Efforts to Prevent Disputes by Understanding LaborCompliance Strategies

In an increasingly complex business environment, compliance with labor regulations is not merely an administrative obligation but also a vital strategy to maintain reputation, operational stability, and harmonious industrial relations. In Indonesia, labor law protects the fundamental rights of workers guaranteed by the Constitution, both through the implementation of regulations and legal mechanisms. Lawyers have a professional responsibility in dispute resolution, whether through litigation or non-litigation, in accordance with the Advocate Law.

The Complexity of Industrial Relations in Indonesia

Labor issues represent one of the key aspects of economic and social development. Alongside industrialization and economic growth, the relationship between workers and companies has become increasingly complex. Companies often face pressure to remain competitive, which sometimes leads to decisions involving termination of employment (PHK). Many disputes arise from a lack of understanding or improper implementation of labor regulations. With the growing labor force, creating adequate employment opportunities remains a major challenge for the government.

Labor Compliance Strategies to Prevent Disputes

Below are labor compliance strategies that can help companies prevent conflicts from arising:

1. Regular Internal Compliance Audits
   Conduct internal audits of labor aspects, including wage structure, employment status, working hours, overtime, and social security. This helps identify potential areas of noncompliance before they result in legal consequences. Such audits ensure that HR policies and procedures are aligned with the latest regulations.
2. Clear and Legally Compliant Employment Agreements
   Many disputes arise from employment agreements that do not comply with the law — for example, the use of Fixed-Term Employment Agreements (PKWT) for permanent positions or the failure to clearly state rights and obligations. Preparing accurate and comprehensive contracts is essential to minimize potential conflicts.
3. Proactive Legal Consultation
   Regular consultation with legal advisors or internal compliance teams familiar with labor regulations enables companies to stay ahead of legal changes, such as those under the Job Creation Law, Government Regulation No. 35 of 2021, and its implementing rules. This proactive approach not only avoids administrative sanctions but also fosters a fair, transparent, and sustainable work environment.

Compliance as a Sustainable Business Strategy

Labor compliance is not merely a legal requirement but also a long-term business strategy. Companies that consistently uphold compliance principles are better equipped to minimize dispute risks, maintain employee trust, and ensure that all workplace policies and practices align with the law.

Author:
Ni Putu Ayu Mandalay Shasa Alba Chiara, S.H.
Editor:
Anak Agung Made Shintya Dewi
Advisory Board:
I Wayan Sudarsana, S.H.
Anak Agung Alit Juliarta, S.Pd., S.I.Kom., M.Par.

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