Whistleblowing and Indonesian Employment Law: Rules for Companies

Whistleblower protections in Indonesia primarily relate to criminal matters. The main legislation related to whistleblowers is the Witness and Victim Protection Law. However, companies often inquire whether there are any whistleblowing rules under the Indonesian Employment Law (Law No. 13 of 2003).

Whistleblowing and the Employment Law

The Indonesian Employment Law does not contain explicit provisions on whistleblowing. Two provisions of the Employment Law, however, provide certain protections for employees who have knowledge of criminal acts of the employer.

Article 153(1)(h) stipulates that an employer cannot terminate an employee for reason that the employee reports to the relevant authority an alleged criminal offense by the employer. Article 169 paragraphs (1) and (2) in essence stipulate that an employee may terminate the employment relationship and still be entitled to severance, service and compensation pay if the employer, among other things, incites and/or orders the employee to commit an act contrary to laws and regulations.

If an employee terminates the employment relationship for the above reason, the employee is entitled to two times severance pay, one time service pay and one time compensation pay. By contrast, in an ordinary resignation, the employee is only entitled to compensation pay.

Management of Whistleblowing Schemes by Employers

There is no legislation that requires employers to create whistleblowing protections or that prescribes how employers should draft whistleblowing provisions. In practice, employers may establish whistleblowing protections under their company regulations (i.e., work rules). Notwithstanding the absence of legislation that provides guidelines on whistleblowing protections in company regulations, it is important to note that company regulations must be socialized with employees before being filed with and ratified by the Ministry of Labor.

Data Security

There is no specific regulation in Indonesia on the security or transfer of data in the context of employee whistleblowing. Article 21 of the Human Rights Law broadly provides that each individual has the right to privacy. The ITE Law (Law No. 11 of 2008 regarding Electronic Information and Transactions) prohibits the transmission or use of the personal data of an individual through electronic media without the consent of the individual.

While the ITE Law does not provide a specific sanction for failing to obtain an individual's consent for the transmission or use of personal data through electronic media, it does provide that any person whose rights are infringed may file a claim for losses caused by such violation. It follows that collecting and/or transferring the personal data of employees by electronic means will require the prior consent of the concerned person.

Employment laws in Indonesia do not specifically deal with employee data privacy. In practice, employers in Indonesia regulate the data privacy of their employees by way of unilateral employee consents, employment arrangements, company regulations and collective labor agreements. Such agreements and consents are justified by the freedom of contract principle under the Indonesian Civil Code.

Liability

Although there is no employment legislation that provides guidelines on whistleblowing provisions, the Witness and Victim Protection Law provides certain sanctions that may be applicable to employers in certain situations. Article 39 of the Witness and Victim Protection Law stipulates that any person causing a witness or a victim to lose their job because the witness or victim provides true information in a court proceeding can be imposed with a maximum imprisonment of seven years and a maximum fine of IDR 500 million.

Article 42A of the Witness and Victim Protection Law stipulates that if the violation is conducted by a company the sanctions can be tripled. Other than imprisonment and a fine, a company could also face additional sanctions in the form of (i) revocation of business license, (ii) revocation of status as a legal entity and/or (iii) the dismissal of the management of the company.

There is no specific reference to vicarious liability for retaliation by co-workers under the prevailing laws and regulations governing whistleblowing. However, in general, vicarious liability is recognized under Article 1367 of the Indonesian Civil Code, which in relevant part stipulates that an individual shall be responsible for the damage that he has caused, as well as which was caused by the acts of the individuals for whom he is responsible, or caused by matters which are under his supervision.

Article 1367 further stipulates that employers and those who have been assigned to manage affairs of other individuals shall be responsible for the damage caused by their servants and subordinates in the course of duties assigned to them.

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