When a manufacturing firm in Surabaya discovered that one of its supervisors was leaking confidential production data, management had to act quickly. However, instead of immediate dismissal, the company first initiated an internal investigation to ensure that any disciplinary action would comply with Indonesian labor law.

Legal Framework

Employee misconduct in Indonesia is governed under:

• Law No. 13 of 2003 on Manpower, as amended by Law No. 11 of 2020 (Job Creation Law),
• Government Regulation No. 35 of 2021, which outlines rules for termination, suspension, and disciplinary measures.

Employers cannot arbitrarily terminate staff for misconduct. Instead, the law requires:

1. Investigation: Collecting evidence, interviewing witnesses, and allowing the employee to provide clarification.
2. Suspension (Skorsing): Employers may suspend employees under investigation but must continue paying wages and benefits during the suspension.
3. Disciplinary Actions: Written warnings (valid for 6 months) are common, escalating to termination if misconduct persists.

Real Case Example

In 2019, a logistics company in Jakarta dismissed an employee for alleged theft without a proper investigation. The Industrial Relations Court ruled against the company, stating that termination must be based on clear proof and progressive disciplinary steps. The employer was ordered to reinstate the employee and pay compensation.

Best Practices for Foreign Employers

• Document Clearly: Keep written records of the investigation process, warnings, and employee responses.
• Ensure Fairness: Provide the employee an opportunity to explain their side before making decisions.
• Progressive Discipline: Use a tiered approach—verbal warning, written warning, suspension, termination.
• Maintain Pay During Suspension: Even if an employee is suspended, wages and benefits must be paid.
• Seek Mutual Agreement: Whenever possible, resolve disputes through bipartite negotiations to avoid litigation.

Conclusion

Handling misconduct in Indonesia requires balancing legal compliance with fair process. By conducting proper investigations, respecting employees’ rights, and documenting every step, employers not only protect themselves legally but also maintain trust and integrity in the workplace.

References

1. Law No. 13 of 2003 on Manpower (as amended by Law No. 11 of 2020).
2. Government Regulation No. 35 of 2021 on Fixed-Term Contracts, Outsourcing, Working Hours, and Termination.
3. Ministry of Manpower – Guidelines on Disciplinary Actions and Termination. https://kemnaker.go.id
4. ILO Jakarta – Indonesia: Employment and Industrial Relations Practices. https://www.ilo.org/jakarta