Optimizing Employee Productivity In The Post-Pandemic Era: Company's Right To Transfer and Demote

The Covid-19 pandemic, lasting for over 2 years, has had a significant impact on the business and industrial landscape. Many companies have been forced to adjust their business strategies to survive and thrive amidst an uncertain situation. One aspect that needs to be considered is human resource management.

In order to enhance human resource productivity, some companies may have already considered or are currently contemplating transferring or demoting their employees with the aim of improving employee performance, team balance, or even enhancing operational efficiency. However, companies should exercise prudence in exercising their right to transfer or demote and ensure compliance with the applicable laws and regulations.

Employee Transfer

According to the Kamus Besar Bahasa Indonesia (“KBBI”), "Employee Transfer" refers to the relocation of an employee from one position to another, involving changes in form, quality, or other attributes. Employee Transfers are typically carried out by companies with branch offices and are a strategy to allocate the right human resources in accordance with the company's needs.

Based on Article 32 of Law No. 13 of 2003, as amended by Government Regulation in Lieu of Law No. 2 of 2022 (“Labor Law”), companies must adhere to the following principles when carrying out transfers:

• Transparency

Transparency entails the company's obligation to provide explanations regarding job types, wage rates, and working hours.

• Freedom

Freedom means there should be no coercion for both the company to accept employees and for employees to accept a particular job.

• Objectivity

Objectivity requires the company to offer job types to employees that align with their abilities and the requirements of the positions. Additionally, the company must consider public interests and avoid favoring specific parties.

• Fair and equal without discrimination

Fair and equal treatment without discrimination means that the selection of employees for specific positions should be based on their abilities, without considering race, gender, skin color, religion or political affiliation.

Based on above principles, provisions regarding Employee Transfers should be clearly outlined in company regulations, collective labor agreements, and/or fixed-term employment agreements. If Employee Transfers are not covered in the company regulations or fixed-term employment agreements, the company must obtain the employee's consent before implementing an Employee Transfer policy.

Furthermore, the company must also adhere to the wage regulations when implementing Employee Transfer policies. Article 88E Paragraph (2) of the Labor Law states, "Employers are prohibited from paying wages lower than the minimum wage"

Based on the explanation provided in Article 88E Paragraph (2) of the Labor Law, when conducting Employee Transfers, companies must consider the employee's wages in accordance with the minimum wage at the location where the employee is being transferred.

Employee Demotion

According to the KBBI, "Demotion" refers to the reassignment of an employee to a lower position. With a demotion, the employee's salary, and allowances (if any) will be reduced.

Salary reduction due to Demotion can be implemented by the company based on Article 92 Paragraph (1) of the Labor Law, which states that "Employers are obliged to establish wage structures and scales in the company, taking into account the company's capacity and productivity"

Referring to the above explanation, if a company demotes an employee resulting in a reduction of salary and/or allowances, the company must be able to demonstrate that there has been a decrease in work performance that has impacted the productivity of the company and/or the employee.

Furthermore, the company must also ensure that the salary reduction does not fall below the minimum wage set by the applicable regulations. Similarly, to Employee Transfers, it is advisable for the company to establish provisions regarding the company's right to demote employees in its company regulations.

- Jennyke Setiono-