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Employers in Indonesia were previously afforded the right to include in their employment contracts, company policies or collective labor agreements a provision enabling employers to terminate an employee having a marital bond and/or a blood relationship with another employee in the same company. This right came under fire in a recent court decision.
Employers wanted to enforce such a provision, given the potential conflict of interest issues, especially if employees in the above circumstances hold strategic positions in the company (i.e., a director or finance manager), as well as the potential collusion and nepotism issues.
This right was regulated under Article 153(1)(f) of Law No. 13 of 2003 regarding Manpower (the "Manpower Law"), which prohibited an employer from terminating an employee having a marital bond and/or a blood relationship with another employee in the same company, unless the employment contract, company regulation or collective labor agreement has regulated otherwise.
Court Decision Changes Termination Rules
The Constitutional Court recently weighed in on this issue and came down on the side of employees. Constitutional Court Decision No. 13/PUU-XV/2017, dated Dec. 14, 2017, stipulates that Article 153(1)(f) of the Manpower Law contradicts the 1945 Constitution. The court reasoned that the right of employees of the same company to marry each other or to have a blood relationship did not impede any moral norms, religious values, security or public order in a democratic society, and that no rights or freedoms of others would be hampered by such marital bonds or blood relationships within a company.
The Constitutional Court also reasoned that one had to consider the imbalance of power between the contracting parties to an agreement (i.e., employment contract, company policy or collective labor agreement) regulating such a prohibition. In this case, the employee is in a significantly weaker position as the party who needs employment. Given this imbalance of power, and the inclusion of the phrase "has regulated" in Article 153(1)(f) of the Manpower Law, the court found that the freedom of contract principle required for an agreement between contracting parties (in this case, employer and employee) to be valid was not fully met.
Based on the above considerations, the Constitutional Court adjudicated that the phrase "unless the employment contract, company regulation or collective labor agreement has regulated otherwise" contradicts the 1945 Constitution and that such phrase does not have binding legal force. Thus, Article 153(1)(f) of the Manpower Law now reads in its entirety: "An employer shall be prohibited to conduct a termination of the employment relationship due to the employee having a blood relationship and/or a marital bond with another employee in the same company."
Dicky Tanjung is an attorney with SSEK Indonesian Legal Consultants in Jakarta, Indonesia. © 2018 SSEK Indonesian Legal Consultants. All rights reserved. Reposted with permission of Lexology.
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