EXTERNAL ASSESSMENT REPORTALLIANCE ONE INDONESIA
Burley farmers in Lumajang

Agricultural Labor Practices Program

November, 2016

External Assessment

Table of Content
Executive summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Market and company background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1. Implementation of the ALP Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.1. Commitment to the ALP Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.2. Strategy and objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.3. Internal capacity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.4. Communication of the ALP Code requirements to farmers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.5. Internal monitoring: data collection, accuracy, and addressing issues. . . . . . . . . . . . . . . . . . . . . 16
1.6. Address systemic and/or widespread issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

2. Farm-level assessment of living and working conditions
in regards to the ALP Code Standards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1. ALP Code Principle 1: Child labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2. ALP Code Principle 2: Income and work hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.3. ALP Code Principle 3: Fair treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.4. ALP Code Principle 4: Forced labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.5. ALP Code Principle 5: Safe work environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.6. ALP Code Principle 6: Freedom of association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.7. ALP Code Principle 7: Compliance with the law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

3. ALP Program: feedback from farmers, workers, and other stakeholders . . . . . . . . . . . . . 30
4. Appendices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Appendix I – PT. AOI Action Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Appendix II – Scope and methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Appendix III – Legal information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Appendix IV – Communication materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Appendix V – Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Executive summary

EXTERNAL ASSESSMENT
Alliance One Indonesia

External Assessment

In September 2016, Philip Morris International(PMI) requested Control Union (CU) to conduct
an external assessment of the Burley tobacco
growing operations of its supplier PT Alliance One
Indonesia (PT. AOI) in Lumajang, East Java region.
The assessment evaluated the labor practices atcontracted farms and whether these were meetingthe standards of the Agricultural Labor Practices(ALP) Code.1 CU also evaluated PT. AOI’s internal
capacity to implement the ALP Program, theirunderstanding of farm practices, and how issues
were being identified, recorded, and addressed.

During the assessment, CU noted that PT. AOI’s had
clear objectives for the implementation of the ALP
Program but a more robust review of the progressand overall ALP Program performance was needed.

CU interviewed 14 PT. AOI’s employees, one PMI
Asia Regional representative, one HM Sampoerna(HMS – PMI’s local affiliate) employee and one
external stakeholder from the University of Jember.
Over two weeks Control Union visited 23 farms 2 inLumajang and interviewed 23 farmers, 14 family
members and 15 hired workers. One extra field day
was assigned to assess Prompt Actions reported onfour farms prior to the external assessment. All thefarm visits were unannounced.

Accountability was limited, as some members of theteam did not included ALP related activities and intheir job descriptions. In addition, in the cases were
job descriptions did include ALP, these were the samefor various positions. Instead of focusing on actual
behavioral change at the farms, ALP-related targets
focused mainly on the numbers of farmers reached
by initiatives to address issues and ALP principles
monitored per year. While other STP project
initiatives were developed annually, initiatives toaddress widespread ALP issues had been the same
since the beginning of the implementation.

An
information
triangulation
methodology
was used to evaluate farm practices. The threesources included interviews, documentation andobservation, together with problem analysis (“Five
Whys Analysis”). The “Plan, Do, Check, Act” cycle
was adopted for analyzing PT. AOI’s management
approach.
In 2001, Alliance One, via one of its predecessor
companies, started working with the Burley farmers
in the Lumajang area. Since 2005, Alliance One
Indonesia joined forces with a local company toimprove the quality and sustainability of tobacco
production. In 2011, Alliance One Indonesia
introduced PMI’s Agricultural Labor Practices(ALP) Program, and formally rolled it out to all their
farmers in 2012.

1.

2.

As a subsidiary company, PT. AOI adheres to AOI’s
global policies on Corporate Social Responsibility
and child labor. Although employees wereindividually committed, the internal organization
was still developing and looking for the best structure
to tend to all Sustainable Tobacco Production (STP)
related projects and programs.

To communicate the policies and practices, PT. AOI
used several communication methods and materials.
The materials were professionally designed andclearly laid out but were only printed in Bahasa,
while some farmers and workers preferred toread in Madurese or Javanese. Furthermore,communication materials lacked information on
legal matters leading to farmer’s unawareness oncertain labor issues, as they received limited legal
information from PT. AOI.
Almost all farmers and the majority of family
members were aware of the ALP Program; however,more than half of the external workers were
unaware. While CU found that the level of general

The main goal of the ALP Code is to eliminate child labor and other labor abuses progressively where they are found,and to achieve safe and fair working conditions on all farms from which PMI sources tobacco (see link). For more
information on the background of the ALP Program see link.
The minimum sample size was 23 farms, which is the square root of the total number of farms within the scope (533
at the time of the assessment). All the visited farmers were interviewed.
4External Assessmentawareness among farmers and family members on
ALP Code Principles was in line with the targeted
focus areas of child labor, income and working hours
and safe work environment, knowledge gaps wereidentified in other principles.
Field technicians mainly reported situations notmeeting the standard related to child labor and safe
work environment, which resulted in an extensive
database to address widespread issues. However,
only a few income and work hours were reported as
situations not meeting the standard, while CU foundmany farms at which this ALP Code measurable
standard was not being met. The same procedure
was used for reporting issues irrespective of thelevel of risk and urgency. Considering that mostof the information was accurate and that thedifferences in the data were mainly due to changes
on the farm occurring after the last Field technician
visit we can conclude that PT. AOI strategy tomonitor and collect data in the field is efficient andreliable. In any case, PT. AOI could improve somedata gathering procedures (for instance, whenissuing prompt actions) in order to use the system
to its full potential.
Although the ALP team members had extensive
experience in the tobacco sector, and used it toaddress issues and conduct a risk assessment in2015, an in-depth root cause analysis to explain
the reasons for those issues was lacking. The
partial identification of risks and issues resulted in
an inability to address issues effectively. While animportant behavioral change at the farms regarding
the involvement of farmers’ children was evident
during the farm visits, a lack of use of proper safety
PPE and harvesting clothing was identified, despite
the efforts made by the company to address theseissues.
Additionally, the definition and approach to Prompt
Actions seemed to be misunderstood as situations
not meeting the standard were also treated andreported as Prompt Actions. Finally, even though
field technician trainings resulted in a goodunderstanding of the ALP Code, Control Union

found a lack of awareness of related legal aspects at
the farm level.
CU’s assessment demonstrates that complex labor
issues were still present on tobacco farms in the
Lumajang region, including a lack of awareness oflegal issues, excessive work hours, salaries below theminimum wage, lack of formalization of employment,
and limited safety measures. The farm assessments
revealed that most labor issues in Lumajang were
due to two main causes: insufficient awarenessand/or training; and cultural practices that affectlabor relations. These issues were widespread andsystemic, and will require the long term commitmentof various stakeholders to correct.
Feedback received from farmers, workers, andother stakeholders mainly noted the improvementof farm safety since the start of the ALP Program.
Several interviewees reported a reduction inchild involvement and some even cited a general
improvement in safe work environment for
tobacco production. When it comes to the support
mechanism, PT. AOI took a first step by introducing
together with the University of Jember a pilot
program implemented by local volunteers (farmers,
workers and community members). The program
looks forward to give support to workers andfarmers on income & work hours, forced labor andfair treatment issues. However, there is still room
for improvement as half of the farmers and noneof the workers interviewed in the region where
the program took place were aware of the support
mechanism. In addition PT. AOI should constantly
review the state of progress of the support programin order to recognize the most common issues
found at the farms and develop proper strategies toaddress them.
The outcome of this assessment can be used as atool to facilitate management to improve its ALP
Program implementation. CU acknowledges PT.
AOI’s commitment to address the issues identified
and define areas of improvement through theimplementation of an action plan (see Appendix I).

5Market and company background

EXTERNAL ASSESSMENT
Alliance One Indonesia

External Assessment

PT AOI’s tobacco growing activities are concentrated
in four regions, namely: Lombok, Central and East
Java. PT. AOI´s tobacco production comprises 2.6%of the national total in terms of hectares and 0.6% of
the total number of tobacco farmers.3
PT. AOI worked only with contracted farmers, underits Integrated Production System (IPS) system,
resulting in farmers having a guaranteed crop
sale, along with technical and financial assistance.
This system enabled PT. AOI to make long-termplans, ensuring product quality and integrity and aguaranteed supply to its customers. Additionally,
this system provided PT. AOI with a greater visibilityof labor conditions at the contracted farms. In the2015/2016 crop season, PT. AOI contracted 533
farmers in the Lumajang region. These farmers
were supported by 10 field technicians, twoField supervisors, one agricultural manager, one
production manager and one national agronomy
manager.

Another development was the research conductedby Human Rights Watch in 2014 and 2015 which
involved several tobacco manufacturers and leaf
merchant companies operating in Central Java, East
Java, and West Nussa Tenggara. PT. AOI provided
information to this NGO on their approach toidentify risk and address child labor on farms
from which PT. AOI purchased tobacco, number ofissues identified, as well as initiatives to introduce
labor saving techniques and support afterschooland scholarship programs with local NGOs, local
government, and local schools. 5
The 2016 crop season was challenging as some
farmers lost part of their crop due to the lack ofrain. Despite of these adverse weather conditions,some farmers persisted and decided to retransplate
tobacco while others decided not to plant again,as they could not afford the costs for retransplate
tobacco in new areas.

The ALP Program was not the only focus as PT. AOI
also had to implement the environmental and crop
pillars4 of GAP (Good Agricultural Practices), as wellas the STP Program.

3.
4.
5.

PT. AOI’s own database.
http://www.pmi.com/eng/sustainability/good_agricultural_practices/pages/good_agricultural_practices.aspx
https://www.hrw.org/report/2016/05/24/harvest-my-blood/hazardous-child-labor-tobacco-farming-indonesia
7Chapter 1

Implementation of the ALP Program

EXTERNAL ASSESSMENT
Alliance One Indonesia

External Assessment

1.1. Commitment to the ALP Program
PT. AOI demonstrated their formal commitment
to the ALP Program by publishing their corporatesocial responsibility policy6 and specific child labor
policy7 on their global website. In addition, PT. AOI
published a specific agricultural labor policy 8 andprojects developed in Indonesia to address childlabor 9 on their separate sustainability website. The
child labor policy referred to the ALP Program andILO conventions. As one of AOI’s subsidiaries, thesepolicies were also applicable to PT. AOI.
PT. AOI’s staff was individually committed to the
ALP Program. Of the senior management team, theDirector and Agronomy Manager demonstrated
close involvement and engagement with the program.
All those involved considered the ALP Program tobe an important step forward in improving labor
conditions on the farms. Members of the Agronomy
team stated the main improvements: ensuring thatchildren have a good life and access to education;
sustainability of the tobacco business; improving
working conditions at the farms; increasingawareness of farmers; and ensuring that tobacco
was produced in accordance with the law. Some
members of the agronomy team also had ideas foraddressing widespread issues. The ideas submitted
by the staff are analyzed internally and PT. AOIprioritizes actions based on the risk identified, timeframe, and cost. As part of the review and decisionmaking process, HMS is also consulted.

1.2. Strategy and objectives
The approach and implementation strategy for
the ALP Program and other similar programs
was greatly influenced by the close collaboration
between PT. AOI and the local Phillip Morris
affiliate, HMS. However, PT. AOI did not have aformal process in place for setting the strategy andobjectives for the ALP implementation. Long-term
objective defined by the company was to implement
ALP in all the contracted farms. About the annual
objective for the next season, this was to continue
with the monitoring activities covering all the ALP
Code Principles.
The first risk assessment 10 was carried out in
September 2015 but the results were not linked
to any action plan or initiative. In addition, theinformation used for determining the legal maximum
working hours was incorrect11 and some risk levels
did not match with CU’s findings. 12
PT. AOI’s risk assessment identified the following
practices as high risk:• Involvement of farmers’ children in tobacco
production and potentially hazardous activities(especially during holidays);• Employment of Children below 18 years of age;
• Farmers not having a plan in case of an emergency(i.e. fire, extreme weather event, etc.);• Lack of safety measures: use of PPE, harvesting
clothes, CPA storage; and• Lack of communication on safety issues between
farmers and workers.
Although some of these risks were in line with CU’sfindings, the following risks had not been identified
by PT. AOI: salaries below the legal minimum wage;
and salary differentiations between men and women(see chapter 2). In addition, severity and probability
assigned to employment relation formalization
did not matched with CU’s findings and should be
reviewed.

6. http://www.aointl.com/sustainability/one-vision/corporate-social-responsibility-policy/
7. http://www.aointl.com/sustainability/one-vision/child-labor-policy/
8. http://www.aoisustainability.com/index.php/commitment/agricultural-labour-policy/
9. http://www.aointl.com/sustainability/one-vision/agricultural-labor-policy/
10. The method used was PMI’s global template for GAP assessments. This template required PT. AOI to identify thepotential risks that were associated with each Measurable Standard and ascertain the level of probability andseverity, to determine the risk level.
11. It read 48 hours per week when the legal maximum working hours in Indonesia are 40 hours per week.
12. Example: PT. AOI determined the probability of not finding written contracts between workers and farmers at thefarms as “unlikely”, while during Control Union visits none of the farmers provided written contracts to their workers.
9External Assessment

Root causes were not identified for most of theabovementioned risks. Only in the interest of lackof safety measures on the farms, PT. AOI identified
three main root causes: PPE and harvesting clothes
considered uncomfortable in high temperatures;
inadequate CPA storage; and workers feeling more
comfortable working without boots or shoes. CU
also found that farmers were not communicating
the ALP Code to their workers. Thus, workers were
not aware of the need for PPE when applying CPA.
PT. AOI implemented initiatives to address theabovementioned issues (see 1.6) and set thefollowing targets:• Improve safety by providing CPA storage lockers
to all the contracted farmers: 205 units were
distributed in the 2015/2016 crop season; and• Improve safety by providing PPE and harvesting
clothes to 100% of the farmers.
Targets set by PT. AOI focused mainly on inputs (e.g.
on the number of items distributed), which did notnecessarily lead farmers to changing their behavior(see 1.6).

1.3. Internal capacity
1.3.1. Dedicated organizational
structure
PT. AOI added an ALP structure to the alreadyexisting company structure. The ALP Steering
Committee consisted of the country manager,financial director, sales director and the national
Agronomy manager. The Agronomy team consistedof the STP manager, ALP coordinator and Lumajang
STP coordinator. Each region was composedof Production and Agronomy manager, field
supervisors and field technicians who provided
the link between management and the field. PT.
AOI worked in close contact with HMS receiving
regular guidance on the implementation of the ALP
Program. Legal support was provided by the PT. AOIlegal department, but also by HMS’s senior counsel.

Internal structure for ALP implementation

Steering Committee

Country Manager

National Agronomy
Manager

Financial Director

Sales Director

ALP Team
STP
Manager

Jumajang
STP Coordinator

Burley Production Manager

ALP
Coordinator

Legal
Department

Burley Agronomy Manager

Field Supervisor

Field Technicians (10)Farmers10

External Assessment

1.3.2. Roles and responsibilities
The national Agronomy manager – in addition tohis core task of managing the tobacco productionin Indonesia – also managed other programs,
including ALP. For ALP, he coordinated management
staff training, and monitoring of the ALP Program
development in the country and oversaw theapproval of the quarterly reports for PMI Region.
The country manager and financial director weremore involved in the financial aspects of the ALP
implementation. The sales and financial directors
did not have clearly defined ALP responsibilities.
The STP manager oversaw monitoring, controlling,
and implementation of the STP and GAP Programin Indonesia and, the drafting of the quarterly PMI
reports. Next to the STP Lumajang coordinator,
he was also in charge of training the field staff.
In addition, the STP coordinator had to monitor
the knowledge of the field supervisors and fieldtechnicians in regards to the ALP Code. At the timeof the assessment, the new ALP coordinator had
recently taken over the role and was not yet fully
informed about his activities.
The general job descriptions for the national
Agronomy manager, STP Manager, STP Lumajang
coordinator, and ALP manager were identical andincluded specific ALP responsibilities and duties
related to GAP and SRTP program.
In regards to the field supervisors, their job
descriptions did include some ALP-related details,
namely: the responsibility to monitor, improve,and implement the ALP Program. Field technicians’
job descriptions requested them to communicate,monitor, complete Farm Profiles, and identify
and address potential issues. Field technicians
demonstrated to have a clear picture of their ALPrelated responsibilities, although they were notaware of the inclusion of these responsibilities intheir job description.

1.3.3. Training and knowledge of the
ALP Program
The senior management received guidance on ALP
from HMS and Verité. PMI Regional provided two

formal training sessions in 2013 and 2014. The
national agronomy manager, STP manager, regional
STP coordinator, and regional field supervisors
participated in both events. The ALP coordinator
position was created five months before Control
Union’s, and received training from the agronomy
manager and GAP coordinator.
The company developed a four-phased plan/
procedure to keep all the employees trained.
The first phase training, called “Master Trainee”,
was given by the agronomy manager to the GAP
coordinator and other coordinators involved in the
STP program. The second phase covered the trainingof the field supervisors by the GAP coordinator, andthe third phase focused on the training of the fieldtechnicians by the field supervisors. A fourth andlast phase involved the training of the farmers by
the field technicians.
Management employees generally had sufficientunderstanding of the ALP Code. However, theirknowledge of the relevant legal information was
limited, and it is important that management know
and understand the legal aspects relevant to the
ALP Program.
Prompt Actions were another important aspectof the ALP Program that was not well understood.
When asked, the ALP Team gave a correct answer as
they considered Prompt Actions to be any situationin which the physical or mental well-being ofworkers, children, or a vulnerable group (pregnant
women and elderly people) might be at risk, andwould have to be stopped immediately. However,
because of limitations in the digital system used
to gather the information some situations being
reported as prompt actions were not catalogued assuch. For instance, situations like the lack of proper
CPA storage or a grievance mechanism were treated
and reported as prompt actions, which they were not(see 1.5.3). This misunderstanding was identified
in all layers of the company. The categorization ofsituations not meeting the standard is importantas it will have a direct impact at the moment ofprioritizing which are the actions or measures to betaken to address the issues.

11External Assessment

During weekly meetings at the buying station, thefield supervisor discussed specific topics as they
related to the ALP Code with the field technicians,
after which the field supervisor accompanied
the field technicians into the field to verify theirunderstanding. As there were no evaluation
records, it was not possible to establish improved
knowledge.
Monthly trainings were conducted for fieldtechnicians, during which a different ALP CodePrinciple was discussed. These trainings also
included role playing to better understand how
to address some of the more specific issues at thefarms. At the end of the day, knowledge was tested
using written exams.
Assessment of field technicians’ knowledge per ALP
Code Principle:• Child labor: All field technicians were aware of
the legal minimum age for working in Indonesia13
All Field Technicians could clearly explain theconcept of hazardous activities. However, even
if most of them could give accurate examplesof hazardous activities (e.g. CPA application,
working at heights, or harvesting), only half (3 or50%) of them considered tobacco stringing to be
hazardous activities.
• Income and work hours: This ALP Code Principle
was not well understood by the field technicians.
While all could recall the minimum salary inaccordance with the local law, none of themknew the maximum regular work hours; they all
believed that it was 48 hours per week. Only one
field technician (17%) could provide the correct
answer regarding the overtime rate. None of the
field technicians could mention one or more of
the legal entitlements.

• Fair treatment: All field technicians could
provide a good explanation of this ALP CodePrinciple; that workers should be treated fairly
and without discrimination. However, noneof them mentioned that farmers must makethemselves available to workers who want todiscuss potential grievances.
• Forced labor: All field technicians were awareof this ALP Code Principle and could give valid
examples for risks of forced labor, such as notretaining identity documents of the workers orwithholding payment until the end of the season.
• Safe work environment: Field technicians had
a good understanding of the required safetymeasures for tobacco farms, such as the use of
PPE, CPA storage, having a tidy environment, andthe importance of clean water. However, none ofthem mentioned GTS or the re-entry period after
CPA application.
• Freedom of association: All field technicians had
an adequate understanding of this ALP CodePrinciple.
• Compliance with the law: All field techniciansrightly interpreted this ALP Code Principle as thefarmers’ obligation to comply with all applicablelaws. In regards to having written contracts, only
one field technician (17%) said that workers
should have written employment agreements 14
and two (34%) of them mentioned the obligationof the farmer to communicate the terms andconditions of the employment to the workers.

13. See appendix III for more information.
14. According to article 59(1) of Law 13/2003 and MoMT Decree 100/2004, a farm worker that works a few days in a
farm shall be included in the employment agreement for definite period specifically the free daily work. This type ofagreement shall be made in written.
12External Assessment

PT. AOI response:

1.4. Communication of the ALP Coderequirements to farmers“…To further enhance Field Technicians knowledge
and understanding of the ALP program, PT. AOI plans
to implement the following programs in 2017:• Make updates and improvements to materials
included in the ALP educational toolbox• Incorporate materials about the National andLocal Government law and regulations• Continue providing ALP refresher training to all
Field Technicians and Field Supervisors during
different crop stages.
• Continue monthly ALP training, including pre- andpost-training tests to evaluate Field Technicians’
knowledge improvement”

1.3.4. Internal communication
The ALP team held monthly meetings, during which
topics such as situations not meeting the standards,
Prompt Actions, farm data, field technician training,and general market and company developments
were discussed and documented. Meetings between
field supervisors and field technicians were also
held on a weekly and monthly basis. During theweekly meetings, objectives and targets for the
week were discussed. During the monthly meetings,
the ALP Code Principles, reporting procedures, andother topics were discussed in more detail. Topics
discussed during monthly and weekly meetings
between field supervisors and field technicians
were not registered nor recorded. In addition, fieldtechnicians and field supervisors communicated byphone and email.
Quarterly and monthly reports, which included theprogress of the ALP implementation, were producedby the STP Manager and National Agronomy
Manager, then sent to PMI Regional and HMS.

1.4.1. Communication strategy andtactics
At the time of the assessment, communication
efforts were focused mainly on child labor, income
and working hours, and safe work environment,
as these were considered the most salient issues.
However, important issues such as the wage
differentiation between men and women, lack of
employment contract formalization, and lack ofawareness on local law, did not receive proper
attention.
All Field technicians claimed that they had
insufficient time to communicate all ALP CodePrinciples when visiting the farms. The average fieldtechnician-to-farmer ratio was 1 to 52.
PT. AOI produced several communication materials
with the support of HMS. The following written
communication methods and materials were used(see Appendix IV):
• Messages at buying stations: messages regardingchild labor and safety were broadcasted on TV
screens during both the contracting and buying
seasons.
• Farmer Festival: since 2012, communicationon the ALP Code was included in the GAP
seminars and organized during the so called“Farmer Festival”, which was attended yearly byapproximately 300 farmers.
• ALP poster about safe work environment:
distributed among farmers and used by the
Field Technicians to communicate the safe work
environment principle during the field visits.
• ALP calendar: distributed two months before
the CU assessment to all farmers. It included
all seven ALP Code Principles, and each monthincluded recommendations to prevent risk
associated to the respective crop stage (e.g.
for months in which CPA spraying took place, it
included recommendations on how to handle of13External Assessment

CPA, from mixing, to applying, to PPE usage, anddisposal). Control Union saw the calendar posted
at 13 (57%) farms.
• Posters about child labor: two different posters
distributed to all farmers. The topics covered
the tasks that children can and can´t perform on
the farm, commitment to school attendance, andlocal law in regards to child labor.
• Poster about CPA handling and empty containers
disposal: focused on the correct method of
mixing and applying of CPA’s and the proper way
to dispose of the empty CPA containers.
• Posterabout
CPAhandling:
detailed
recommendations about the correct PPE for
applying CPA and proper storing of CPA.
Although these communication materials were
professional and clear, CU identified several inneed of improvement. Important legal information
was not being provided, such as the legal minimum
wage, maximum work hours, legal overtime rate, orbasic worker entitlements. According to the Field
Technicians, wages were arranged per village andasking farmers to pay salaries in accordance to the
local law would have led to a conflict between PT.
AOI and the farmers and also between farmers andlocal workers For this reason, PT. AOI decided not
to communicate legal aspects in the communicationmaterials. All communication materials weretranslated accurately into the Bahasa language.
Even though all farmers and family members

understood the language used (Bahasa), 12 (52%)
farmers who spoke native Javanese and one (4%)
who spoke native Madurese declared that theywould have preferred to receive the communicationmaterials in their native language.
All but one farmer (22 or 96%) were aware of the
ALP Program. However, awareness among family
members was slightly lower (12 or 86%) and lower
still among external workers (7 or 43%). This could
be explained by the fact that the field technicians
would only speak with the farmers and family
members when visiting the farms.
The highest levels of awareness were on the topics
of child labor and safe work environment. However,other topics, including income and working
hours, a principle in which PT. AOI made special
communication efforts, were less known among
farmers and practically unknown to family members
and external workers.
This can be explained by the limited understandingof legal aspects among field technicians and thelack of information on legal aspects in written
communication materials.
The following tables demonstrate the level ofawareness of the ALP Code Principles among the
23 farmers, 14 family members, and 15 external
workers that were familiar with the ALP Code, andthe means of communication through which they
remembered receiving information about the ALP.

14

External Assessment

Level of awareness of ALP Code Principles
Farmers

Family members

Workers

Child labor

22 (96%)

12 (86%)6 (40%)

Income and work hours

8 (35%)

7 (29%)

Fair treatment

4 (17%)

0 (0%)

Forced labor

6 (26%)

1 (7%)

Safe work environment

18 (78%)

11 (79%)

Freedom of association

5 (22%)

0 (0%)

Compliance with the law

5 (22%)

0 (0%)

None of the above

1 (4%)

4 (27%)

1 (7%)

Means of communication through which the ALP Code was received
Farmers

Family members

Workers

Verbally from field technician

19 (83%)10 (71%)

1 (7%)

Poster (sticker)

15 (65%)4 (28%)

Group meeting

14 (61%)

Calendar

13 (57%)

Farmer book

1 (4%)

Verbally from the farmer

9 (64%)

6 (40%)

6 (43%)

PT. AOI response:

clearly defined the responsibilities of the Company’s“..To strengthen ALP program comprehension andunderstanding of Prompt Actions, PT. AOI provided

Agronomy manager, STP manager, ALP manager and
STP coordinator.”refresher training on the ALP program to 100% of“In Q2 2017, PT. AOI took the following actions:

Lumajang FTs throughout the 2016 season”• Reviewed National and Local Government law“In Q2 2017, PT. AOI provided refresher training on
Prompt Actions and the importance of documenting
them in Alliance One International’s (AOI) Growers
Management System™ (GMS)

to ensure proper

follow-up and action plan development.”“To provide further visibility of ALP responsibility,
PT. AOI’s Human Resources Department reviewed
the job descriptions during Q2 2017 and more

and regulations relevant to legal aspect of the ALP
program and included in ALP refresher training• Continued providing FTs and Field Supervisors
ALP refresher training during different crop stages• Reviewed

ALP

Monitoring

Guideline

andincluded information about the National andLocal Government law and regulations related tolegal aspect of the ALP program book which is
distributed to all FTs
15

External Assessment• Continued monthly ALP training meetings withField Technicians, including pre- and post-training
tests to evaluate knowledge improvement.”“…PT. AOI conducted the 2017 Farmer GAP Day
during Q2 for farmers, workers and farmers spouses.
A total of 273 individuals attended the 2017 event(141 farmers, 61 workers, and 71 farmers’ spouses).
In addition, during Q3, PT. AOI will broadcast
messages through local media (Radio or TV) to

1.5. Internal monitoring: data collection,accuracy, and addressing issues
At the time of the assessment, PT. AOI wascollecting three types of ALP-related data from thefarms: socio-economic information (Farm Profiles);situations not meeting the standard (farm-byfarm monitoring); and Prompt Action reports. Thisdata was compiled and used to complete the risk
assessment and create the quarterly reports thatwere shared with PMI’s Regional Team.

enhance awareness of ALP program principles amongcommunities in tobacco production areas.”“With regards to CPA training, PT. AOI is implementing
the following action plan for the 2017 crop season:• Continue to conduct group training on CPA safety
usage. Training was conducted by three CPA
suppliers during Q2, educating 100% of contracted
farmers.
• Provide individual training about CPA safety usage
during a scheduled farm visit in Q3.
In Q2 2017, PT. AOI began distributing new PPE
units to contracted farmers to identify the level of

Field Technicians were tasked with obtaining all
farm data and all farms were visited and monitored
at least 12 times throughout the crop season.
The Field Technicians’ limited understanding ofsome ALP Code Principles and legal aspects had adirect impact on their reports since they were unable
to identify situations such as workers working morethan the legal maximum working hours or the lack offarmer written employment agreements.

1.5.1. Socio-economic data: FarmProfiles

acceptance from farmers. The Company plans to
distribute 100 units by the end of the year and willconduct a survey at the end of the season to evaluate
if and how the new units were used.”

1.4.2. Farmers’ responsibilities
The growing contract included several clauses andchapters in regards to the farmers’ responsibilities
as they related to the ALP Program, including:taking proper measures to avoid GTS; proper CPA
handling; prohibition of hiring children below
the minimum legal age; avoiding discrimination,
allowing freedom of association, and compliancewith the local law. These contracts were written
in the Bahasa language, and both farmers and fieldtechnicians commented that farmers barely readthe terms of the contract.

For all farms visited an updated Farm Profile forthe current crop season was available, in line with
PMI’s template. The socio-economic information
for the Farm Profiles was collected at the beginningof the year, and updated upon each visit in PT. AOI’s
Grower Management System (GMS). Based on CU’scomparison between the socio-economic reported
data (farm profiles) and the actual situations foundat the farms, 78% of the farm of the farm profiles
matched the situation on the farm. There were 5
cases (22%) where the actual tobacco production
areas did not match the reported area. This should
be positively acknowledge as the differences in thereporting software rely on the fact that harvests
were lost or ruined due weather conditions andtherefore farmers had no choice but to reseed inother areas. In regards to the reporting software, allfield technicians declared that they felt comfortableusing the system and that they did not have any
difficulties with the GMS.

16

External Assessment

1.5.2. Systematic monitoring: situations
not meeting the ALP Code standards
Situations not meeting the standard were monitoredinitially for three ALP Code Principles – child labor,safe work environment, and income and work hours– during the farm-by-farm monitoring activities.
However, if the field technician identified any
situation as not meeting the remaining principles of
the ALP Code, they would report it in the GMS.
Based on demonstrations of the GMS provided
by field technicians and interviews, CU identified
an improvement point. When reporting, fieldtechnicians had to select the issues identified undera list of possible issues to single out the incident
with the relevant principle. In addition, the software
had a comment box to add comments when creating
an incident record. However, as field technicians
were not asked to provide details and qualitative
feedback about their visits, this box was not used.
This meant that no further information was included
to clearly describe the situation, such as the people
involved and the action taken by the field technician
to address the problem, and to define the best action
plan to address the issue.
Both Prompt Actions (see 1.5.3) and situations notmeeting the standard were reported as “incidents”
in the GMS. There was no difference in the reporting
procedure and thus Prompt Actions were not given
a higher urgency level than situations not meetingthe standard.
All situations not meeting the standard weregathered by the STP manager who, in turn,reported them to the ALP team. At the time of theassessment and for the 2015/2016 crop season,
all farms were monitored and field technicians
reported 446 situations not meeting the standard
in this way during this season (312 related to safe
work environment, 116 to fair treatment, 14 toCompliance with the Law, and 4 to income and work
hours). This demonstrates that field technicians felt
comfortable reporting issues internally.

Only four issues were reported in regards to income
and working hours. However, CU discovered thatmost of the farmers were paying below minimum
wage (see chapter 2). As a result, the ALP team did
not have a complete overview of all situations notmeeting the standard at the farms.

1.5.3. Prompt Actions
When an incident was identified the field technician
would raise a prompt action, register it in the GMS
system, and inform the farmer about the corrective
action. The GMS system provided a wide range ofsituations per principle that could be considered
as incidents at the farms. The field technicians had
to determine which incident was found at the farm.
Follow up of the Prompt Action was done during thenext visit to the farm to ensure that the incident was
resolved. If the issue persisted, the field technician
would talk with the farmer to find the best solution
to address the issue. If the farmer did not want tocooperate, the field technician would raise thesituation to the Field Supervisor, who would look
for a solution with the farmer.
All field technicians were aware of the procedureused for taking action. Field technicians also
explained that they did not report the Prompt
Action in the instances where they could solve thesituation at the farm. This meant that the ALP Team
did not have historical records of all Prompt Actions
which could be used to identify issues at the farms,
and allow them to develop a documented strategy
to address those issues.
The GMS did not set any deadlines for following up,
and each field technician conducted follow-up visits
according to their own perception about the severityof the Prompt Action. Follow-up varied between fiveand 30 days. At the time the assessment, 205 Prompt
Actions issued about safe work environment weresolved; among those, 26 in regards to fair treatment
and 13 about legal compliance. CU assessed 11
Prompt Actions during the regular farm visits, allof them related to safe work environment issues. In

17

External Assessment

four cases (36%) the farmer was not aware of thereported Prompt Action and at two farms 15 (18%)
the same incident was identified during the visit.
In regards to the four Prompt Actions assessed
during the specific Prompt Action visits, none of the
farmers were aware of the issued Prompt Action.
Furthermore, even if corrective measures had beentaken, in two cases (50%) the same situation was
identified. 16

PT. AOI response:“In collaboration with Alliance One International’s
global GMS team, PT. AOI will be strengthening the
GMS program to better manage prompt action issues
and add an email notification that will prompt field
supervisors to follow up on pending issues within
associated during Q4 2017 or Q1 2018 timelines.
PT. AOI will review contracted farmers’ Prompt
Actions annually, analyzing year-on-year incidents

was also a risk of not having real-time information
available. Different reports needed to be generated
to provide the information for one Farm Profile oran overview of all ALP Code Principles. In addition,
data was extracted manually, which increased the
difficulty of data management and analysis.

1.5.5. Improvement plans for individual
farms
The reporting of Prompt Actions resulted in
improvement plans for individual farms, which
included CPA locker distribution, harvesting gloves,and PPE for CPA application17. However, no clear
deadlines or follow-up were defined. Corrections
were agreed upon between field technicians
and farmers, but no plans were made to ensure
continuous improvement.

1.6. Address systemic and/or widespread
issuesand determining whether there are any ongoing
trends.”“To assure GMS data collection by FTs, PT. AOI began
conducting Unannounced Visits during Q2 2017.
Unannounced Visits aim to validate data accuracy
and minimize discrepancies in farm data”

Based on the risks and issues identified (see 1.2), leaf
tobacco suppliers are expected to address systemic
and/or widespread issues through operational (STP)
initiatives, community programs, and engagementwith key stakeholders.
At the time of the assessment, PT. AOI implemented
the following operational initiatives:

1.5.4. Data management and analysis
The STP manager was responsible for checking allreported data, and for questioning field technicians
to verify whether the information was clear
and complete. However, this task was very time
consuming due to constant updates in the GMS
software, and the fact that the internet connectionin the area was in many cases slow. In addition there• Distribution of CPA storages: to all the farmers
after they signed the growing contract. 22(93%) 18 farmers declared to have bought a CPA
storage box from PT. AOI and said that they
were very pleased with it. Storages are notsubsidized by PT. AOI, however all farmers whobought them said that the price was reasonable.
However, although the CPA storage had a lock,15. The two prompt actions were related to the lack of use of proper protective equipment when handling green tobacco.
According to the Prompt Action report, in both cases the FT explained verbally which was the corrective clothing
and the reason for using it.
16. The Prompt Action was related to the lack of a proper place to store the CPA´s. The company distributed CPA lockers
among the farmers, but in these two cases the farmer was still storing the CPA´s outside the CPA locker.
17. Since 2013 PT. AOI distributed 1.473 PPE´s, 21.935 pairs of hand gloves and 1.532 CPA´s storages
18. One farmer explained that the field technician did not offer him a CPA storage box when he signed the contract withthe company and felt shy to ask for it now.
18

External Assessment

it was made from wood and without any kind ofventilation system, and some farmers mentioned
the box was too small.
• Distribution of harvesting gloves: distributed
gloves to all farmers prior to the crop season, tobe used during the harvest season. All farmers
declared to have received these gloves andexplained that they were very happy with thisinitiative. However, three farmers (13%) did
not know that the cost of the gloves would be
deducted from the tobacco when it was sold. At
four farms (16%) people handling green tobacco
were not using gloves, although they had themat their disposal. These people explained thatthey had more sensitivity without the gloves andthus reduced the damage of the leaf during theharvest.

boy scout activities; music; and marching
band lessons. The selection of the schools was
based on the density of farmers’ children in theregions. At the time of the assessment, threeelementary schools were selected to take partin the program. 21 None of the farmers selectedin the areas where the schools were placed had
school-aged children, and so CU could not verify
the impact of this initiative.
• Metal Clips distribution: While this initiative
aims to reduce the amount of labor required
for stringing and sticking activities with clips,
it has also a direct impact in child labor as
those activities are often done by children. In
total 132.000 units were distributed among
contracted farmers.

• Distribution of PPE for CPA handling: 22
farmers (96%) declared that they had received aset of PPE which included goggles, gloves, apron,
and a mask. The only farmer who declared not
to have received a PPE explained that he didreceive it in the previous crop season, but that
he did not feel comfortable using it. Two farmers(8%) mentioned that the material of the apron
got damaged or broken after the first use.
Other initiatives that were being implemented incollaboration with key stakeholders included:• After School Program: 19 This program wasdeveloped in 2015 with the cooperation of PMI
Regional, PT. AOI, and STAPA, 20 a local NGO
focused on community development with theaim to reduce the amount of time children spend
on the farms during the harvesting season. The
program provided a series of extra-curricular
activities for elementary schools which included:

19. http://www.aointl.com/files/2014/6109/0447/7._CERIA_Leflet_.pdf
20. Social Transformation and Public Awareness. http://stapacenter.org/index.php/key-issue/education-for-all.
21. Schools were SDN Kunir Lor 01, SDN Jatisari 01, and SDN Jokarto 04, covering a total of 272 students.
19

Chapter 2

Farm-level assessment of living andworking conditions in regards to the
ALP Code Standards

EXTERNAL ASSESSMENT
Alliance One Indonesia

External Assessment

This chapter describes CU’s assessment of the living
and working conditions on farms in regards to the
ALP Code Principles and Measurable Standards.
ALP Code Principles are short statements designed
to guide farmers in specific practices, resulting insafe and fair working conditions. A Measurable
Standard defines a good practice and over time canbe monitored objectively to determine whether, andto what extent, the labor conditions and practices
on a tobacco farm are in line with each ALP CodePrinciple.

PT. AOI response:“Given the success of its existing programs andrecognizing that child labor continues to be an areaof concern, PT. AOI plans to continue its efforts
to raise farmers’ awareness of the issue, enhance
understanding

andencourages

compliance.

Inaddition, farm monitoring will continue in order toensure contracted farmers do not employ children in
tobacco production on any hazardous activities.”2.1. ALP Code Principle 1: Child labor
2.2. ALP Code Principle 2: Income andwork hours
There shall be no child labor.

Income earned during a pay period orMain findings and challenges

2.1.1. Children working and activities
performed
No evidence was found of children below 18 yearsof age being employed at the farms or being involved
in hazardous activities. 22 No farmer’s children below
18 were involved in any tobacco related activity.

Analysis and priorities
CU found no children working or helping at thefarms, even if one of the main risks identified by PT.
AOI was child labor. The reason for these results
could be that the visits were performed during theschool season, but it could also be the fact that
this ALP Code Principle has been one of the main
focus areas of PT. AOI since the beginning of theimplementation. The initiative implemented toaddress child labor, in combination with the focusedcommunication and monitoring efforts, seemed tobe effective.

growing season shall always be enoughto meet workers’ basic needs and shall beof a sufficient level to enable the generation of discretionary income.Workers
shall not work excessive or illegal work
hours.
Main findings and challenges

2.2.1. Payment of workers
At 20 farms (87%) the salary varied per gender (see2.3.1) and tasks performed. See the table below
with the differences in the salaries according to theworkers gender:

22. According to Article 68 of the Law 13/2003, employer is prohibited to employ children under 18 years old. However,according to Article 69 paragraph (1) of Law 13/2003, the prohibition is exempted for children with age between 13(thirteen) to 15 (fifteen) years old to conduct light work under certain conditions. However, the ALP Code only allows
children between the ages 15-17 to be employed for any tobacco-related activities. Younger children between theages of 13-14 are only allowed to support a family farm. Children below 18 are only allowed to be involved in nonhazardous activities. As ALP requirements are stricter, the ALP Code prevails. (See Appendix III for more detailed
legal information).
21

External Assessment

GenderFarmers paying below minimum wage 23

Average Salary (IDR/hour)Male

15 (65%)

6,487

Female20 (87%)

7,711

Salaries were either calculated daily, hourly, or based on a piece rate (250 IDR – 300 IDR per stick 24 and
30,000 IDR per loaded barn25).
On average, women received salaries ranging from 35,000 to 70,000 IDR per day. Conversely, male salaryranged between 50,000 IDR and 70,000 IDR per day. However, working hours were different among
workers and farms. Find below a table with the lowest and highest salaries assessed according to theworkers gender:

GenderLowest salary assessed (IDR/hour)

Highest salary assessed (IDR/hour)

Male

6,250

12,000Female3,076

12,000

Women were involved in all major tobacco work
activities including transplanting, production
including fertilization, topping, harvesting, andclassification. Men were more likely to be involved
in soil mechanization, curing, pesticide spraying,
and loading and unloading the barn.

2.2.2. Payment schedule
All farmers paid their workers regularly, in
accordance with the law26 on a daily or weekly basis.

2.2.3. Work hours
Workers put in more time than the maximum legal
working hours 27 at seven farms (30%); between
eight and nine hours per day excluding lunch time.
On three farms (13%) workers were not receiving
at least one day of rest per week. The main
reasons for the excessive hours came down to theheavy workload during the harvesting season, in

combination with the scarcity of workers and thefact that workers earning a per-piece rate would
work more hours to earn more money at the end of
the day.
None of the farmers assessed paid for the overtime
work hours and none of the workers interviewed
declared to do involuntary work hours. There was alack of awareness of workers and farmers in regards
to legal overtime hours.

2.2.4. Legal benefits
None of the farmers provided their workers withthe additional basic entitlements required by law(see appendix III, point 2.4) . The main reasons given
by field technicians and farmers for this were thatthe workers had no formalized employment andwere not registered at the required government
institutions. It was difficult to register them as, inmost cases, the farmers and workers understood

23. The legal minimum wage is IDR 8.306 per hour (See Appendix III for more detailed legal information).
24. Stringing activities were performed by female workers and it was assumed that 15 sticks were completed in one
hour. This would result in an hourly salary of 3,750 IDR to 4,500 IDR.
25. Barn loading activities were performed by male workers and It was assumed that one barn is loaded in 4 hours. This
would result in an hourly salary of 7500 IDR.
26. Payments cannot exceed one month.
27. Maximum legal work hours were 40 regular hours per week and eight regular hours per day, with a maximum twohours of overtime per day (See Appendix III for more detailed legal information).
22

External Assessment

this formalization to be a lack of trust between
both parties. Finally, it is important to mention
that farmers and workers lacked awareness about
the possibilities available to register workers andformalize their employment.

“…To support this communication and increase
farmers’ awareness about Income and Work Hours,
PT. AOI will install a banner in Lumajang buying
station during Q3 2017”“PT. AOI recognizes the need to better understand theUnderlying factors that increase riskroot causes driving the lack of compliance with thisprinciple in order to create lasting, positive change.

Neither the farmers nor the workers were awareof the legal minimum wage that was applicablein the region of Lumajang. Wages were locallyarranged between farmers and workers in eachregion. Additionally, farmers said that there
was no governmental entity enforcing this legal
requirement.

Analysis and priorities
Despite PT. AOI’s focus on this ALP Code Principle,
the findings above demonstrate that many practices
were not meeting the standard. Lack of awarenessamong farmers and workers about relevant legal
aspects were in line with the limited awareness onthese topics among field technicians (see 1.3.3) andlack of information provided in the communicationmaterials. Cultural practices, such as different
payments for men and women and agreements on
wages that do not consider legal requirements, werethe main reasons for the situations not meeting thestandard.
These practices will need special attention andfurther analysis by PT. AOI to determine the best
way to address them.
PT. AOI response:“..As a preliminary approach to communicating
minimum and equal wage requirements, as well as
benefit requirements, PT. AOI distributed educational
materials (posters, calendars) during Q2 2017 to
all contracted farmers. These materials include
information about Indonesian Labor Law, to help
contracted farmers better understand what is legally
expected of them as employees.”

PT. AOI will collaborate with local stakeholders, suchas a university or NGO, to conduct a study which willassess workers’ payment against the minimum wage,
payment schedule, gender, tasks, working hours andovertime pay and benefits.”

2.3. ALP Code Principle 3: Fair treatment

Farmers shall ensure fair treatment ofworkers. There shall be no harassment,
discrimination, physical or mental punishment, or any other forms of abuse.

Main findings and challenges

2.3.1. Treatment of workers
No evidence was found of verbal, sexual, or physicalabuse on the farms.28 Due to the scarcity of workers,
and the fact that most of the workers were farming
neighbors, farmers said that they had to treat
their workers well, to ensure that they would keep
working for them.

2.3.2. Different payments for men andwomen
As mentioned in 2.2.1, among both farmers andworkers, it was understood that men and women
would be paid on different scales. Even though
there was a clear differentiation in some of thetasks performed by male and female workers,

28. According to article 28D point (2) of UUD 1945, every person shall have the right to work and to receive fairand proper remuneration and treatment in an employment relationship (See Appendix III for more detailed legal
information).
23

External Assessment

transplanting, fertilization, wedding, topping, andharvesting were performed by both genders. Also,
at 20 farms (87%) female workers were not allowed
to perform other tasks classified as “male tasks”
that paid better. This practice was considered
normal for all the crops and farmers in the region,
and male and female workers understood this asa fair arrangement. However, because the ALP
Code promotes equal treatment of workers, this isconsidered a discriminatory practice.

2.3.3. Support mechanism
Support mechanisms help workers by giving themaccess to information, support in difficult situations,and mediation during disputes with farmers. Leaf
tobacco suppliers are expected to ensure thatboth farmers and workers have access to such amechanism.
At the time of the assessment, PT. AOI was running a
support mechanism pilot in the Jatigono and Jakarto
villages. The program was launched in cooperation
with the Socioeconomic Agriculture Department of
the Jember University, which identified that local
conflicts were better treated locally by an existing
informal dispute resolution mechanism. The aim of
the program was to utilize this existing mechanism
rather than to introduce a new one, and, through the
University monitor, formalize and provide tools andknowledge to strengthen the current organizational
system.
The pilot was first kicked off in June 2016 byidentifying and contacting relevant village
stakeholders, including heads of the villages andinformal leaders. After this, three informal leaders
per village were identified. These informal leaders
were requested to: make an inventory of possible
problems; collect information and evidence; identify
parties involved in the conflicts; define a solution;and register the whole process. Additionally,
these leaders would have 22 volunteers helping
them communicate the support mechanism to thefarmers, workers, and community, and act as a link
between the leaders and the parties involved.

The support mechanism was focused on three ALP
Code Principles: income & work hours; forcedlabor; and fair treatment. Six farmers from thevillages covered by the support mechanism pilot
were included in CU’s sample. In three cases (50%)
the farmers declared that they were aware ofthis grievance mechanism. However, none of theworkers employed on these farms were aware of the
support mechanism.
Additionally, three improvement points wereidentified by CU. First, no legal information suchas minimum wage, maximum working hours,
and overtime rates among others was being
communicated. Second, none of the village leaders
or volunteers had received a formal training on ALP.
Third, since the launch of the program PT. AOI had
not received any feedback or reports from Jember
University in regards to how the support mechanism
was progressing.

Analysis and priorities
The development of a grievance mechanism toaddress disputes among farmers and workers is an
important achievement but should be improved toalso provide information on legal aspects and tosolve potential issues faced by workers. In regards
to the lack of opportunities for female workers
to perform male-categorized activities, a further
analysis on these practices should evidence the best
way to address this issue.

PT. AOI response:“..there were unequal payments between male andfemale workers performing the same tasks. PT. AOI
will gain a deeper understanding of the root cause ofthis inequality through a study conducted by a local
university or NGO . This study will assess workers’
payment against the minimum wage, payment
schedule, gender, tasks, working hours and overtime
pay and benefits.”

24

External Assessment“In Q2 2017, PT. AOI expanded the support
mechanism to cover four villages in crop year 2017.

2.5. ALP Code Principle 5: Safe work
environment

The Company will support UNEJ and other informal
leaders

by providing ALP training and materialreferencing National and Local regulation related toagricultural labor law”

Farmers shall provide a safe work
environment to prevent accidents andinjury and to minimize health risks.
Accommodation, where provided, shall2.4. ALP Code Principle 4: Forced labor

be clean, safe and meet the basic needsof the workers.

All farm labor must be voluntary. There
shall be no forced labor.

Main findings and challenges

2.5.1. Training and awareness of GTS
Main findings and challenges

2.4.1. No evidence of involuntary labor
No evidence was found of workers who were unable
to leave their employment, working against theirwill, or under compulsory or prison labor. Likewise,no evidence was found of workers being obliged tohand over their original identity documents or pay afinancial deposit.

Analysis and priorities
Even though no evidence of involuntary labor was
found during the CU visit, PT. AOI should not takethe compliance of this principle for granted and thus
ensure to allocate time in monitoring and surveying
this principle.

At 18 farms (78%) people responsible for handlinggreen tobacco were not trained on the avoidanceof GTS. At one farm the farmer had not received
any training. And at the remaining farms, family
members or workers had not been trained.
Some of the trained farmers (12 or 52%) were notable to fully understand what GTS is, or believedthat it even existed and/or how to avoid it. Thus,
farmers either did not think it was necessary to
train those working on the farm or they were unable
to train them. The table below shows the types ofprotective clothing that were used.

PT. AOI response:“To communicate and increase awareness about thisprinciple, PT. AOI facilitated a pilot project to increaseuse of a Support Mechanism in four villages. This pilot
project was started in Q3 2017 and will be completed
at the end of the 2017 crop year”

25External Assessment

Use of protective clothing for harvesting29

Number of farms

Full equipment30

12 (52%)

Long sleeves, long pants, gloves

11 (48%)Long sleeves, gloves, long pants

7 (30%)Long sleeves, long pants

2 (8%)Long sleeves, gloves

2 (8%)

Gloves1 (4%)In addition to the limited awareness, it was common
practice in the local culture to work barefoot on
the farm or even when sorting and stringing green
tobacco leaves. Farmers and workers typicallyworked barefoot or with sandals on as they declared
to feel more comfortable than when they wore
boots or shoes.

2.5.2. Training and handling of CPA
Handling of CPA proved to be a challenge at thefarms. Four farmers (18%) did not store their CPA
safely. The main reason was that farmers did nothave an adequate storage facility31 or not enoughplace to store all the products.32 The remaining
farmers had an adequate storage that could belocked.

At three farms (13%), people handling CPA were
not trained. Farmers were generally trained on CPA
handling by external parties,33 but their external
workers, who also applied CPA on occasion, did
not always participate in those trainings. Farmers
seemed to be unaware of the necessity to train
those working on their farm.
At 12 farms (52%), people responsible for CPA
application did not use the complete set of PPE.
The main reason was that those handling CPA were
unaware of the necessity to wear the complete setof PPE. Other reasons included the discomfort ofwearing PPE in high temperatures and that workers
or farmers applying CPA preferred to work barefootor in sandals rather than wearing boots or shoes.

Use of PPE for CPA application

Number of farms

All PPE

11 (48%)Overall, mask, boots, and gloves (no goggles)

4 (17%)Overall, mask, and goggles (no boots and gloves)

3 (13%)Overall, mask, goggles, and gloves (no boots)

2 (8%)

Mask and goggles

1 (4%)Overall and mask

1 (4%)

29. Full equipment consists of long sleeves, long pants, gloves and shoes.
30. In two cases the storage facilities were broken.
31. In these two cases the CPA´s were stored in a shelter outside the house with other farming tools.
32. PT. Syngenta and PT. Sandar International
33. PT. AOI asked the farmers to store the empty CPA containers in special plastic bags that were distributed by the
Field Technicians. When filled, those bags were collected by the Field Technicians or the farmers would take26

External Assessment

11 farmers (48%) did not ensure that people could
not enter the field after recent CPA application, but
all of them declare to have used some type of signal
which gave evidence of recent CPA application.
None of the farmers was aware of the re-entry
period; they would just use an approximate timeframe that would vary between 12 hours to fourdays after application.
14 farmers (64%) did not wash or discard the empty
CPA containers correctly.34 In most cases (52%) the
farmers would pierce or triple wash the empty CPA
containers and bury or burn the containers on thefarm. At 11 (48%) farms, the places selected for the
storage of equipment and tools were inadequate.
At some of those farms, sharp tools were stored inplaces were children could reach them, and in othercases the CPA application equipment was hanging
inside.
PT. AOI response:“In collaboration with three CPA manufacturers, PT.

2.5.3. Clean drinking and washing waterNo evidence was found of farmers not providing
clean drinking water, soap, and clean washing water
to family members and external workers.

Underlying factors that increase risk
Farmers, family members, and external workers
generally lacked awareness on the importance ofsafety measures, which resulted in limited basic
safety measures at the farms. Only one farmer(4%) had resources to act in case of fire; one farmer
had a first-aid kit on the farm (4%) while anotherhad completed a first-aid training (4%); and nine
farmers (39%) took specific measures to ensurethat their equipment and tools were stored safely.
Another underlying factor was lack of awarenessabout proper PPE equipment, as many farmers andworkers thought that there was no need to cover
their feet when handling green tobacco or applying
CPA.

AOI hosted practical CPA training sessions for 100%of contracted farmers in Q2 and Q3 2017.

Analysis and priorities

To further emphasize safety on farms, PT. AOIDespite the many initiatives implemented by PT. AOI
to ensure a safe work environment, including the
distribution of CPA storages, PPE, and harvesting
gloves; the findings demonstrate that these
initiatives have not resulted in the desired change of
behavior. As these practices have been in place for along time, it is unlikely that the situations will change
quickly. Therefore, it is important to understandthe reasons behind these practices and to set
targets that refer to the actual change of behavior,rather than the number of distributed items. The
farmers still seem to have limited awareness andunderstanding of the need for safety measures. In
addition, farmers are not teaching their workers
about the safety measures they should take whenhandling green tobacco or applying CPA. These
continue to be the main reasons for not changing
their behavior, despite the availability of adequate
safety items provided by PT. AOI.

expanded its Integrated Pest Management training toinclude information about:• Proper selection and application of the correct
CPAs for targeted pest/diseases,• Required PPE and its correct usage,• Triple rinse CPA container procedures,• Proper recycling and disposal of empty CPA
containers, and• Re-entry interval guidance. ”“..PT. AOI will require 100% of contracted farmers toreturn CPA empty containers prior to receiving green
tobacco delivery authorization. To further incentivize
farmers to return empty CPA containers, PT. AOI plans
to offer a reward program to contracted farmers who
return 100% of plastic and empty CPAs containers asrequested at the end of the season.”

34. AOI asked the farmers to store the empty CPA containers in special plastic bags that were distributed by the Field
Technicians. When filled, those bags were collected by the Field Technicians or the farmers would take them to thebuying station, were AOI would then deliver them to a recycling company (Pt. Major Plastics).
27

External Assessment

2.6. ALP Code Principle 6: Freedom of
association

2.7. ALP Code Principle 7: Compliancewith the law

Farmers shall recognize and respect

Farmers shall comply with all laws ofworkers’ rights to freedom of association

their country relating to employment.

bargain collectively.
Main findings and challenges
Main findings and challenges

2.6.1. Workers’ right to freedom of
association
No evidence was found of farmers disrespecting theworkers’ right to freedom of association. Although
there were no formalized labor unions in theassessment area, workers would get together andagree about wages and other working conditions.
None of the farmers were against these meetings as
they understood the need of the workers to discuss
their working rights with each other.

Analysis and priorities
This ALP Code Principle was not a focus for PT.
AOI, and there seemed to be no risk of violationof the workers’ right to freedom of association.
Additionally, field technicians had adequate
knowledge of this topic.

2.7.1. Information on legal rights
There was one farm (4%) in which a worker declared
to not be informed about how much she was goingto receive for payment, and she felt uncomfortableasking the farmer about it as this was the first time
she had worked at that farm. At all other farms,
workers were typically informed about their basic
employment conditions such as the wage they would
receive, the hours they needed to work, their tasks,and payment conditions.
However, none of the farmers informed theirworkers fully about their legal rights regarding thelegal minimum wage, employment formalization,or the rate for overtime hours. Three reasons wereidentified for this: (1) farmers lacked the required
knowledge about legal aspects to inform theirworkers properly; (2) farmers were unaware of their
responsibility to provide this information to theirworkers; and (3) farmers usually hired the same
workers, so they presumed that the workers alreadyknew this information.

PT. AOI response:“In 2017, PT. AOI is continuing to educate
100% of contracted farmers on this principle toensure compliance remains among farmers andworkers. PT. AOI has distributed educational
material through visual leaflets, farmers meetingsand individual visits training and community
engagemen”

2.7.2. Formalization of employment
According to Indonesian law, workers who work for
an indefinite period do not need to sign a written
contract to formalize their employment relation
with the farmer. However, a letter of appointment
needs to be in place.35 Even though 13 (57%) farmers
were aware of the need of written appointment
letters with the workers, none of the farmers who
hired labor had formalized the employment of their

35. According to Law 13/2003 the employment agreement for Indefinite Period can be agreed in writing or verbally.
However, if such a contract is agreed to verbally, based on Article 63 of Law 13/2003, the employer shall issue aletter of appointment for the worker which shall at least contain the following information; (1) name and address ofworker; (2) date the worker starts to work; (3) type of work that will be done by the worker; and (4) the amount ofwages that the worker is entitled to (see Appendix III for more detailed legal information).
28

External Assessment

workers through a letter of appointment. None of
the farmers were aware of the need and procedure
to register the worker in the authorized manpower
institution.36

PT. AOI response:“PT. AOI conducted refresher training, including
pre- and post-tests, for all Agronomy personnel
during Q2 2017 to improve understanding of thisCU identified two main reasons why workers did
not receive formal employment agreements. First,
farmers and workers were hesitant to formalize
their employment relationship, as this could beseen as lack of trust between both parties. Second,
workers were unaware about the law in regards towritten contracts.

Analysis and priorities
In line with the limited understanding among
field technicians on this topic, farmers also lacked
awareness about the legal benefits and rights
of workers (including the formalization of theiremployment) and they also did not understandthat it was their responsibility to inform workers
about their legal rights. PT. AOI did not provide any
information on these topics to farmers and workers.

principle.
Additionally, in Q2 2017, PT. AOI provided
contracted farmers with a template document on
which they could list workers’ name, age, gender,task, wage, and time worked. The document isdesigned to facilitate a written contract agreement
between farmers and workers on farms where theexisting contract type is verbal. PT. AOI provided
training to 100% of contracted farmers on how to
use this document.
To support this communication and increase
farmer and worker awareness about this subject,
PT. AOI will also install a banner in Lumajang
buying station during Q3 2017.”

36. According to Law 13/2003, indefinite workers shall be registered by the employer to the authorized manpower
institution in the local district/city within 7 (seven) days from the signing of the registration.
29

Chapter 3

ALP Program: feedback from farmers,
workers, and other stakeholders

EXTERNAL ASSESSMENT
Alliance One Indonesia

External Assessment

Control Union asked farmers, family members, andexternal workers to state what had changed at thefarms since the ALP Program started.
Twelve farmers (52%), six family members (43%),and one worker (6%) declared that farm safety had
improved due to the use of PPE, changes in farming
tool storage which improved farm tidiness, and/or
CPA storage.
Four farmers (17%), six family members (43%), andthree workers (20%) stated that the involvement ofchildren was reduced due to the awareness raisedby the field technicians during their visits; Twoworkers (13%) explained they had learned about
the GTS and were now taking measures to avoid thesickness.
Six farmers (14%) and three family members (21%)
declared that they had not changed any practices.
The field technicians discussed some of the farmers,
workers, or family member’s inquiries during their
meetings with supervisors. Meeting minutes onlyreflected the topics that were discussed, but did notrecord any feedback from the field or details about
the discussions.

31Appendices

EXTERNAL ASSESSMENT
Alliance One Indonesia

External Assessment

Appendix I – PT. AOI Action Plan
Introduction

1. Comments and Acknowledgement

PT. Alliance One Indonesia (PT. AOI) welcomesControl Union’s (CU) assessment of Agricultural
Labor Practices (ALP) program implementation
among its contracted burley farmers in the Lumajang,
East Java region. Findings and understandings fromthe assessment will help PT. AOI further improveand strengthen the implementation of ALP program.

A. People and Commitment

PT. AOI appreciates CU’s recognition of theCompany’s extensive efforts in planning andimplementing the ALP program, but acknowledges
that there remain opportunities for improvement.
The Company is committed to tackling thesechallenges by identifying the root causes at farmlevel and implementing solutions that achievemeasurable results over time. Recognizing thatthe development of solutions to many of theseroot causes involves stakeholder collaboration,
PT. AOI looks forward to continued collaborationand engagement with local communities, NGOs,
government bodies and other stakeholders as wework toward achieving our common goals.
PT. AOI’s objective is to achieve long-termsustainability of tobacco production in Indonesia
while ensuring that all contracted farmers
demonstrate Good Agricultural Practices (GAP)and continuous improvement toward meeting ALP
program expectations.

Philip Morris International (PMI) introduced the
ALP program to PT. AOI during the 2011/2012
crop year. Initial implementation of the program
involved training PT. AOI management, fieldtechnicians (FTs) and other employees responsible
for ALP implementation. The following year, PT.
AOI began collecting data to build farm profiles
so that the Company could better understand thereality of labor conditions on its contracted farms.
At the same time, PT. AOI also began initial ALP
communication to contracted farmers. Since that
initial communication, PT. AOI has continued toenhance its ALP communication as well as train
contracted farmers on the program and monitor
them for compliance. In terms of farm monitoring,
PT. AOI has conducted a Risk Assessment to identify
issues and mitigate potential risk. The initialassessment was conducted in June 2016, following
Sustainable Tobacco Production (STP) guidance
received in crop year 2016.
During Q2 2017, PT. AO reviewed the CY17 Risk
Assessment, farm monitoring results and root cause
analyses to establish mitigation plans and address
the issues based on risk level.

The following action plan is specific to addressing
concerns raised by CU among contracted burley
farmers in Lumajang.

33

External Assessment

ALP Implementation Roadmap: 2011-2016

To ensure strong ALP program implementation and coordination among internal teams, PT. AOI has
established a three-tiered management structure with clear communication and reporting procedures. The
structure includes three teams: Steering Committee, Country Team, and STP Station37 Team. The below
diagram provides additional information regarding the expectations of each team38:

37. Station refers to a particular buying area.
38. ALP is part of the Sustainable Tobacco Programme (STP) and Good Agricultural Practices (GAP) programs.
34

External Assessment

Each team has its own meeting schedule. Any issues observed on the fields and ideas for improvement are
documented and discussed with relevant management personnel. To report progress, the STP coordinatorleads Station Meetings on monthly basis throughout the season (6 meetings occurred in 2016) and theCompany keeps a record of ALP subjects discussed. PT. AOI’s ALP manager also attends these meetings toprovide additional support and guidance. PT. AOI will develop and implement a monitoring tool to evaluate
field technicians’ knowledge improvements during the monthly meetings. The Company began recording
meeting minutes for weekly and monthly meetings during Q2 2017.
During the Country Team meetings, STP/ALP managers and station management analyze issues, discuss
potential solutions and evaluate new ideas for improvement that have been proposed by the Station Team.
The ALP manager leads quarterly Country Team Meetings and reports the results, along with recommended
action plans, to the Steering Committee for their information and consideration. The Steering Committee
meets quarterly to review proposed ideas and provide final approval.

Control Union expressed positive appreciationof these processes, as the structure provides thenecessary staff with decision-making authority tointegrate the ALP program into operational plans
and address problems as they arise. However,Control Union did find that, despite the strong
structure, the follow-up process on Prompt
Actions was not always clear or followed and thatField Technicians lacked understanding of how tomonitor for the Safe Work Environment, Income
and Work Hours, and Fair Treatment principles. To
address these concerns, PT. AOI provided additional
training to the Lumajang Field Technicians in April
and May of 2016.

To further enhance Field Technicians knowledge andunderstanding of the ALP program, PT. AOI plans to
implement the following programs in 2017:• Make updates and improvements to materials
included in the ALP educational toolbox• Incorporate materials about the National andLocal Government law and regulations• Continue providing ALP refresher training to all
Field Technicians and Field Supervisors during
different crop stages.
• Continue monthly ALP training, including
pre- and post-training tests to evaluate Field
Technicians’ knowledge improvement

35External Assessment• Recruit an external expert (NGO / University)
to conduct a baseline study about local cultural
practices to better understand standard payment
and employment practices on the farm and how
they compare in different crops 39.
B. Training Procedures
Control Union found that the majority of PT. AOIcontracted farmers and their family members were
aware of the ALP program, but more than half ofthe non-family farmworkers lacked awareness ofthe program. In addition, Control Union found thatwhile PT. AOI employees generally had a strong
understanding of the ALP program, they lacked
comprehension of Prompt Action procedures andthe legal aspects relevant to the ALP code.
Internal at PT. AOITo strengthen ALP program comprehension andunderstanding of Prompt Actions, PT. AOI provided
refresher training on the ALP program to 100% of
Lumajang FTs throughout the 2016 season. The
training sessions, which included pre- and posttraining tests, were conducted during the seedbed
crop stage (April & May), field crop stage (June-July)and harvesting and post-harvest stage (AugustSeptember).
In Q2 2017, PT. AOI provided refresher training on
Prompt Actions and the importance of documenting
them in Alliance One International’s (AOI) Growers
Management System™ (GMS)40 to ensure proper
follow-up and action plan development. This training
included role-play, simulation and educational
material to improve understanding of the ALP
program and when to report a prompt action,
particularly in the areas of Safe Work Environment,
Income and Work Hours, and Fair Treatment.

To properly manage ALP program implementation,
PT. AOI has updated the job descriptions of
relevant employees to include details about theirscope of duty. To provide further visibility of
ALP responsibility, PT. AOI’s Human Resources
Department reviewed the job descriptions during Q22017 and more clearly defined the responsibilitiesof the Company’s Agronomy manager, STP manager,
ALP manager and STP coordinator.
Individual Farmer Communication
PT. AOI provides one-on-one education to its
contracted farmers throughout ongoing farm
visits. On average, FTs visit each contracted farmer
22-24 times per season, providing farmers withongoing ALP education and monitoring them forcompliance with the program. In addition, FTs may
host small group education sessions to addresscommon concerns that may be arising in particulargeographical areas.
As highlighted in CU’s report, PT. AOI has createdan ALP toolbox to support FTs’ efforts in improving
working conditions on farms. Per Indonesian law 41,
all educational material is provided in Bahasa
Indonesian, the national language. The 2016 ALP
toolbox included the following items:• ALP Monitoring Guideline Book42• Farm calendar which includes information about
the ALP principles 43• Child Labor & Safe Work Environment videos• Safe Work Environment posters44
Considering the dynamic nature of tobacco farms,
PT. AOI continuously reviews toolbox materials toensure they meet the current needs of the farmers
and their communities.

39. Reference the Farm Monitoring section for more information about GMS.
40. Indonesian Law No. 24/2009, Pig Chapter 3 National Language article 25 paragraphs 3 and article 39 paragraph 1.
The law states that all material for communication purposes shall use Bahasa Indonesian.
41. See Appendix I in PT. AOI’s response.
42. See Appendix IV in the CU Report.
43. See Appendix IV in the CU Report.
44. See Appendix IV in the CU Report.
36

External Assessment

In Q2 2017, PT. AOI took the following actions:• Reviewed National and Local Government law
and regulations relevant to legal aspect of the
ALP program and included in ALP refresher
training• Continued providing FTs and Field Supervisors
ALP refresher training during different crop
stages• Reviewed ALP Monitoring Guideline andincluded information about the National andLocal Government law and regulations related tolegal aspect of the ALP program book which is
distributed to all FTs• Continued monthly ALP training meetings withField Technicians, including pre- and post-training
tests to evaluate knowledge improvement.
Group Farmer Training
While year-round individual training is highly
effective, PT. AOI recognizes that a break in routine
is sometimes required in order to maintain interest
in and a commitment to implementing change. To
this end, PT. AOI, in partnership with PT Hanjaya
Mandala Sampoerna Tbk. (HMS) /PMI has hosted
annual Farmer GAP Day events throughout tobaccogrowing regions since 2012/2013. Farmer GAP Day
was designed to bring together social, educationand health issues to improve farmers’ economic
conditions and tobacco growing practices, and the2016 event involved three main components:
1. ALP Training

importance of budgeting and financial management,
and a local financial consultant teaches them how tocreate a simple income and budgeting sheet. Proper
financial management is essential in helping farmers
avoid labor abuses on their farms, particularly withregards to children of the farmer, as they can better
plan for and understand labor costs.
To increase workers’ awareness of the ALP program,
PT. AOI took the following steps in 2016:• Encouraged farmers, farmers’ spouses, andworkers to participate in the Company’s annual
Farmer GAP day event. This included training on
ALP and Integrated Pest Management (IPM).
• Provided farmers with educational posters to beposted in areas visible to workers.
A total of 301 individuals (134 farmers, 56 workers
and 111 farmers’ and workers’ spouses) participatedin the 2016 Lumajang event. Each individual left theevent with a calendar and t-shirt highlighting theprinciples of GAP and ALP, which served as ongoingreminders of the ALP program throughout the restof the year.
Utilizing the same concept as in 2016, PT. AOI
conducted the 2017 Farmer GAP Day during Q2
for farmers, workers and farmers spouses. A totalof 273 individuals attended the 2017 event (141
farmers, 61 workers, and 71 farmers’ spouses).
In addition, during Q3, PT. AOI will broadcast
messages through local media (Radio or TV) toenhance awareness of ALP program principles
among communities in tobacco production areas.

2. Integrated Pest Management (IPM) training
3. Financial Literacy: Training for farmers’
spouses, who are often tasked with managing
money earned from tobacco sales
Throughout the event, farmers are reminded about
the principles of ALP and GAP through various formsof edutainment and then quizzed on the information
as the day progresses. During the Financial Literacy
classes, farmers’ spouses, who are often responsible
for managing the family’s finances, learn about the

CPA Training
In CY16, PT. AOI partnered with CPA suppliers to
conduct CPA safety training for contracted farmers.
This training provided information on how to selectthe correct CPAs for targeted pests/diseases,
properly use Personal Protective Equipment (PPE),
properly dispose of CPA containers, and stay safein the field post-CPA spraying (re-entry internalguidance). 100% of PT. AOI’s contracted farmers in
the Lumajang area attended the training in CY16.

37

External Assessment

With regards to CPA training, PT. AOI is implementing
the following action plan for the 2017 crop season:• Continue to conduct group training on CPA
safety usage. Training was conducted by three
CPA suppliers during Q2, educating 100% of
contracted farmers.
• Provide individual training about CPA safety
usage during a scheduled farm visit in Q3.
In Q2 2017, PT. AOI began distributing new PPE
units to contracted farmers to identify the levelof acceptance from farmers. The Company plans
to distribute 100 units by the end of the year andwill conduct a survey at the end of the season toevaluate if and how the new units were used. The
Company will continue gradually distributing newunits to 100% contracted farmers through the endof 2019 to replace old PPE.
C. Farm Monitoring
In 2017, PT. AOI plans to monitor 100% of its
contracted farmers for compliance with all seven
ALP principles. FTs visit contracted farmers a totalof 22-24 times during different stages of the crop
cycle in order to provide ALP training and education,
monitor them for compliance, and mitigate issues
associated with the activities that take place duringthat time.
During the farm visits, FTs collect several pieces of
information in order to build a full farm profile thatwill allow PT. AOI to identify potential risks on thefarm and manage and mitigate these risks, thereby
reducing non-compliance with the ALP program.
Examples of the type of information collected forfarm profiles include:• People on Farm

• Farm Cash Crops• Farm Household Consumption• Farm Livestock Consumption
Farm profiles are continually updated throughout
the season.
PT. AOI has a standard monitoring procedure inplace to support FTs as they monitor farms for ALP
compliance. The monitoring procedure consists offour key steps:• Visual Observation• Farmer Interview• Worker Interview• Written documentation review
If a FT visually observes an ALP incident, the FT’s
first step is to discuss the incident with the farmer toobtain a full understanding of the underlying issues,
as many incidents have root causes that cannot be
determined by simple visual observation. The FT
will remind the farmer of his or her contractual
requirement to comply with the ALP program
and then work with the farmer to collaboratively
develop and agree to a corrective action plan,
which is then recorded in GMS. If the incident isserious and urgent, it is recorded as a prompt action
incident and elevated to management action. The FT
will conduct follow-up visits to continue educating
the farmer and ensure the corrective action plan is
implemented. If the issue persists and the farmer
does not demonstrate any willingness to improve,
PT. AOI management is involved and the incident istaken into consideration for future contracts. This
process is outlined in the following flowcharts:• Farm Tasks• Living Conditions• Employment Conditions

38External Assessment

PIC

RECORDACTIONAOI Team

START

FT

FIeld visit

Farm Monitoring

Case Open

Incident

FS / STP cordinator
Agronomy Manager
Station Manager

Case Resolved

Case Closed

Management (HO)GMS Farm
Monitoring
GMS Incident Log

Immediate
Superior
Case Open

Case Closed

Emergency
actionCase Open
GMS Farm
Monitoring
GMS Incident Log

Notice theFarmerFT & FS

END

PHASE

ACTION

Reconsider
Future Contract

Case Open

Phase 6

Management(Head Office)

Incident

Case Resolved

Case Open

Phase 5

Follow Up Visit :Station Manager,
Agronomy Manager

Incident

Case Resolved

Case Open

Phase 4

Follow Up Visit :Agronomy Manager

Incident

Case Resolved

Case Open
Phase 3

Follow Up Visit :FT, FS

Incident

Case Resolved

Case Open
Phase 2

Follow Up Visit :FTIncident

Case Resolved

Case Open
Case Resolved
Phase 1START
VISIT : FT

PromptAction

CLOSED(END)

39

External Assessment

PT. AOI appreciates CU’s acknowledgment that thequality and accuracy of Farm Profile data proved
to be accurate on 100% of farms visited, with small
discrepancies identified only regarding contracted
geographical area data. This discrepancy was foundto be the result of farmers unexpectedly reducing
their transplant areas due to unfavorable weather
conditions.
All information collected during farm visits is
documented in GMS, AOI’s global monitoring systemthat makes use of a handheld device to electronicallycollect and analyze crop, environmental and labor
farm data, as well as prompt actions and practices
that do not meet ALP standards45. The use of GMS
provides PT. AOI with access to live data as it allows
the leaf technicians to update information on thefarms in real-time, including GPS location. This tool
allows FTs to build and update Farm Profiles withgreater ease compared to manual recording.
In collaboration with Alliance One International’s
global GMS team, PT. AOI will be strengthening the
GMS program to better manage prompt action issues
and add an email notification that will prompt field
supervisors to follow up on pending issues within
associated during Q4 2017 or Q1 2018 timelines.
PT. AOI will review contracted farmers’ Prompt
Actions annually, analyzing year-on-year incidents
and determining whether there are any ongoing
trends. This analysis will be used to enhance farmer
and worker awareness of ALP principles.
To assure GMS data collection by FTs, PT. AOI began
conducting Unannounced Visits during Q2 2017.
Unannounced Visits aim to validate data accuracy
and minimize discrepancies in farm data. All FTs
are responsible for conducting Unannounced
Visits on farms where they have no day-to-day
responsibilities. The Unannounced Visits areregistered in GMS and provide additional visibility
for the risk areas. In 2017, PT. AOI plans to conduct
Unannounced Visits on 25% of randomly selected
contracted farms.

2. Action Plan
Issues identified by CU must be addressed within
the context of the socio-economic and cultural
conditions present in Indonesia tobacco-growing
communities and Lumajang specifically.
Traditionally, the local tobacco market has reliedheavily on a middle-man system which inherently
has the potential for labor abuses to arise due tothe degrees of separation between the farmer andthe ultimate buyer. As noted in CU’s report, throughpredecessor companies, PT. AOI has a history inIndonesia dating back 15 years. Over the course ofthat time, the Company’s objective has always been
to move away from purchasing tobacco throughthird-parties toward directly contracting with
farmers through the Integrated Production System(IPS). This system allows PT. AOI to continuallyinteract with contracted farmers, providing themwith education and training as well as monitoringthem for ALP compliance. Since the formation of PT.
AOI in 2011, the Company has steadily increased
the volume of tobacco purchased from contracted
farmers. In 2016, 100% of PT. AOI’s Burley Lumajang
purchases were from contracted farmers.
In addition, it is important to consider the strong
family farming culture in Lumajang. Strong familybonds tie all family members to farming activities.
The average size of a farm is approximately one
hectare, thus it is possible to be managed by family
members, however, there are some activities, suchas field preparation, transplanting, cultivation,
topping, harvesting, tying and sorting, that require
workers. Families view farm work as an opportunity
for children to learn about the tobacco growing
process which is a potential business for them in the
future.
One way that PT. AOI is addressing labor concerns
in the Burley area of Lumajang is by providing
hand-held rotivators (mini tractors) to contracted
farmers. In partnership with one of our customers,
HMS /PMI, PT. AOI covers the majority of the cost of

45. See Appendix II in this response to view samples of GMS screenshots that demonstrate the user-friendly navigation.
While screenshots are in English, the tool is available in the Bahasa Indonesia language, which is the primary languageof PT. AOI FTs.
40

External Assessment

the machines for contracted farmers. By supplying
these machines, we are eliminating some of the needfor labor during land preparation and, therefore, aredecreasing labor risks during this labor-intensive
task. In 2016, 100% of contracted burley farmers inLumajang utilized hand-held rotivators.
PT. AOI has developed an action plan in response to
CU’s assessment findings. In addition to the actionplans noted for each principle below, it is important
to consider the impact that PT. AOI’s overall
training on Good Agricultural Practices has had on
mitigation of labor risks.
1. Child Labor (CL)Eliminating child labor from tobacco production inIndonesia is challenging for many reasons, including
the education level, agronomy focused culture
and the socio-economic conditions of farmers andworkers.
Control Union did not find any evidence of child laboron PT. AOI contracted farms during its assessment.
However, PT. AOI did identify and address threechild labor incidents in Lumajang in 201646.
PT. AOI has implemented a number of programs
focused on the eradication of child labor fromtobacco production:• Farmer GAP Day – This event is designed toenhance awareness of ALP principles and provide
integrated farm training with educational games
methodology to contracted farmers and theirworkers and spouses.47 PT. AOI hosted thisevent in Lumajang during Q2, and a total of 273
participants were involved 48 (141 farmers, 61
workers, and 71 farmers’ spouses).

and conveying messages about safely working on
farms. In 2016, four schools were selected to bepart of ASP in Lumajang and PT. AOI expanded
the program to include two additional schools in
2017.
• Child Labor Eradication Initiative in Tobacco
Area (CERIA) - Program is PT. AOI’s programthat aims to prevent contracted farmers andworkers’ children from working in tobacco
as well as provide support and education tochildren under the age of 15 (the age at which
compulsory schooling ends). In Q3 of 2017, the
CERIA program will be implemented in Lumajang
in six Lumajang schools, reaching 600 children.
• Eliminating Child Labor in Tobacco Foundation(ECLT) – In partnership with ECLT, PT. AOI is
conducting a baseline study to identify root
causes of child labor in other areas of Indonesia.
If appropriate, PT. AOI will transfer lessons
learned and projects to the Lumajang area. ECLT
has yet to release the Child Labor Study final
report in East Java and Lombok.
PT. AOI’s existing programs have been successful
in reducing child labor incidents. Among PT. AOIcontracted farmers in Lumajang, child labor incident
rates observed per farm visit were reduced by morethan 78% when comparing 2016 data to 2015 data.
Given the success of its existing programs andrecognizing that child labor continues to be an areaof concern, PT. AOI plans to continue its efforts
to raise farmers’ awareness of the issue, enhance
understanding and encourages compliance. In
addition, farm monitoring will continue in order toensure contracted farmers do not employ children
in tobacco production on any hazardous activities.

• After School Program (ASP) – In collaboration
with the government, schools, HMS/PMI anda local NGO, PT. AOI has developed a series ofextracurricular after school activities focusedon creating a fun learning experience for youth
46. The three cases involved individuals ages 15-17, one of which was tying tobacco leaves and the other two wereoperating handheld rotivators.
47. See “group training” under Training Procedures section.
48. Initial attendance target was 180 participants.
41

External Assessment

2. Income and Work Hours (IWH)
CU identified several issues regarding IWH during
the assessment, including:• Workers are often paid below minimum legal
wages• Male and female workers are not paid equally for
performing the same tasks• There is a lack of clarity regarding working hours
and what benefits should be provided to workers.
Indonesian law 49 states that the maximum numberof hours that can be worked in one week is 40
hours, not including overtime. Overtime allows fora maximum of 14 hours per week. However, many
farmers and workers come to an informal agreement
on hours, tasks to be performed and wages together
that do not necessarily meet legal requirements.
As a preliminary approach to communicating
minimum and equal wage requirements, as well
as benefit requirements, PT. AOI distributed
educational materials (posters, calendars) during
Q2 2017 to all contracted farmers. These materials
include information about Indonesian Labor Law50,
to help contracted farmers better understandwhat is legally expected of them as employees.
Additionally, PT. AOI monitors all contracted
farmers for compliance with this principle anddocuments incidents in GMS as they arise. To
support this communication and increase farmers’
awareness about Income and Work Hours, PT. AOI
will install a banner in Lumajang buying station
during Q3 2017.
However, PT. AOI recognizes the need to better
understand the root causes driving the lack ofcompliance with this principle in order to create
lasting, positive change. PT. AOI will collaborate
with local stakeholders, such as a university orNGO, to conduct a study which will assess workers’
payment against the minimum wage, payment
schedule, gender, tasks, working hours and overtime

pay and benefits. Because the wage issues arewidespread among all farmworkers, not just thoseworking in tobacco, the study will also include othercrops to define a holistic action plan. Data captured
during the survey will provide PT. AOI with a better
understanding of how farmers and the farming
community set wages and why there are different
wage rates between male and female workers.
The study will be started in Q3 2017 and will
be finished by the end of 2017. Following thecompletion of the study and analysis of the findings,
PT. AOI will establish an action plan.
3. Fair Treatment (FT)
While CU did not identify any evidence of verbal,
sexual or physical abuse on assessed farms, they didnote that there were unequal payments between
male and female workers performing the sametasks. PT. AOI will gain a deeper understanding of
the root cause of this inequality through a study
conducted by a local university or NGO 51. This study
will assess workers’ payment against the minimum
wage, payment schedule, gender, tasks, working
hours and overtime pay and benefits. Because thewage issues are widespread among all farmworkers,
not just those working in tobacco, the study will
also include other crops to define a holistic action
plan. Data captured during the survey will provide
PT. AOI with a better understanding of how farmers
and the farming community set wages and why there
are different wage rates between male and female
workers. The study will be conducted in Lumajang,starting during Q3 2017 and will be finished by theend of 2017. Following the completion of the study
and analysis of the findings, PT. AOI will establish
an action plan. Based on UNEJ (Jember University)
methodology, there will be 80 tobacco farms visitedand 40 non-tobacco farms surveyed.
PT. AOI appreciates CU’s positive acknowledgmentof the pilot support mechanism the Company
launched in partnership with HMS/PMI in 2015. The
pilot project was conducted in two Lumajang area

49. Indonesian Law No. 13/2003 article 77 paragraph 2 and article 78 paragraph 1
50. Indonesian Law No. 13/2003
51. See study described in IWH section for more information.
42

External Assessment

villages, which were selected based on the findingsof Jember University’s (UNEJ) baseline study in2015. The project covered 43 contracted farmers
and was intended to facilitate issues related the
Fair Treatment, Income & Work Hours and Forced
Labor principles. UNEJ served as the facilitatorof any disputes. Neither HMS/PMI nor AOI wereinvolved in conflict mediation. It is estimated thatbetween 800 and 1,200 individuals 52 are aware of
the support mechanism.
In Q2 2017, PT. AOI expanded the support
mechanism to cover four villages in crop year 2017.
The Company will support UNEJ and other informal
leaders 53 by providing ALP training and materialreferencing National and Local regulation related
to agricultural labor law.
4. Forced Labor (FL)CU did not identify any Forced Labor issues during
its assessment, which is in line with PT. AOI’s own
farm monitoring findings. However, to ensure
continued compliance, PT. AOI will continue toeducate 100% of contracted farmers through visualleaflets, group meetings, individual visits, andtraining. To communicate and increase awarenessabout this principle, PT. AOI facilitated a pilot
project to increase use of a Support Mechanism infour villages. This pilot project was started in Q3
2017 and will be completed at the end of the 2017
crop year.
5. Safe and Work Environment (SWE)As acknowledged by CU, significant progress has
been made in terms of the availability of safety
equipment on PT. AOI contracted farms. For
example, more than 96% of assessed farms had
protective PPE equipment, including hand gloves
and CPA storage, available on site. This is a direct
result of the high level of commitment PT. AOI has
demonstrated toward making improvement in thisarea. Between 2012 and 2016, PT. AOI provided thefollowing PPE to contracted farmers in Lumajang:• 1,075 PPE units, 54• 15,894 pairs of gloves, and• 1,071 CPA locked storage units.
Since 2015, PT. AOI has provided 745 Re-Entry
Interval (REI) warning signs to its contracted
farmers as part of its efforts to educate farmers
and workers about the importance of abiding byproper field re-entry procedure following CPA
application. The Company provided REI signs to
100% of new contracted farmers in 2017. FTs will
provide replacements to contracted farmers on an
as-needed basis.
PT. AOI acknowledges that there are still
opportunities for improvement regarding farmer
and worker safety, as CU identified gaps between
the training provided and the practices on the farm.
During farm visits, Field technicians will continue
to monitor contracted farmers to ensure they are I
compliance with this principle and are using the REI
signs, gloves and storage units as expected.
Safe CPA Application Training
Although CU identified comprehensive educational
materials regarding CPA safety and recycle/disposal
available at PT. AOI contracted farms, the Company
plans to intensify visual communication and training
efforts in order to continue improving farmer andworker awareness. In collaboration with three
CPA manufacturers, PT. AOI hosted practical CPA
training sessions for 100% of contracted farmers in
Q2 and Q3 2017.
To further emphasize safety on farms, PT. AOI
expanded its Integrated Pest Management training
to include information about:

52. Subject to final verification from UNEJ.
53. These individuals, who are typically nominated by local religious groups, mediate conflicts between farmers andworkers.
54. PPE units include googles, head wraps, long-sleeve shirts and gloves.
43

External Assessment• Proper selection and application of the correct
CPAs for targeted pest/diseases,

Environment principle, PT. AOI has taken and willcontinue to take the following actions:• Required PPE and its correct usage,• Continued to distribute safety material (PPE andCPA Lock Storage) to all contracted farmers• Triple rinse CPA container procedures,• Re-entry interval guidance.

• Improved educational material (calendar,
poster) consisting of contact/hotline number toemergency access (police, hospital, fire brigade)in each community

Field technicians reinforce this training with
contracted farmers during farm visits and monitor
them for compliance with ALP program expectations.

• Exploration of local media (TV, Radio) outlets
to broadcast messages regarding Safe Work
Environment, in collaboration with HMS/PMI• Proper recycling and disposal of empty CPA
containers, andEmpty CPA Container Collection Program
Regarding the empty CPA container collection
for recycling and disposal program, PT. AOI
acknowledges that, although ample educationmaterial is available on farms, the return rateof empty containers is relatively low. PT. AOI
intensified farmer communication and awarenessduring 2016 crop and 13% of the containers werereturned for recycling and disposal proposes. In
order to continue increasing the number of empty
CPA containers being returned for recycling anddisposal, PT. AOI will require 100% of contracted
farmers to return CPA empty containers prior toreceiving green tobacco delivery authorization. To
further incentivize farmers to return empty CPA
containers, PT. AOI plans to offer a reward program
to contracted farmers who return 100% of plastic
and empty CPAs containers as requested at the endof the season.
It is also important to highlight the lack ofenforcement
regarding
CPA
application
55
regulation . This may lead farmers to assume thatthey are not required to return the empty containers
nor use protective equipment, thereby potentially
increasing farmers, workers and communities’
exposure.
To improve compliance with the Safe Working• Hosted a training session for all FTs in basic firstaid techniques during Q2 201756 to increase
understanding of how to address some of thehealth and safety risks that could occur in thefield (e.g. CPA application, injury due to sharp
tools, snake bites, etc.).
• Distributed a first aid kit to 25% of contracted
farmers in Q2 2017. In Q3 2017, PT. AOI
engaged a third-party resource57 to provide
training to contracted farmers who received
first aid kits. The training aimed to increaseawareness on health and safety risks in the field,
familiarize farmers with the function of thefirst aid kits and inform them of who to contact
in case of an emergency. The Company willcontinue to distribute first aid kits to contracted
farmers through the end of 2020, with a targetof reaching 100% of the contracted farmer base.
• Ongoing engagement with CPA manufacturers
and distributors to provide training to 100% of
contracted farmers
6. Freedom of Association (FA)
PT. AOI fully supports the right to freedom of
association and collective bargaining. As noted by
CU, there was no evidence of PT. AOI contracted
farmers not respecting workers’ rights to freedomof association. In 2017, PT. AOI is continuing

55. Government Regulation No. 08/MEN/VII/2010
56. Training was provided by a third-party, Industrial Clinic Experts.
57. In collaboration with “Indonesian Red Cross”
44External Assessment

to educate 100% of contracted farmers on thisprinciple to ensure compliance remains among
farmers and workers. PT. AOI has distributed
educational material through visual leaflets,
farmers meetings and individual visits training andcommunity engagement.
7. Compliance With the Law (CWL)
PT. AOI contracted farmers are required to comply
with all applicable laws, including labor laws.
During the assessment, CU found that farmers did
not provide their workers with written contracts
nor did they inform them of their legal rights andemployment conditions.
According to PT. AOI’s farm monitoring results,
100% of the Company’s contracted farmer basehired labor. Through farm monitoring, PT. AOI
has identified that non-compliance with thisprinciple is often due to the farmer being confusedon expectations and therefore does not provide
a written contract to workers. The incidents
reported were related to unavailability of written
contract between farmers and workers, but PT.
AOI acknowledges that law surrounding thisexpectation is confusing and difficult for the farmer
to understand what is required.
To obtain further clarity on the requirement of
having a written contract between farmers andworkers, PT. AOI contacted the local Government
Man Power Officer in September 2016. PT. AOI
received a letter from the local Government Man
Power Officer stating that individual businesses
which are not considered legal entities, such as
farmers, are not legally required to have written
contracts with their employees. However, farmers
are legally required to maintain a list of theirworkers with names, ages, gender, and wage rate
and job responsibilities.
In order to boost compliance with employment laws,
it is imperative that farmers understand that they
are employers and therefore have legal obligations

to their workers. PT. AOI provided refresher
training for all Agronomy Personnel in May 2016 to
help them better understand how to mitigate risks
associated with this principle. The training included
the Prompt Action process. PT. AOI conductedrefresher training, including pre- and post-tests, forall Agronomy personnel during Q2 2017 to improveunderstanding of this principle.
Additionally, in Q2 2017, PT. AOI provided
contracted farmers with a template document on
which they could list workers’ name, age, gender,task, wage, and time worked. The document isdesigned to facilitate a written contract agreement
between farmers and workers on farms where theexisting contract type is verbal. PT. AOI provided
training to 100% of contracted farmers on how to
use this document.
To support this communication and increase farmer
and worker awareness about this subject, PT. AOI
will also install a banner in Lumajang buying station
during Q3 2017.
PT. AOI will continue to monitor all contracted
farmers using GMS tablets during Field Technician
visits based ALP measurable standard and guidance.

3. Conclusion
PT. AOI is committed to the eradication of child laborfrom tobacco production and driving continuous
improvement in all labor practices among its
contracted farmer base. The Company appreciates
CU’s recognition of the positive progress that has
been made thus far in ALP program implementation
and acknowledges identified areas for improvement.
As noted throughout the document, PT. AOI has
developed an action plan focused on learning
more about the root causes of labor challenges,
strengthening the training and education provided
to its contracted farmer base and FTs, and working
with relevant stakeholders to drive lasting, positivechange. It is imperative that FTs work in close45

External Assessment

collaboration with contracted farmers to determine
whether their current labor practices meet ALP
program requirements and then implement thenecessary changes in order to drive continuous
improvement.
PT. AOI is committed to strong ALP program
implementation and looks forward to continued
collaboration with stakeholders as we strive toenhance safe working practices and progressively
eliminate labor abuses from contracted tobacco
farms in Indonesia.

46External Assessment

Appendix I

ALP Monitoring Guideline Handbook

47

External Assessment

Appendix II

48

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49

External Assessment

Appendix II – Scope and methodology
Assessment team
The team responsible for conducting this assessment
consisted of two local Indonesian auditors, two local
translators, and three coordinators. The auditors
conducted farm assessments and interviewed
the field technicians. The three coordinatorsinterviewed PT. AOI management, GAP, ALP and
field managers, and the field supervisor. The local
auditors were trained by Verité and CU at the endof 2014. The coordinators were trained by Verité
and CU.58 This qualification process consisted of thefollowing stages:• Candidate selection by Control Union;• Webinars organized by Control Union to verify
suitability of candidates;• Completion of online training provided by Verité;• Full week of classroom training conducted by
Verité with Control Union; and• Shadowing during farm visits by Verité.
The local translators received one day’s training
prior to the field visits. The training was focused onunderstanding the ALP Code and the translators’role during the field visits.59
Desk review
Prior to this assignment, CU requested
documentation from PT. AOI to give the assessment
team a better idea about the market characteristics
and the management systems that were in place.
PMI Regional, with the approval of PT. AOI,
provided the legal information that was relevant to
the ALP Code (see Appendix III for more detailed

legal information). This was important to ensure athorough preparation of the assessment.
Opening meeting
On September 6, 2016, CU started the assessmentwith a meeting in Surabaya in the East Jawa
province, Indonesia. This meeting was attended bypart of PT. AOI’s ALP team (STP manager and ALP
manager60), country manager, agronomy manager,burley agronomy manager, burley production
manager, and PMI Regional. CU presented theobjectives and approach of the assessment, while
PT. AOI provided a brief overview of the market andcompany background.
Methodology for ALP implementation systemreview
The methodology used for the evaluation of
PT. AOI’s implementation of the ALP Programis based on the widely used PDCA 61 cycle. This
cycle is a management method for the continuous
improvement of processes and products. CU spent
one and a half day (September 6 & 7, 2016) on
the management assessment. They interviewed
management staff, analyzed documentation, andevaluated their systems to better understandhow the implementation of the ALP Program wasorganized. In total, CU interviewed six management
personnel,62 eight field personnel, 63 and two
representatives of PMI Regional. Additionally, CUinterviewed one stakeholder: the director of theSocioeconomic Agriculture Department of theJember University (see 1.9.2). All interviews wereconducted individually, so that interviewees felt
comfortable and able to speak freely and raise any
issues.

58. One in December 2015 and the other one in December 2014.
59. Translators were asked to literally translate the conversation between auditors and the interviews in order to avoid
any type of interpretation.
60. Lumajang STP coordinator was not able to attend to the opening meeting due health reasons.
61. Plan, Do, Check, Act.
62. President director, national Agronomy manager, STP manager, ALP manager, Lumajang STP coordinator, Burleymanager and production manager
63. Two field supervisors and 6 field technicians.
50External Assessment

Scope and farm sampling
At the time of the assessment, PT. AOI sourced tobacco from Lombok and Central and East Java. In orderto ensure a manageable sample size, the scope of this assessment was limited to the Burley farmers locatedin the Lumajang region, in East Java (see image below).

Scope of assessment: Burley farmers in Lumajang (source: PT. AOI)
PT. AOI contracted a total of 533 Burley farmers inthis region. To constitute a meaningful sample, CU
needed to visit at least 23 farms, the square root of
the total population of farmers within the scope. In
total, Control Union visited 23 farmers, which were
either sampled randomly or selected based on thefollowing criteria:• Geographic spread; and• Farm size: different farm sizes selected to ensure
diversity, but focus on large farms to ensurelabor practices could be assessed.
In addition, an extra field day was assigned toassess Prompt Actions issued to four farms. The
information verified was:• Farmer awareness about the issued Prompt
Action• Status at the farm: did the same situation takeplace during the CU visit?
• Prompt Action management: recording, follow
up, and corrective action
Over a period of two weeks, CU visited an average ofeight farms per day, with a reporting day after eachfield day. The graphs below provide demographic
information about the farm selection. All farmers
worked together with family members and external
workers. One farmer exchanged labor with anotherfarmer for certain tasks.

51

External Assessment

Methodology for ALP farm practices review

Farm size (Hectares contracted by PT. AOI)

26%

57%
17%
0-1
1<2
>2
Average assessed farm size: 1.8 hectares

Stage of tobacco production

Growing9Topping9
17

Harvesting
14

Curing0

2

4

6

8 10 12 14 16 18

Number of farms

Due to the openness and collaboration of PT. AOI,
CU managed to conduct all the visits unannounced.
This meant that the farmers had not been informed
about the visit and its objective prior to CU’s arrival.
PT. AOI did inform farmers several weeks before
that a visit could take place within a certain period,
but said nothing in the days prior to the visits. CU
informed PT. AOI about the names of the selected
field technicians the day before their visit would
take place. The names of the farmers were only
provided on the day of the visit. The reason for thisis that CU wanted to obtain a realistic picture of
the farm practices, which was most likely to be seen
when arriving unannounced.

The methodology used during the farm visits was
based on triangulation of information. Auditors
were instructed to seek at least two, preferably
three, sources of information. They used theirfindings to draw conclusions about whether farm
practices were meeting the standard of the ALP
Code. These sources could be interviews with
farmers, family members, and workers. Sources
could also include documentation and visualobservation of the farm area, field, storage facility,
and curing barns. This methodology was also
used to investigate the underlying factors that
increased the risk of not meeting the standard. In
addition to information triangulation CU also used
the “Five Whys” methodology, a commonly usedtechnique to obtain an understanding of problems,
to investigate the reasons behind certain issues.
Before every interview, CU explained the objectiveof the assessment and assured interviewees that all
information would be kept completely anonymous.
Next to assessing labor practices, CU also verified
the impact of PT. AOI’s management systems at
the farms. The goal being to see how these wereperceived by field technicians, farmers, family
members, and other people at the farms.
People interviewed
Wherever possible, these interviews wereconducted individually and without the presenceof the farmer, to avoid undue bias. For this same
reason, all interviews with farmers were conductedwithout the presence of the field technicians. In
total, 52 people were interviewed by Control Union.

52External Assessment

Age of the people interviewed

100
90

3%

80

44%

70
60
50
27%

40
30
20

97%

29%

10
0

<13

Interviewees

Adults (>=18)

Farmers
Family members

Duration and frequency of employment of hired
workers interviewed (15 people in total):

External workers

Demographic information on the 29 family members
and external workers interviewed:

Frequency of employement
external workers

Gender of people interviewed

46%
54%
38%
62%

Full shifts full workweek
Full shifts several days a week
FemaleMale

53

External Assessment

Duration of employement
external workers

47%

Leaf manager, regional AOI Asia, PMI regional, PMI
Operations Center, and Verité’s consultant for Asia.
CU presented the initial findings. PT. AOI requested
clarification of certain items, and a constructive
discussion took place on some topics. Overall, CU’sfindings were considered a useful base for taking
action to improve the implementation of the ALP
Program.
53%

Less than 1 month
1-3 months

Closing meeting
On October 17, 2016, a closing meeting took placein Surabaya, East Java, Indonesia. The meeting wasattended by PT. AOI’s Steering Committee (country
manager, Agronomy manager, financial director
and Burley manager), ALP team (STP manager,
ALP manager, Lumajang STP coordinator), Burley
Agronomy manager, Burley production manager,

Reporting procedure
During the assessment, auditors reported after
each field day to the coordinator. The coordinatormonitored the auditors’ findings, and provided
feedback whenever necessary. The coordinatorcompiled all findings and combined these with thefindings from the management assessment. Public
release of CU’s assessment report demonstrates
PMI’s commitment to transparency, which is an
important component of the ALP Program. CU
authored the final report, which was evaluatedby Verité. PMI reviewed the report to ensure
consistency of the presentation of CU’s findings
worldwide. Finally, PT. AOI reviewed the report
to verify that all the information was correct, andto finalize their action plan that was based on thisreport.

54

External Assessment

Appendix III – Legal information
The information below has been provided to Control
Union before the assessment by PMI and approvedby PT. AOI. Control Union reviewed this information
to ensure that it was clear and complete so that it
could be used for the assessment.

1. Principle 1 – Child Labor
1.1 Minimum age for employment (in tobacco)
According to Article 68 of the Law 13/2003, employer
is prohibited to employs children under 18 years
old. However, according to Article 69 paragraph(1) of Law 13/2003, the prohibition is exempted
for children with age between 13 (thirteen) to 15(fifteen) years old to conduct light work as long as
it does not disturb the physical, mental and social
development and health. The children within age
15 (fifteen) to 18 (eighteen) years old are allowed
to be employed except for hazardous work which
may harm the health, safety or moral of the children
based on Minister of Manpower and Transmigration
regulation 235/2003.64
There is no specific regulation in Indonesia which
regulates minimum age for employment of childworker in tobacco industry.
1.2 Requirements applying to farmers’ own children
or other family members such as nieces and nephews
helping on the farm
According to Article 69 paragraph (2) and (3) of Law
13/2003, for children who are employed in familybusiness, the employer is required to fulfil thefollowing requirements; (1)The maximum working
hours is 3 (three) hours, (2), The work is conductedat noon time and does not disturb school hours and(3) Work health and safety.

1.3 Age (or ages) limit for compulsory schoolingAccording to Article 6 of Law 20/2003 mentionedthat every citizen with the age of 7 (seven) to
15 (fifteen) years old is required to follow basic
education. Based on Article 48 of Law 23/2002, thegovernment is required to establish basic education
for minimum of 9 (nine) years for every children.
1.4 Definitions of hazardous work (incl. agriculturalactivities that constitute hazardous work) as wellas any tasks that workers under 18 are specificallyprohibited from participating in by law
According to Article 74 paragraph (3) of Law 13/2003
and further regulated in Minister of Manpower
and Transmigration regulation 235/2003, it ismentioned that children under 18 (eighteen) years
old is prohibited to work and or employed in a work
which hazardous to children’s health, safety or
moral as follows:
Works classification which hazardous to children
health and safety
1. Works that associated with machines,
appliances, installation, and other equipment
which
includeproduction,assemble/
installation, operation, maintenance andrepair.
2. Works that conducted in a hazardous working
environment which include:
3. Works that containing physical hazard;
4. Works that containing chemical hazard;
5. Works that containing biological hazard.
6. Works that containing hazardous nature andsituation.

64. However, ALP code only allows children between the ages 15-17 to be employed for any tobacco related activities.
Younger children between the ages of 13-14 are only allowed to support a family farm. Children below 18 are only
allowed to be involved in non-hazardous activities. As ALP requirements are stricter, the ALP Code prevails.
55External Assessment

Works classification which hazardous to children
morality
1. Works in bar, discotheque, karaoke, billiard,
movies, massage parlor or any location thatcan be used as prostitution place.
2. Works as a model for liquor promotion, sexualstimulations and or cigarettes.
1.5 Other restrictions or requirements on theemployment of workers under 18 years (e.g. limit on
work hours, work permits, etc.)
According to Article 69 paragraph (2) of Law
13/2003, employer who employs children on lightworks shall fulfill the following requirement:
1. Written permission from the parents or
guardian;
2. Employment
agreement
betweenemployer with the parents or guardian;the

3. Maximum working hours of 3 (three) hours;
4. Conducted on day time and do not disturb
school hours;
5. Work health and safety;
6. Clear employment relation; and7. Receiving wages based on the prevailingregulation.
According to Article 72 of Law 13/2003 mentioned
that, child worker who is working together withadult worker, must have separate working placewith the adult worker.

2. Principle 2 – Income and Work Hours
2.1 Laws on regular and overtime hours (e.g.
maximum work hours)
According to Article 77 paragraph (1) and (2) of Law
13/2003, mentioned that every worker requiredcomplying with the working hours provision as
follows:

According to Article 78 paragraph (1) of Law
13/2003, mentioned that the allowed overtime
hours is at maximum of 3 (three) hours in one day
and 14 (fourteen) hours in one week.
The working hours should be disclosed in the
Mandatory Manpower Report which required tobe reported by the employer to the Database of
Mandatory Manpower Report or the Manpower
Office.
2.2 Requirements those employers must meet torequest overtime from workers
According to Article 78 paragraph (1) of Law
13/2003, the employer who employs their workers
exceeding the regular working hours shall fulfil thefollowing requirements:
1. The relevant worker is agree to perform theovertime; and2. The allowed overtime hours is at maximum of
3 (three) hours in one day and 14 (fourteen)
hours in one week.
Furthermore, Article 78 paragraph (2) of Law
13/2003, the employer who employs their workers
exceeding the regular working hours is required to
pay the overtime payment.
The agreement from the relevant worker to performthe overtime shall be made in written based on Article
6 of Minister of Manpower and Transmigration
regulation 102/2004. This agreement can be madein a form of list of workers who are agree to performthe overtime and signed by the respective workers
and the employer.
2.3 Laws on regular and overtime wages (e.g.
minimum wages, minimum wages agreed with
unions)
Article 89 of Law 13/2003, mentioned that minimum
wages may consist of:

1. 7 (seven) hours per day and 40 (forty) hours
per week for 6 (six) working days in a week; or

1. Minimum wages based on the province orregency/city;

2. 8 (eight) hours per day and 40 (forty) hours
per week for 5 (five) working day in a week.

2. Minimum wages based on sector at theprovince or regency/city.

56External Assessment

The said minimum wages is stipulated by theGovernor with regard to the recommendationfrom the Wages Councils and/or Regent/Mayor.
According to Governor of East Java Regulation No.
88 of 2015 on Region/City Minimum Wage in EastJava of 2016 specifically for Lumajang Region is
Rp. 1.437.000 per month. When calculated by day,workers working 6 (six) days a week should receiveat least 57.480 IDR/day and workers working 5(five) days per week should receive at least 68.429
IDR/day.
Article 90 of Law 13/2003 mentioned that theemployer is prohibited to pay the wages lower thanthe minimum wages.
Furthermore Article 91 of Law 13/2003 mentionedthat the regulation of wages which agreed upon
agreements between the employer and the worker
or labor union shall not be lower than the wages
provisions which stipulated by the prevailingregulation. In the event where the said agreement islower or contradict with the prevailing regulations,the agreement is null and void and the employer
is required to pay the worker wages based on theprevailing regulations.
According to Article 8 of Minister of Manpower
and Transmigration regulation 102/2004, overtime
pay calculation is based on monthly wages. Hourly
wages is 1/173 of monthly wages.
Article 11 of Ministry of Minister of Manpower andTransmigration regulation 102/2004, mentioned
the calculation of overtime pay as follows:

2. In the event where the overtime is conducted
on weekly day rest and or official holiday for
6 days of working hours and 40 hours a week,
therefore:a. Calculation of overtime pay for the first
7 hours shall be paid 2 times of 1 hour
wages, and the eight’s hour shall be paid 3
times of 1 hour wages and ninth and tenthhour shall be paid 4 times of 1 hour wages
b. If the official holiday is falls on the
shortest working days, calculation of thefirst 5 hours shall be paid 2 times of 1 hour
wages, the sixth hour shall be paid 3 timesof 1 hour wages and the seventh and eight
hours shall be paid 4 times of 1 hour wages.
3. If the overtime is conducted on weekly day
rest and or official holiday for working timeof 5 working days and 40 hours a week,
therefore the calculation of overtime pay forthe first 8 hours shall be paid 2 times of 1 hour
wages, the ninth hour shall be paid 3 times of
1 hour wages and the tenth hour and eleventhhour is 4 times of 1 hour wages.
2.4 Laws on basic entitlements to be paid to workers(e.g. social security, health care, holidays, otherleave entitlements etc.).
Social Security
Generally, social security is regulated under Law No.
40/2004 and specifically regulated in GR 44/2015,
GR 45/2015 and GR 46/2016.
Based on Law 40/2004, social security program

1. In the event where the overtime is conductedduring working days
a. For the first working hour shall be paid in
the amount of 1,5 times of 1 hour wages
b. For the next working hour shall be paid in
the amount of 2 times of 1 hour wages

including:
1. Health security;
2. Work accident security;
3. Old age security;
4. Pension security;
5. Death security.

57External Assessment

According to PD 19/2016, the contribution of
Health Security is in the amount of 5% of one monthwage with the following provision:
1. 3% is borne by the employer;
2. 2% is borne by the worker.
According to Article 16 of GR 44/2015, thecontribution should be paid by the employer forwork accident security is based on 5 categories ofworking environment risk level, including:
1. Very low risk level: 0,24% from one monthwage;
2. Low risk level: 0,54% from one month wage;
3. Medium risk level: 0,89% from one monthwage;
4. High risk level: 1,27% from one month wage;
5. Very High risk level: 1,74% from one monthwage.
For Death Security, according to GR 44/2015, thecontribution shall be paid by the employer for Death
Security is in the amount of 0,30% of one monthwage.
For Pension Security, according to GR 45/2015, thecontribution shall be paid monthly in the amount of
3% of one month wage, with the division of:
1. 2% of the wage is borne by the employer and
2. 1% of the wage is borne by the participant.
For Old Age Security, according to GR 46/2015, thecontribution which should be paid is in the amountof 5,7% of the wage, with following provision:
1. 2% is borne by the worker
2. 3,7% is borne by the employer.

Religious Holiday Allowance
The recent regulation on religious holiday allowance
is MR 6/2016. MR 6/2016 mentioned that theemployer is required to grant religious holiday
allowance to their worker who has worked for 1(one) month continuously or more.
According to the said regulation, the amount ofreligious holiday allowance is as follows:
1. The worker with a working period of 12months continuously or more is granted 1
month wage
2. The worker with a working period of 1 month
but less than 12 month shall be granted
proportionally based on their working period,
with the following calculation:[(Working period) / 12] x 1 month wage

During another holidays other than such Religious
Holidays, the employer is not required to pay thewage to the employee, unless he/she conducting
overtime work during those holidays based on
Article 85 of Law 13/2003.
Annual Leave
Based on Law 13/2003, the worker is entitled toannual leave up to 12 working days if he/she has
worked for 12 months continuously.
The above numbers of annual leave is a minimum
numbers required by the regulation, the company
may, however, opt to increase numbers of leave
entitlement by referring to the years of service.
Maternity Leave
According to Article 82 of Law 13/2003, female
worker is entitled for 1,5 months’ maternity leave
prior to giving birth and 1,5 months’ maternity leave
after giving birth. The female worker who exercise
her maternity leave is entitled for full payment of
her wage according to Article 84 of Law 13/2003.

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External Assessment

Salary during Prolonged Illness
According to Article 93 paragraph (3) of Law
13/2003, the worker who is suffering prolonged
illness is entitled for the following amount of wage:
1. First 4 months: 100% of wage;
2. Second 4 months: 75% of wage;

1 (one) time in a week or 1 (one) time in a month
except the Work Contract cites that it can be paid inless than one week.
There is no specific regulation that mentioned thepayment of wage to foreign worker. Basically, theemployer shall pay the wage to worker in form of
cash with the currency of Rupiah of the Republic ofIndonesia.

3. Third 4 months: 50% of wage; and4. The following months: 25% of wage before
the termination of employment terminationby the employer.
Leave without Salary Deduction
According to Article 93 paragraph (4) of Law
13/2003, the worker who does not perform theirwork due to certain reason is entitled for theirwages with the following provision:
1. Worker getting married, paid for 3 days
2. Worker’s children getting married, paid for 2days
3. Worker’s children getting circumcised, paidfor 2 days
4. Worker’s children getting baptized, paid for 2
days
5. Worker’s wife giving birth or miscarriage,
paid for 2 days
6. Worker’s spouse or parents/parents in law
or children or in law passed away, paid for 2days; and7. Family member who’s living in one housepassed away, paid for 1 day.
2.5 Wage and hours law specific to piece rate
workers, seasonal workers, and migrant workers
Article 59 paragraph (1) of Law 13/2003, mentionedthat seasonal worker is included in a definite
working period employment agreement.

2.6 Laws on payment of wages relevant to thefrequency of payment in agriculture, for example,
laws on whether end-of-season one-time payments
are permissible
According to Article 12 of GR 78/2016, mentionedthat wage shall be determined based on: (a) timerate; and/ or (b) piece rate. Wage based on time rateshall be determined on a daily, weekly, or monthly
basis.
Article 13 of GR 78/2015, furthermore mentionedthat in case that the wage is determined based ona daily basis, the calculation of wage shall be as
follows:• for Company with 6-day system of work in a
week, the monthly Pay of Wage shall be of 25(twenty five) days; or• for Company with 5-day system of work in a
week, the monthly Pay of Wage shall be of 21(twenty-one) days.
Article 19 of GR 78/2015 mentioned that wage shallbe paid by employer at least 1 (one) time in a weekor 1 (one) time in a month except the Work Contract
cites that it can be paid in less than one week.
2.7 Laws on in-kind payment
According to Law 13/2003, Article 1 paragraph (30)
define wage as worker entitlement in form of cashthat required to be paid by the employer.
Furthermore Article 21 of GR 78/2015, mentionedthat The Wage shall be paid in the currency of
Rupiah of the Republic of Indonesia.

According to Article 19 of GR 78/2016 mentionedthat The Wage shall be paid by Employer at least
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External Assessment

2.8 Legal requirements for migrant workers toensure they are legally permitted to work
According to Law 13/2003, specifically Article 42
paragraph (1), mentioned that every employer which
employed foreign worker is required to written
permit from the appointed Minister or authority.
Article 42 paragraph (3) mentioned that foreign
worker is allowed to be employed in Indonesia onlyin employment relation of Definite Working Period
and certain position.
Specifically, the requirement to employ foreign
worker in Indonesia is regulated under MR 16/2015
and lastly amended with MR 35/2015, which
mentioned that employer who employ foreign
worker is required to obtain Expatriate Manpower
Utilization Plan (Rencana Penggunaan Tenaga Kerja
Asing/”RPTKA”) and Expatriate Working Permit(Izin Mempekerjakan Tenaga Kerja Asing/”IMTA”).
2.9 Other specific rules applicable to migrant
workers
Article 36 of MR 16/2015 mentioned that the foreign
worker which employ by employer in Indonesia isrequired to fulfil the following requirements:
1. Having inline educational background withthe requirement of the positon that will beoccupied by TKA;
2. having competency certificate or work
experience in line with the position that will
be occupied by TKA for at least 5 (five) years;
3. maketheStatement

Letterregardingmandatory skill transfer to the Associate
Manpower which proven by education andtraining realization report;
4. having Tax Registration Identification
Number (Nomor Pokok Wajib Pajak/NPWP)
for TKA who has worked for more than 6 (six)months;5. having insurance policy evidence in insurancecompany which incorporated under the lawsof Republic of Indonesia; and6. registered in National Social Security for
TKA who have worked for more than 6 (six)months.

3. Principle 3 – Fair Treatment
3.1 Laws defining and prohibiting verbal,
psychological, physical punishment, and sexual
harassment and abuse
Generally, pursuant to Article 28D point (2) of UUD
1945, every person shall have the right to workand to receive fair and proper remuneration andtreatment in employment relationship.
3.2 Laws defining and prohibiting discrimination
Pursuant to Article 1 point (3) of Law 39/1999,
discrimination means all limitations, affronts or
ostracism, both direct and indirect, on grounds ofdifferences in religion, ethnicity, race, group, faction,social status, economic status, sex, language, or
political belief, that results in the degradation,
aberration, or eradication of recognition, execution,
or application of human rights and basic freedoms
in political, economic, legal, social, cultural, or any
other aspects of life.
In addition, according to Article 1 point (1) of Law
21/1999, terms “discrimination” are includes:• Any distinction, exclusion or preference madeon basis of race, colour, sex, religion, politicalopinion, national extraction or social origin,which has effect of nullifying or impairing equalityof opportunity or treatment in employment or
occupation;• Such other distinction, exclusion or preference
which has the effect of nullifying or impairing
equality of opportunity or treatment in
employment or occupation as may be determinedby the Member concerned after consultation
with representative employers’ and workers’organization, where such exist, and with otherappropriate bodies.

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External Assessment

For the Based on Article 38 of Law 39/1999,
everyone, both men and women who conduct works
has the rights to equal pay for equal work, and theright to equal work conditions. Everyone, both men
and women also has the right to fair and adequate
remuneration, ensuring for himself and his family an
existence worthy of human dignity
3.3 Protection of workers from discrimination(workers’ rights and employers’ obligations)
According to Article 86 point (1) letter a) and b) of
Law 13/2003, every worker has the right to receive
Protection against immorality and indecency; andTreatment.
In addition, pursuant to Article 169 of Law 13/2003
point (1) letter a, in the event the employer battered,rudely humiliated or intimidated the worker, such
worker may submit an official request to industrial
relation dispute settlement institution.
3.4 Laws on resource for victimized workers, if
applicable
There are no specific provisions, except for the ones
described above in this section.

4. Principle 4 – Forced Labor

4.2 Laws on prison labor
According to Article 14 of Law 12/1995 and Article
29 of GR 32/1999, mentioned one of the rights ofprisoners is to receive wages or premium for thework they conducted.
4.3 Legislation regulating the operation of labor
brokers and other third party recruiters
Based on to Article 64 Law 13/2003 a company
allowed to hand over parts of its work to anothercompany under a written agreement of contract ofwork/labour.
MR 19/2012 specifically regulates the requirements
to hand over parts of company works to othercompanies and can be conducted through businessactivity outsourcing agreement or manpoweroutsourcing agreement (Article 2 of MR 19/2012).
Article 3 paragraph (2) of MR 19/2012 mentionedthat the works that can be hand over to a businessactivity outsourcing company shall fulfill thefollowing requirements:• Conducted separately from the main activities
either management or work performance
activities;

4.1 Legislation on forced labor• Conducted with direct or indirect order from theemployer;

Indonesia has ratifies the ILO convention No. 105
concerning Abolition of Forced Labour with theenactment of Law 19/1999.

• Supporting activities of the company entirely;

Law 21/2007 prohibits every action to recruit,
transport, store, deliver, transfer, or receipt of
persons by threat of violence, the use of violence,
abduction, confinement, forgery, fraud, abuse of
power or a vulnerable position, debt bondage,or giving payments or benefits, so obtaining theconsent of a person having control over anotherperson, either conducted within the country andbetween countries, for the purpose of exploitationor lead to the exploited• Does not burden the production process directly.
According to Article 5 of MR 19/2012, the type of
supporting works which will be outsourced to thebusiness activities outsourcing company must bereported by the employer to the authorize authority
in manpower field where the outsourcing work is
conducted.
The handover of parts of the works shall be conducted
through a written outsourcing agreements andregistered by the business activities outsourcing
company to the relevant authority in manpower
field, based on Article 9 and 10 of MR 19/2012.

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External Assessment

Article 12 of MR 19/2012 mentioned therequirements for outsourcing company as follows:
1. In the form of legal entity;
2. Own a company registry number;
3. Own a business license; and4. Own a mandatory manpower registry in thecompany.
Article 24 of MR 19/2012 mentioned that the
manpower outsourcing company shall fulfil thefollowing requirements:
1. In a form of Perseroan Terbatas;
2. Own a company registration number;
3. Own a business license;
4. Own a mandatory manpower registry in thecompany
5. Own operational license;
6. Own an office and permanent domicile
address; andOwn tax payer identification number.
4.4 Laws relating to limits or prohibitions on
recruitment fees and deposits workers may berequired to pay
Indonesia has no regulation on this matter.
Theoretically it is possible if the company wishes toarrange the limits or prohibitions on requirements
fees and deposit workers may be required to pay
based on employment contract between company
and worker. 65

5. Principle 5 – Safe Work Environment
5.1 Requirements for provision of medical
protection, such as availability of first aid kit, health& safety training, etc.
Requirement is stipulated under Article 2 of MoMT
Regulation 15/2008, where any employer must
provide first aid kit at work. In addition, based on
Article 8 of MoMT Regulation 15/2008, first aid
kit shall include first kit room, first aid kit box,
evacuation and transportation equipment, andsupplementary facility in form of self-protection
tools and/or special equipment at work place withspecific potential danger.
The obligation of the Company to conduct healthand safety training is regulated under GR 50/2012,
where it shall create a management system for worksafety and health and document the training of worksafety and health activities.
5.2 Requirements to report accidents and injuries
Social Security Agency for Manpower (Badan
Penyelenggara
Jaminan
Sosial/”BPJS”)
asestablished by Article 62 of Law 24/2011 has
replaced the role of PT Jamsostek (Persero). Basedon Article 43 of GR 44/2015, the company as theemployer shall report any work accident or illness
experienced by its workers caused by working to the
BPJS for Manpower. Such report shall be submitted
in maximum of 2 (two) x 24 (twenty-four) hours after
the accident or illness diagnosis, and the company
shall immediately report the impact of accident or
illness after the worker has been recovered, disable,or passed away.
5.3
Requirements for personal protective
equipment needed for using, handling, storing, ordisposing of crop protection agents (CPA). Thismight vary depending on the CPA in question
Yes, various Government Regulations, such as GR
7/1973 and GR 6/1995 and 85/1999. In addition,using CPA to protect corps from damage and to

65. Article 1338 Indonesian Civil Code “all agreements which have been constituted legally shall be law to those having
undertaken these”
62External Assessment

increase yields can cause serious damage for theworker. Therefore, the employers are required toprovide personal protective equipment for theirworkers. According to MoH Regulation Number
258/1992 regarding Health Management Terms of
Pesticides, it requires a company to have responsible
technical personnel. Furthermore, for providing theworkers can be carried out by the third parties ornot, it depends on the core business activities of thecompany itself according to the provision of MoM
Regulation 19/2012.
5.4 Restrictions on CPA use, handling, storing, ordisposing. Most countries will have restrictions onvulnerable populations interacting with CPA (orprohibit this outright), such as people under 18,
pregnant women, nursing mothers, etc.
Minors are prohibited from interacting with CPA
according to Law 13/2003 and Schedule of MoMT
Decree 235/2003. The prevailing provisions only
state the prohibition to employ female workers/
laborers aged less than 18 (eighteen) years.
5.5 Restrictions on farm equipment (such as
maintenance and licensing for operators)
1. Farm Equipment
The farm equipment including but not limited toprototype tool and machine according to MoA
Regulation 5/2007 shall comply certain standard
or minimum technical requirements. Such farmequipment shall be tested and certified by Product
Certification Agency. The test shall consist of:a. verification test;
b. working method test;
c. sustainable load test;
d. service test; ande. compatibility test.
Shall the farm equipment has passed the abovementioned test, it will be granted Product Certificate
by Product Certification Agency.

2. Requirements for Operators of Heavy Equipment
An operator of heavy farm equipment such as
forklift, dump truck, trailer, tractor, compactor,
bulldozer, shovel, steamroller, loaders, tandem
roller, tire roller, grader, side boom, truck,
excavators, according MoMT Regulation 9 of 2010
shall fulfil the following requirements:
a. minimum education of Junior High School;b. having experience for minimum of 1 (one) to 3
(three) years;c. healthy;
d. minimum age of 19 years or 21 years; ande. holding Work Safety and Health License andWork Book.
The above requirement, is applicable in general,and not depending on the region. Furthermore theminimum age as stated above is depending on theclassification of the heavy equipment operated.
5.6 Other legislation related to CPA, such as how
and where they may be stored or transported;
more explicit restrictions for specific CPA; weather
conditions under which CPA may or may not beapplied; and any other restrictions limiting contact
or exposure with CPA
CPA is one of Hazardous and Toxic Materials(Bahan Berbahaya dan Beracun/”B3”), therefore
the procedure to store and transport CPA are thesame with treating B3. According to Article 11 and
12 of GR 74/2001, anyone who produces, transport,
transports and distribute CPA must create Material
Safety Data Sheet. Material Safety Data Sheet shallconsist of:a. trademark;b. chemical formula of CPA;c. type of CPA;
d. classification of CPA;e. storage method; andf. procedures in handling if there any accident.

63External Assessment

CPA transport must use an operationally propertransportation and package. Each CPA package
must be given symbol, label and Material Safety
Data Sheet in accordance with the provisions as
stipulated under MoE Regulation 3/2008.
5.7 Requirements related to providing drinking
water and safe housing for workers
There is no specific obligation in providing drinking
water and safe housing for workers.
5.8 Specific requirements if worker accommodation
is provided
There are no specific requirements in providing
worker accommodation.

6. Principle 6 – Freedom of Association
6.1 Laws on organizing unions and their operation(workers’ rights and employers’ obligations)
According to Article 104 paragraph (1) of the Law
13/2003 mentioned that every worker has theright to form and become member of Labor Union.
The Labor Union shall have the right to collect andmanage fund and be accountable for the financesof the union’s, including but not limited for theprovision of a strike fund. For the amount andthe procedure of the strike fund will be further
regulated in Article of Association of the union’s.
Pursuant to Article 25 of Law 21/2000, Labor union
has the right to:a. Negotiate a collective labor agreement withthe management;
b. Represent workers/ laborers in industrial
dispute settlements;c. Represent workers/ laborers in manpower
institutions;d. Establish an institution or carry out activities
related to efforts to improve workers/
laborers’ welfare.
e. Carry out other manpower or employment¬related activities that do not run against
valid national statutory rules and regulations.

Labor Union may affiliate to and or cooperate withinternational trade unions/ Labor Union and orother international organizations on the condition
that the affiliation or the cooperation does not
run against valid national statutory rules andregulations.
Employers is prohibited from preventing or forcing aworker/ laborer from forming or not forming a Labor
Union, becoming union official or not becoming
union official, becoming union member or not
becoming union member and or carrying out or notcarrying out Labor Union activities. This provisionalso stipulated in Article 28 of Law 21/2000.
Employers also has the obligation to provide
opportunity to the officials and members of a Labor
Union to carry out Labor Union activities during
working hours that are agreed upon by both parties
and or arranged in the Collective Labor Agreement.
6.2 Requirements for collective bargaining
Based on Article 116 of Law 13/2003 and Article
14 of Decree 28/2014, mentioned that shall bemade between a Labor Union or several Labor
Union which already recorded at a government
agency responsible for manpower affairs and the
Employer’s.
In the event the Company has already formed
the Labor Union, but the Company still using theCompany Regulations, then the Company shallobtain the recommendations and considerations
from Labor Union. However if the Labor Union has
not being formed yet, therefore the Company shallrequested the recommendations and considerations
by the worker representatives.
6.3 Prohibitions on union discrimination andemployer interference in their operations
As already mentioned above, the Labor Union
is protected according to Law 21/2000. The
Employer is prohibited from preventing or forcing alaborer from forming or not forming a labor union,
becoming union official or not becoming union
official, becoming union member or not becoming

64External Assessment

union member and or carrying out or not carrying
out Labor Union activities by:a. Terminating his employment, temporarilysuspending his employment, demoting
him, or transferring him to another post,
another division or another place in order
to discourage or prevent him from carrying
out union activities or make such activities
virtually impossible;
b. Not paying or reducing the amount of theWorker salary;c. Intimidating him or subjecting him to any
other forms of intimidation;d. Campaigning against the establishment ofLabor Union.
According to Article 35 of Law 21/2000, in theevent the dispute between Labor Union, federationand confederation of Labor Union and another shallbe settled through deliberations by the trade/ Labor
Union, the federations and the confederationsof Labor Union that are involved in the conflict.
Therefore the Employer shall not interfere in casethe dispute occurs.
Employer is prohibited to arrest and/or detain
laborers and union officials who are on strikelegally, orderly and peacefully pursuant to theprevailing laws and regulations. If this condition
occurs, pursuant to Article 144 of Law 13/2003 theEmployer is prohibited to:a. Replacing striking workers with other workers
from outside of the Company; orb. Imposing sanctions on or taking retaliatory
actions in whatever form against striking
worker and union officials during and after
the strike is performed.
6.4 Requirements that worker representatives bein place
In the Article of Association of Labor Union shallcontain the membership and administration of theunion. However, there are no specific provisions

or requirements needs to apply to be union leader
according to the prevailing laws of Manpower inIndonesia.

7. Principle 7 – Compliance with the law
7.1 Laws and regulations on employment contracts(incl. necessity for written employment contracts,
and if is not what are the grounds to consider the
existence of a verbal employment agreement)
Based on Article 1 point (15) Law 13/2003, labor
relation is a relation between employer and worker/
labor in accordance with employment agreement,
which has the element of work, wage, and order.
Furthermore Article 50 Law 13/2003 is occurred
when there is an employment agreement between
employer and worker/labor and stipulates that the
Employment Agreement is made upon;a. Consent between both parties;
b. Ability to commit a legal action;c. There is a specific work which is agreed;d. The agreed work is not against with the
public order, morality, and prevailing laws andregulations.
The existence of the verbal employment agreement,
besides defined in Article 51 of Law 13/2003 above,
may be considered by the fulfilment of the above
elements.
7.2 Required content for written employment
contracts
According to Article 54 Law 13/2003, a written
employment agreement shall at least consist:a. Name, address of the company, and the line ofbusiness;b. Name, gender, age, and address of the worker/
labor;
c. Position or type of work;
d. Work premises;e. Amount of the wage and the payment method;65

External Assessment

f. Work requirements which consisting rights
and obligations of the employer and theworker/employer;

1. name and address of worker;

g. The beginning time and the validity period of
the employment agreement;

3. type of work that will be done by the worker;
andh. Place and date of the employment agreement
is made;4. the amount of wage that the worker is entitled
to.

i. Signatures of both parties in the employment
agreement.
7.3 Deadline for conclusion of the contract (e.g. on
the date of hire or within 30 days of hire)
Basically the Law 13/2003 does not clearly stipulate
the maximum period of time of the signing of theemployment agreement after the worker/labor
has already worked with the employer. However,to deter the legal certainty, as stipulated in the
aforementioned points, the employment relation is
emerged upon an employment agreement between
employer and worker/labor.
Such employment agreement also shall containthe date of the commencement of the work andthe period. Since it is not regulated, the parties
may conclude when the conclusion date of theemployment agreement within particular days ofhire as long as the party agree with it. One should
be noted, that the date of the commencement of
the work shall be determined and concluded firstto avoid encountering any dispute between theemployer and the worker/labor.
7.4 Requirements for various types of employment
contracts (indefinite term, definite term, temporary
workers, probationary workers)
I. Requirements of Employment Agreement for
Indefinite Period
Employment Agreement for Indefinite Period(Perjanjian Kerja Waktu Tidak Tertentu/”PKWTT”)
according to Law 13/2003 can be agreed in writingor verbal. However, if such PKWTT is agreed byverbal, based on Article 63 of Law 13/2003, theemployer shall issue a letter of appointment for theworker which shall at least contain the following
information:

2. date the worker starts to work;

The PKWTT may require probation period for
maximum of 3 (three) months
II. Requirements of Employment Agreement for
Definite Period
Different with PKWTT, Employment Agreementfor Definite Period (Perjanjian Kerja Waktu
Tertentu/”PKWT”) requires the employer to makeit in writing and must use Bahasa and Latin word.
If the employer does not provide the written
PKWT, then the employment relation between theemployer and worker shall be deemed as PKWTT.
In addition, PKWT does not require a probation
period, if required, it shall be null and void.
Type of PKWT based on Article 59(1) of Law
13/2003 and MoMT Decree 100/2004:
1. any work which is finished in one timeor temporary; Temporary worker is also
included as PKWT worker. The maximum
term of PKWT is 3 (three) years. In the casethat a certain work agreed in PKWT can becompleted earlier than the agreed periodof time, then the PKWT is severed by law
on the settlement of the work. However
due to certain condition the work cannot becompleted yet, the renewal of PKWT can be
conducted after a period of 30 days is oversince the previous employment agreement
comes to an end.
2. any work which the estimation of its
completion shall not within a long period andmaximum of 3 (three) years; The explanation
as mentioned in point a above shall apply inthis PKWT type.

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3. any seasonal work; This PKWT type can only
be made for one type of work in a certain
season and cannot be renewed. The works
which have to be done to fulfill orders or
certain target can be executed with PKWT as
seasonal works which is only valid for worker/
laborer who does additional work. The
employer who recruits seasonal workers shallcreate a name list of workers who perform
such additional work.
4. any work related to the new product, newactivity, or additional product which are
under trial or exploratory phase; This PKWT
can only be made for the period of 2 (two)years at maximum and can be extended foranother one time for one year. However
this PKWT cannot be renewed. PKWT for thiswork is only valid for worker who performs
a work other than the usual activity or work
done by company.
5. any work for free daily work; PKWT for freedaily work can be conducted for certain
works which are changeable in the case oftime and work volume and the wages are
based on attendance. The PKWT can be madein the condition that the worker perform thework less than 21 (twenty one) days in 1 (one)month. If the worker performs the work for
21 (twenty one) days or more, for 3 (three)months consecutively or more, therefore the
PKWT is changed into PKWTT.
A farm worker that works a few days in a farm shallbe included in the Employment Agreement for
Definite Period specifically the free daily work. This
type of agreement shall be made in written, which
can be made in a form of worker list which contains:
1. the name/address
employer;ofthecompany

2. the name/address of the employee;or

4. nominal of wages and/or other compensation;
5. (Based on MoM Decree No. 100/2004 Article
12 Paragraph (1))
Any party of both sides in a PKWT terminates theemployment relation prior to the expiration of theagreement, or if their work agreement has to beended for reasons other than the death of one ofparties, the side who terminates the relation is
obliged to pay compensation to the other side in
amount of the compensation pay shall be the sameas the amount of wages that the worker in the PKWT
is entitled to receive from the point of termination
until the expiration of the agreement.
In addition, based on MoMT Decree 100/2004 The
PKWT must be registered by the employer to the
local manpower office in the maximum of 7 (seven)days after being signed.
a. Requirements of Employment Agreement for
Probation
During the probation period, the employer isprohibited to pay less than the applicable minimumwage,
7.5 Requirements for termination of employment(termination with or without cause, wrongfuldismissal, notice periods required to end
employment)
Termination of employment can be conducted by
the employer to the worker in the event that:a. the worker has done a gross violation, suchas stealing, falsify information which causes
losses to the employer, got drunk or consumed
and or distributed narcotics, psychotropic
substances and other addictive substancesin the working environment, etc. as explainedin Article 158 of Law 13/2003, provided thatsuch gross violation shall be proven by afinal and binding decision from the relevant
criminal court.

3. the type of works which is conducted;

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compensation:• for the worker whose duties and functions
directly represent the interest of theemployer: only the compensation pay• for the worker whose duties and functions
do not directly represent the interest of
the entrepreneur: the compensation pay
and separate payb. the worker cannot perform his/her work for 6(six) months because he/she is alleged to havecommitted a crime which is not filed by theemployercompensation: 1 (one) time of service reward pay
and compensation pay
c. if before 6 (six) month the court has declaredthat the worker guilty of crimecompensation: 1 (one) time of service reward pay
and compensation pay
d. the worker has violated employment
agreement, Company Regulation or Collective
Labor Agreement, the employer may
terminate his or her employment after theentrepreneur precedes it with the issuanceof the first, second and third warning lettersconsecutively. Each warning letter issued shall
expire after 6 (six) months unless otherwise
stated in the employment agreement or theCompany Regulation or Collective Labor
Agreementcompensation: 1 (one) time of severance pay, 1 (one)time of service reward pay and compensation pay
e. the worker resigns of his or her own will;compensation: compensation pay and separate pay
f. in the event of change in the status of theenterprise, merger, fusion, or change in theownership of the enterprise and the worker
is not willing to continue his/her employment
relationg. in the event of change in the status of theenterprise, merger, fusion, or change in theownership of the enterprise and the employer
is not willing to accept the worker to work in
the new enterprisecompensation: 1 (one) time of severance pay, 1 (one)time of service reward pay and compensation pay
h. the enterprise has to be closed down due
to continual losses it suffers for two years
consecutively or force majeurecompensation: 1 (one) time of severance pay, 1 (one)time of service reward pay and compensation pay
i. rationalization of the company
compensation: 2 (two) times of severance pay, 1(one) time of service reward pay and compensationpay
j. the employer goes bankrupt
compensation: 1 (one) time of severance pay, 1 (one)time of service reward pay and compensation pay
k. the employer has passed away
compensation: 2 (two) times of severance pay, 1(one) time of service reward pay and compensationpayl. the worker has reached retirement age
compensation: only compensation pay, provided
that the company has fully paid the worker’s pension
contribution.
m. the worker has been absent from work forno less than 5 (five) workdays consecutively
without submitting to the employer a written
account (explaining why he/ she is absent fromwork) supplemented with valid evidence (tosupport the truth of the explanation) and theemployer has properly summoned him/her
twice in writing because such absenteeism
may disqualify the worker in question fromcontinuing their employment
compensation: compensation pay and separate pay

compensation: 1 (one) time of severance pay, 1 (one)time of service reward pay and compensation pay
68External Assessmentn. the worker has reported the employer to theIndustrial Relation Court that the employer
has committed acts as specified under Article
169 of Law 13/2003
compensation: 2 (two) times of severance pay, 1(one) time of service reward pay and compensationpay
7.6 Options for farmers to obtain legal assistanceabout their obligations (e.g. government department,
local labor office, farmers association etc.)
Basically, Indonesian government has notestablished a specific agency to assist the worker
to obtain legal assistance. However, in Indonesia
there are many non-governmental legal assistanceinstitutions which will assist the worker, including
but not limited to consultation, advocacy and file apetition to Industrial Relation Court, for free.
In addition, if the worker requires any information
regarding his/her rights and obligations, they may
ask to the local manpower office, labor union or
farmers association (Indonesia Tobacco Farmer
Association or Asosiasi Petani Tembakau Indonesia/
APTI).
7.7 Specific requirements for leaf growing contracts(government imposed templates, government
approval of contract, freedom to choose the termsof the contract)
In Indonesia, leaf growing contract is known as ijon
system. Ijon system is still implemented by farmers,
however until now there is no specific provision on
it from the government. Therefore, in making ijon
contract, the purchaser shall follow the provisionsof Article 1338 and 1320 of Indonesian Civil Code.

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Appendix IV – Communication materials

Poster about safe work environment70

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PT. AOI calendar with the ALP Code71

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Poster I covering child labor

Poster II covering child Labor
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Video about child labor and safe work environment

Poster about CPA handling and empty containers disposal

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Poster about CPA handling74

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Appendix V – Glossary
ALP

Agricultural Labor Practices

ALP Code

PMI’s Agricultural Labor Practices Code

ALP Code Principle

Short statements that set expectations of how the farmer should manage
labor on his/her farm in seven focus areas

ALP Program

Agricultural Labor Practices Program

PT. AOI

PT. Alliance One Indonesia

AOI

Alliance One International

Correction

Any action that is taken to eliminate a situation not meeting the standard

Corrective action

Steps taken to remove the causes of a situation not meeting the standard

CPA

Crop Protection Agents

Family farm

Farm that depends mainly on family members for the production of tobacco

Farm Profiles

A data collecting tool developed by PMI with Verité to track the socioeconomic profile of the farms

GAP

Good Agricultural Practices

GTS

Green Tobacco SicknessHMS

PT HM Sampoerna Tbk, PMI’s Affiliate in Indonesia,

Leaf tobacco supplierCompany that has a contract with PMI to supply tobacco but is not a farmer

Measurable Standard

A Measurable Standard defines a good labor practice on a tobacco farm andhelps determining to what extent the labor conditions and practices on a
tobacco farm are in line with the ALP Code Principles

NGO

Non-Governmental Organization

Piece work

Payment at a fixed rate per unit of production/work

PMI

Philip Morris International, Inc. or any of its direct or indirect subsidiaries

PPE

Personal Protection Equipment

Preventive action

Steps taken to remove the causes of potential situations not meeting thestandard

Prompt Action

A situation in which workers’ physical or mental well-being might be at risk,children or a vulnerable group – pregnant women, the elderly – are in danger,
or workers might not be free to leave their job

Root cause

The underlying reason that caused a situation not meeting the standard

Root cause analysis

A set of analyzing and problem solving techniques targeted at identifying
the underlying reason that caused a situation not meeting the standard

STP

Sustainable Tobacco Production

Support mechanism

A mechanism which enables workers and farmers to access information andbring forward queries, labor disputes, conflicts or grievances. The support
mechanism mediate disputes and provide farmers with additional services
to improve labor and business practices.

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