1. LEGAL ASPECT IN
COMPENSATION
Nike/PT Nikomas Case
Muhammad Luthfihadi K.
(19009134)

2. Compensation
• Compensation is referring to all forms of financial returns and
tangible services and benefits employee receive as part of an
employment relationship. (Milkovich, G., Newman, J., 2008)
• Compensation is the total amount of the monetary and non-
monetary pay provided to an employee by an employer in
return for work performed as required. (Heathfield, S., 2010)

3. The Legal Aspect
“Overtime Compensation”
(Upah & Waktu Kerja Lembur)
The Law :
•UU Republik Indonesia No. 13 Tentang Ketenagakerjaan
•Nomor KEP.102/MEN/VI/2004 Tentang Waktu Kerja Lembur
dan Upah Kerja Lembur

4. Overtime Compensation
“A compensation that paid to the labor/employee
who doing their job on the outside time of their
normal work time,
which based on the government rule and
employers contract.”

5. CASE STUDY
Nike/ PT Nikomas

6. Brief Profile
• NIKE, Inc. (NIKE), incorporated in 1968, is engaged in design,
development and marketing of footwear, apparel, equipment
and accessory products. NIKE is a seller of athletic footwear
and athletic apparel in the world. The Company sells its
products to retail accounts, through NIKE-owned retail stores,
and Internet sales, and through a mix of independent
distributors and licensees, in over 170 countries around the
world.
• PT Nikomas subsidiary company of Pou Chen Group, a
footwear manufacturer in Indonesia which produce many
international brand of footwear, including Nike

7. Nike/ PT Nikomas Case (1)
• Nike factory workers at PT Nikomas typically work from 7am-3pm.
This is followed by three hours of paid overtime.
• Following their regular shift and paid overtime hours, the factory
workers are then told by their supervisors to punch out on the time
clock. Once your workers are off the clock, they are forced by their
supervisors to get back on the production line for one hour of
unpaid overtime.
• This hour of forced, unpaid overtime happens primarily in the
sewing divisions and includes approximately 6,633 Nike factory
workers.
• Nike factory workers are being forced to work this unpaid hour 6
days a week.
• Has been happening for 18 years.

8. Nike/ PT Nikomas Case (2)
• Mr.Chen (Senior Manager of PT Nikomas), deny all of the
allegation
• “There is no fourth hour (of) overtime.”
• Deny of practice “jam molor” had been happening for 18
years.
• “We abide by government labor law, and Nike CLS (Code
Leadership Standards). “

9. Nike/ PT Nikomas Case (3)
Reaction from Nike Headquarter :
After 5 months, from the early allegation Nike, finally
conducting an investigation to PT. Nikomas, and finding out
“a strong case” of workers unpaid overtime.
PT Nikomas Responding (Again)
Admitted receive an enormous complaints of unfair labor
practices. Will following up by hiring independent 3rd
party (Fair
Labor Association) for auditing

10. Nike/ PT Nikomas Case (4)
Reaction from Serikat Pekerja Nasional (SPN)
Doesn’t trust PT Nikomas for hiring FLA for auditing their
company
Feels only desperate step taken by the management team

11. Final Result
• The Allegation start February 2011
• The Decision & deal made in January 2012
• 4,437 Nike factory workers will be paid $1 million dollars or
Rp9,1 billion for overtime they were forced to do without
payment.
• The settlement between SPN and the factory management
reflects 593,468 of unpaid overtime hours that workers put in
sewing Nike sneakers at the plant during the past two years.

12. Critical Review (1)
Undang-Undang Republik Indonesia No. 13 Tentang
Ketenagakerjaan
1 hours more than the law allowed
4 hours X 6 days = 24 hours overtime/week
(10 hours more than the law allowed)

13. Critical Review (2)
Nomor KEP.102/MEN/VI/2004 Tentang Waktu Kerja Lembur dan
Upah Kerja Lembur
Pasal 8
Overtime compensation-> 1/173 X Rp1.285.000 = Rp7.427
Pasal 11
Overtime hour 1 -> 1,5 X Rp7.427 = Rp11.140
Overtime hour 2 -> 2 X Rp7.427 = Rp14.854
Overtime hour 3 -> 2 X Rp7.427 = Rp14.854
Overtime hour 4 -> 2 X Rp7.427 = Rp14.854

14. Suggestion
For Nike
They should have a representative in every continent, so they can look and monitor
more closely. Because, I think 11 months of complaining until taking action is a really
long time for a world class company to take action of wrongdoing in their sub-contract
company.
For PT Nikomas
What I think is there should be a better communication with the employee as the
complaint from SPN, ‘the wrongdoing’ has been lasted for 18 years means that, PT
Nikomas not socializing the rights of their workers, including the overtime limit.
In other hand, some of the workers maybe will not complaining doing more extra hours
than the law regulating, as long as the company as them. So, communication is the key
For Workers
Always know your rights as a worker. How? It simply needs to read the government law,
which will be very beneficial for the prospect the workers itself. So, they won’t be
manipulated and cheated easily by their employers. Also, the union workers is is to
make a bridge from workers to the Management people to communicate.

15. Conclusion
• Can’t say the law is right or wrong
• However, what I can say is the law exist because some reason,
and the reason is surely intended to give benefit to all parties.
• Will limit the power of both parties, to make balance
• Like it or not whoever we are we must obey the law so that
the difference perspective at least can be minimalize

16. THANK YOU