Employee who has conducted grave wrongdoings (kesalahan berat) is allowed to be terminated from its employment. However, there are several conditions that must be fulfilled before the termination can be executed.
One of the reasons for Termination of Employment (“Pemutusan Hubungan Kerja” or “PHK”) is a conduct of grave wrongdoings (kesalahan berat) by the Employee. Such reason is further regulated in Article 158 Paragraph 1 of Law No. 13 of 2003 concerning Manpower (“Manpower Law”), which stipulates the activities that are classified as grave wrongdoings, as follows:
- Fraud, theft, or embezzlement of Company property and/or funds;
- Provide false or falsified information which causes the Company to suffer loss and/or damages;
- Become intoxicated, consume alcoholic drinks, consume and/or distribute narcotics, psychotropic substances and other addictive substances in the work environment;
- Conduct immoral activities or gambling in the work environment;
- Assault, mistreat, threaten, or intimidate his or her co-workers or the Employer in the work environment;
- Persuade his or her co-workers or the Employer to actively break the prevailing rules and regulations, and/or conduct actions contrary to the prevailing rules and regulations;
- Carelessly or intentionally damage or neglect in a dangerous situation, the Company property which results in loss and/or damages suffered by the Company;
- Carelessly or intentionally expose his or her co-workers or the Employer in a dangerous situation at the work environment;
- Disclose or expose the Company secrets which should have been kept confidential, except for the interests of the state; or
- Commit other wrongdoings in the work environment which is threatened with 5 (five) years jail time or more.
Please be noted that even though Manpower Law does not further stipulate regarding the implementation of such termination, the Verdict of Indonesia Constitutional Court Number 012/PUU-I/2003 dated on 28 October 2004 has elaborated more concerning the implementation of Article 158 Manpower Law.
The Verdict is of the view that Article 158 of Manpower Law is found contrary to the Constitution and therefore is not legal and binding. Therefore, termination of Employment as stipulated in ex Article 158 paragraph 1 of the Manpower Law, can only be executed after the issuance of the Criminal Verdict of such grave wrongdoings, and must be deemed legal and binding before it can be executed.
In practice, there are still many Companies who use the conduct of grave wrongdoings as a reason to terminate their Employee, sometimes automatically without specifying the requirement of a final and binding criminal verdict. For this kind of termination, the termination may be challenged to the Industrial Court, and the judges in the Industrial Court can easily revoke the termination due to there are no final and binding criminal verdict to legally enforce it.
One of the solutions for such problem is that the Company and Employee can settle the termination in the industrial dispute resolution forum. Of course, such resolution means that the Company is not allowed to automatically terminate the Employee for conducting grave wrongdoings before the final and binding criminal verdict is issued.
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To ensure a smooth investment and business operation from the legal perspective, but also still focus on maintaining your business in Indonesia and reach your revenue target, it is advised for you to find capable and trusted lawyers or legal consultants for advice and assistance in ensuring your legal compliance with prevailing laws and regulations.
SMART Consulting is an Indonesian Corporate Legal Services firm. SMART has assisted Clients in dealing with matters related to Manpower Law, such as drafting, reviewing and registering the Employee Toolkit, including Employment Agreement, Collective Labor Agreement, and Company Regulations. We also provide advisory services regarding Employment matters, as well as assistance in conducting termination of employment and manpower dispute resolutions.
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