee.
2. Mediation/Conciliation – Conducted by the local manpower office.
3. PHI Filing – If no agreement, either party can file a case in PHI.
4. Court Proceedings – Judges review evidence, witnesses, and arguments.
5. Decision & Appeal – Verdicts can be appealed to the Supreme Court.

Real Case in Indonesia

The West Java manufacturer eventually lost part of the dispute because it failed to provide written evidence of overtime payment. The PHI ruled in favor of employees, ordering back pay plus penalties. This case highlights the importance of documentation and proactive dispute management.

Strategies for Employers

• Maintain Proper Documentation – Payslips, contracts, attendance records.
• Invest in Preventive HR Practices – Clear company regulations and compliant contracts.
• Engage Early with Mediation – Settlement is faster and less costly than litigation.
• Seek Legal Expertise – Local legal counsel ensures compliance with procedural rules.
• Foster Union Relations – Transparent engagement reduces escalation risks.

Conclusion

The PHI is not a forum employers can take lightly. Success depends on compliance, documentation, and strategic negotiation. For foreign employers in Indonesia, approaching disputes with preparation and fairness is the best way to navigate the PHI process.

References

• Law No. 2 of 2004 on Industrial Relations Dispute Settlement
• Law No. 13 of 2003 on Manpower
• Supreme Court of Indonesia, Annual Report on Industrial Relations Cases
• Ministry of Manpower, www.kemnaker.go.id