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29

Are Non-solicitation and Non-competition Clauses in Employment Agreements Necessary in Indonesia?

There are clauses in employment agreements that are often included, namely confidentiality, non-solicitation and non-competition clauses. The purpose of these clauses is to avoid unfair competition and attempts to create competitors or having former employees take advantage of the company's data, information and customers.

The non-solicitation clause prohibits former employees from enticing or trying to take customers from the company. Meanwhile, the non-competition clause is a clause that prohibits an employee from working for a competing company for a certain period after their working period is over. However, these two clauses can be considered contradictory to the law in Indonesia, specifically to Article 28 E paragraph (1) of the 1945 Constitution, Article 31 of the Manpower Law and Article 38 paragraph (2) of the Human Rights Law, which states that everyone is free to choose a job.

Referring to regulation in Indonesia, the matter of non-solicitation and non-competition has not been explicitly regulated. Indeed, there is a provision in Article 1601 of the Indonesian Civil Code that allows agreements that reduce workers' rights regarding not being allowed to do specific jobs when the employment relationship ends.

Standard terms in a non-competition agreement include:

  • Confidentiality. The terms of the agreement are to remain confidential. However, this provision must permit the employee to discuss the terms of the agreement with certain professionals, such as an attorney or an accountant.
  • Non-disparagement. Both the employer and employee agree to refrain from making negative statements about one another. This prevents employees from trying to take business away from the former employer and prevents the former employer from making negative comments about a former employee.
  • Opportunity to Review and Consider, a clause indicating that the employee has read and understands the agreement. This prevents the employee from claiming they did not read or understand the agreement before signing it.
  • Severability. If a court finds a specific employment agreement term invalid, the remainder of the provisions will still be enforceable.
  • Applicability to Successor. If the company is purchased or merges with another business, the terms of the agreement are still valid.

If you are entering into a non-solicitation and/or non-competition agreement, it is wise to consult with an experienced attorney to ensure the contract will be valid and enforceable. It is also essential to understand precisely what types of post-employment conduct will be covered, and that the agreement accurately reflects your understanding and expectations. At Schinder Law Firm, as one of many corporate law firms in Indonesia, our professional civil lawyers strive to understand your unique needs and concerns and will develop creative, cost-effective ways to solve your problems. To learn more, contact us atinfo@schinderlawfirm.com today to schedule a confidential consultation to discuss your situation and how we can help.

Author: Dewi Susanti

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Dear valued Visitor,

Data is a valuable currency in this new world. In the midst of digital transformation, the Indonesian government has taken the final decision to pass the Pelindungan Data Pribadi (PDP) Bill by September 2022. The PDP Law applies to all businesses established in Indonesia and puts the consumer in control. The task of complying with this regulation falls upon businesses.

The PDP Law affects a variety of business operations, including how your sales team prospect and how marketing initiatives are managed. Businesses have had to reassess their business procedures, applications, and forms. Additionally, all businesses that work with personal data should designate a Data Protection Officer (DPO) or data controller to oversee PDP compliance.

In line with this spirit, it gives us great pleasure to announce and share with all our esteemed clients and business associates that Schinder Law Firm is prepared to assist your company to understand the impacts of the Personal Data Protection Law (PDPL) and take the required measures to comply with the law. Our Privacy, Data Protection, and Cybersecurity practice group is a pioneer in providing data privacy law services in Indonesia. Personal data protection services include but are not limited to:

  • Assessing the existing systems, processes, and controls, etc.
  • Providing provide gap assessment on the existing systems, processes, and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDP Law
  • Developing policies, best practices, and procedures
  • Advising on the security of personal data and managing data breaches
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role, and responsibilities of a data protection officer
  • Advising on cross-border transfers of personal data
  • Carrying out data protection impact assessments and data protection audits
  • Recommending other necessary corrective actions in order to comply with the PDP Law
  • Training on the PDP Law tailored to clients’ businesses

We look forward to many more opportunities in the year ahead with your continued support and trust. For consultation, please send us a WhatsApp or Email.

Warmest regards,
Naz Schinder
Managing Partner

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Keep Up with the New Law in Indonesia: Personal Data Protection

  • Assessing the existing systems, processes and controls, etc.
  • Providing provide gap assessment on the existing systems, processes and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDPL.
  • Developing policies, best practices and procedures.
  • Advising on security of personal data and managing data breaches.
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role and responsibilities of a data protection officer.
  • Advising on cross-border transfers of personal data.
  • Carrying out data protection impact assessments and data protection audits.
  • Recommending other necessary corrective actions in order to comply with the PDPL.
  • Training on the PDPL tailored to clients’ businesses.
Privacy, Data Protection and Cyber Security
We help our clients to understand the impact of the Personal Data Protection Law (PDPL) on their companies and take the required measures to comply with the law.
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