CASE:GARUDA INDONESIA’S PILOT COMPENSATIONVIRA CANIA ARMAN/ 19009068 MARCH, 2012

Outline- Company Profile- Case Background- Legal aspects that being analyze- Analysis - Conclusion & Suggestion- Q&A

Garuda Indonesia

Established in 1949

Fly to Southeast Asia, East Asia, the Middle East, Europe and Australia

4-star airline by Skytrax

Employs 5,808 staff (as of Dec 2010)

Case Background

In July 28, 2011 for about 564 pilots from Garuda Indonesia stop to work in 12-hours (planned to be 24 hours)

remuneration system discrimination towards local and expatriate pilots

expatriate pilots have twice as much amount of salary compares to the locals

Facts- Unbalanced between the Human Capital Plan and Company Expansion

- The meeting to a dead end

Demand

Fairness of rights and duties of local and expat pilots

Management meet with Pilots and further steps can be taken after that

Legal Aspect

UU No. 13 Tahun 2003, Tentang Ketenagakerjaan (Pasal 91 Ayat 1, 92 Ayat 1 &2 , and 137)

UU No. 19 Tahun 2003, Tentang Badan Usaha Milik Negara (Pasal 87)

UU No. 13 Tahun 2003, Ketenagakerjaan

Pengaturan pengupahan yang ditetapkan atas kesepakatan antara pengusaha dan pekerja/buruh atau serikat pekerja/serikat buruh tidak

boleh lebih rendah dari ketentuan pengupahan yang ditetapkan peraturan perundang-undangan yang

berlaku

PASAL 91 AYAT 1

UU No. 13 Tahun 2003, Ketenagakerjaan

PASAL 92 AYAT 2

Pengusaha menyusun struktur dan skala upah dengan memperhatikan golongan, jabatan, masa

kerja, pendidikan, dan kompetensi.

PASAL 92 AYAT 3

Pengusaha melakukan peninjauan upah secara berkala dengan memperhatikan kemampuan

perusahaan dan produktivitas

UU No. 13 Tahun 2003, Ketenagakerjaan

PASAL 137

Mogok kerja sebagai hak dasar pekerja/buruh dan serikat pekerja/serikat buruh dilakukan secara sah,

tertib, dan damai sebagai akibat gagalnya perundingan.

UU No. 19 Tahun 2003,Tentang Badan Usaha Milik Negara

PASAL 87

Karyawan BUMN merupakan pekerja BUMN yang pengangkatan, pemberhentian, kedudukan, hak

dan kewajibannya ditetapkan berdasarkan perjanjian kerja bersama sesuai dengan ketentuan

peraturan perundang-undangan di bidang ketenagakerjaan.

AnalysisThere’s misunderstanding between the local pilots and the management

NO. CATEGORIES LOCAL PILOT EXPATRIATE PILOT

I Salary / month Rp. 47,7 million US$ 8,100 ( Rp. 68,8 million)

2 Flight Allowance Rp. 10 million (with 60-hours assumption of flight)

already include in salary

3 Benefit Cash /month (TTT, THR, BIT, Insentif/Bonus) 3.5 x Salary

Rp. 13,9 million -

4 Housing Allowance - US$ 1,200 (Rp. 10,3 million)

5 Total Monthly Cash Rp. 71 million (if include Benefit Non Cash (Rp. 83,3 million)

Rp. 79,1 million (If include Benefit Non Cash Rp. 81,35 million)

6 Benefit Non Cash/month (Medical Allowance, Personal Accident Assurance, Lost of Flying License, Iuran Pensiun, Jamsostek, Kesehatan Pensiun, Penghargaan Masa Kerja 20th, Penghargaan Pensiun)

Rp. 12,3 million Rp. 2,25 million

7 Total Annual Cash Rp. 860 million (Rp. 999.6 million) Rp. 949.2 million (Rp. 976.2 million)

Comparison to others pilots

CategoriesGaruda

IndonesiaMalaysia Airlines

Singapore Airlines

Pilot US $ 8,875.00US $ 7,920.00

- 11,550.00US $ 7,640.00

- 13,200.00

UU No. 13 Tahun 2003, Pasal 91 Ayat 1

Commonly stated that between the management and the employee should have an agreement upon the compensation and salary.

Action: The management invited that Asosiasion of Garuda’s Pilot (Asosiasi Pilot Garuda) to sit together and discuss the best solution for the problem. They came up with the Surat Keputusan (SK) Nomor JKDI/SKEP/50129/ 11 tentang Pembentukan Tim Desain Remunerasi Penerbang PT Garuda Indonesia Tbk.

UU No.13 Tahun 2003, Pasal 92 Ayat 1

Bus iness Owner p lan the s t ruc tu re and compensation scale by concerned in job position, work-life, education background and competency.

Action:

- Special reward to appreciate pilot loyalty to Garuda Indonesia (e.g. 20th work anniversary)

- Extend the work-life of pilot from 56 years old now extend to 60 years old

UU No. 13 Tahun 2003, Pasal 92 Ayat 2

B u s i n e s s O w n e r s h o u l d r e v i e w t h e compensat ion system per iodical ly with concerned to company’s ability and productivity.

Action:

- they regularly evaluate the compensation to the employees.

- extend the work-life of pilot from 56 years old to 60 years old

- cut the layer of salaries from 17 to 10 layers

UU No. 13 Tahun 2003, Pasal 137

Stop-to-work action is a right that can be done by the employees / employee’s association it is legal, orderly, peaceful as a result if there’s no agreement between two parties.

Action:

-In July 28, 2011 for about 564 pilots from Garuda Indonesia stop to work in 12-hours (planned to be 24 hours)

UU No. 19 Tahun 2003, Pasal 87

Rights and obligations of BUMN employees determined based on an agreement between two parties and employee rule of law.

Action: The management invited that Asosiasion of Garuda’s Pilot (Asosiasi Pilot Garuda) to sit together and discuss the best solution for the problem. They came up with the Surat Keputusan (SK) Nomor JKDI/SKEP/50129/ 11 tentang Pembentukan Tim Desain Remunerasi Penerbang PT Garuda Indonesia Tbk.

Conclusion

UU No. 13 Tahun 2003, Tentang Ketenagakerjaan (Pasal 91 Ayat 1, 92 Ayat 1 &2 , and 137) and UU No. 19 Tahun 2003, Tentang Badan Usaha Milik Negara (Pasal 87), implemented in this case

This assignment give a better understanding about legal aspects in Indonesia

Suggestion

management should hear opinions from the employees

give an explanation long way before if there’s will be a new regulation that employees might refuse

gathering together so it will reduced the gap between the management and the employees

give an explanation to reduce the misunderstanding between the management and the employee

Question & Answer

Thank you