16
• has either carelessly or intentionally destroyed
or let the property of the entrepreneur exposed
to danger, which caused the enterprise to incur
losses;
• has unveiled or leaked the enterprise’s secrets,
which the employee is supposed to keep secret
unless otherwise required by the State; or
• has committed other wrongdoings within
the working environment, which call for
imprisonment for five years or more.
Other reasons for termination are, among
others, the employee’s violation of his contractual
obligations (Article 161 of Act 13 of 2003) and the
change of status, merger or change of ownership on
the employer’s side (Article 163 of Act 13 of 2003).
In the event of a termination, the employer
is obliged to compensate the employee with
severance pay, a reward for the employee’s service
and compensation pay for unused entitlements
in accordance to Article 156 of Act 13 of 2003.
In the event of a termination based on one of the
listed reasons in Article 158 of Act 13 of 2003, the
employee can only demand compensation pay for
unused entitlements.
3. INDUSTRIAL RELATIONS
a. Introduction
Under Chapter XI of Act 13 of 2003, industrial
relations are stipulated. Under these industrial
relations, the Indonesian government shall
establish policies, provide services, take control
and take actions against any violations of statutory
manpower rules and regulations (Article 102 of Act
13of 2003).Amongothers, these industrial relations
shall apply through labor unions, collective work
agreements and enterprise regulations.
b. Enterprise Regulation
According to Article 108 of Act 13 of 2003, every
employer who employs no less than 10 employees
is under an obligation to create a set of enterprise
rules and regulations that shall come into force
after being made legal by the Minister or another
government official appointed to act on behalf
of the Minister. This obligation to have a set of
legalized enterprise rules and regulations does not
apply to enterprises that already have collective
work agreements.
Enterprise rules and regulations shall at least
incorporate provisions concerning:
• the rights and obligations of the entrepreneur;
• the rights and obligations of the employees;
• working conditions/requirements;
• enterprise discipline and rule of conduct;
• the period of their validity.
A G U I D E T O C O M P L I A N C E I N I N D O N E S I A
Furthermore, these enterprise regulations must be
in compliance with any statutory legislation. The
employer shall have the obligation to explain the
enterprise regulation to the employees.
c. Collective Work Agreement
According to Article 116 of Act 13 of 2003,
collective work agreements shall be made between
a labor union or several labor unions already
recorded at a government agency responsible
for manpower affairs and an employer or several
employers respectively. According to Article 124 of
Act 13 of 2003, a collective work agreement shall at
least contain the following aspects:
• the rights and obligations of the employer;
• the rights and obligations of the labor union
and the employees;
• the period during which and the date starting
from which the collective work agreement
takes effect; and
• the signatures of those involved in making
the collective work agreement.
