Jul

06

Employment Termination due to Urgent Violation in Indonesia

In some cases, termination of employment is carried out by employers immediately against employees who have committed grave wrongdoings without any warning letter (“Urgent Violation”). Typically, the terms and conditions for termination due to Urgent Violation are set under the Employment Agreements , Company Regulations, and Collective Labor Agreement. The most common questions from the employers is whether the Employment Termination due to Urgent Violation is lawful under Employment Law in Indonesia.

Legal Basis for Termination due to Urgent Violation

Indonesia Manpower Law provides the legal basis for termination due to Urgent Violation through the Omnibus Law Indonesia. Article 52 par. (2) of Indonesian Government Regulation No. 35 of 2021 concerning Employment Agreement for a Specified Period Of Time, Outsourcing, Working Time and Rest Time, and Termination of Employment (“GR 35/2021”) states that an Employer may terminate the employment relationship of a Worker because the Worker commits an Urgent Violation stipulated in the Employment Agreement, Company Regulation, or Collective Labor Agreement.

From these provisions, it is clear that the condition for Urgent Violation shall be stipulated in the Employment Agreement, Company Regulation, or Collective Labor Agreement. Otherwise, the termination shall be unlawful.

Rights of Employees who are terminated due to Urgent Violations

According to Article 52 par. (2) of GR 35/2021, the Workers who are terminated due to Urgent Violations shall be entitled to:

  1. Compensations for Rights in accordance with the provision of Article 40 par. (4) of GR 35/2021, and
  2. Separation pay, the rate of which is regulated in an Employment Agreement, Company Regulation, or Collective Labor Agreement.

Non-Mandatory Notification for Termination due to Urgent Violations

According to Article 52 par. (3) of GR 35/2021, an Employer may terminate the employment relationship without notification. This provision has led a question of whether it is mandatory to establish bipartite negotiations between the Employer and the Worker since a notification to the Worker is no longer required. The consequences of the termination without notification is that the Worker has no chance to negotiate with the Employer. Unfortunately, there is no further provisions in Indonesian Labor Law that explains the obligation to establish the bipartite negotiation as previously mandated in Article 3 of Law No. 2 of 2004 concerning Industrial Relations Disputes Settlement for the termination due to Urgent Violation.

How Schinder Can Help

Schinder Law Firm is a leading corporate law firm in Indonesia, practicing Indonesian Company Law and Indonesian Labor Law. Our team of corporate lawyers in Indonesia and employment law attorneys has forged a reputation for assisting various clients across the globe. As Indonesian corporate lawyers, we have extensive experience providing services in various employment dispute cases, as well as providing daily legal advice related to the Indonesia Labour Law, including but not limited to, drafting an Employment Agreement, Company Regulation, and Collective Labor Agreement.

Shall you have any inquiries related to this article, please feel free to contact us at info@schinderlawfirm.com.

Author: Budhi Satya Makmur