Termination of Employment without Prior Warning Letter Against Urgent Violations: Can it be Done?
Employment Agreements, Company Regulations and/or Collective Labor Agreements may set forth terms and conditions regarding urgent Termination of Employment, such as the period of giving warning letters.
Termination of Employment (Pemutusan Hubungan Kerja or PHK) often causes unrest and has the potential to create disputes in the Manpower sector. Usually, the causes of lay-offs are due to efficiency, business closures, bankruptcy, absenteeism or violations, as well as in the event the employee concerned has died or has retired. Oftentimes, termination of employment is carried out by employers against workers or employees who have committed or are suspected of committing grave wrongdoings. In that case, the employers often terminate their employment immediately without any warning letter. This raises the question of whether such termination of employment is legal.
Legal Basis for Immediate Termination due to Urgent Violations
Article 36 letter (k) Government Regulation No. 35 of 2021 (“GR 35/2021”) states that the Termination of Employment can be carried out on the grounds that the employee violates the provisions stipulated in the Employment Agreement, the Company Regulation, or the Collective Labor Agreement. However, the employee must have previously been given the first, second, and third warning letters. Each of such warning letters is valid for a maximum of 6 (six) months, unless otherwise stipulated in the Employment Agreement, the Company Regulation, or the Collective Labor Agreement.
There are other arrangements if the employee commits what is deemed as an urgent violation (pelanggaran mendesak). Article 52 paragraph (2) GR 35/2021 states:
“The Employer may terminate the Worker/Laborer because the Worker/Laborer has committed a violation that is urgent as regulated in the Employment Agreement, the Company Regulation, or the Collective Labor Agreement.”
Therefore, it is important to understand what is deemed as an urgent violation, to ascertain what kind of violations allows the employer to immediately terminate the employee for doing such violations. Examples of Urgent Violations are listed in the elaboration of Article 52 paragraph (2) GR 35/2021 as follows:
- Commit fraud, theft, or embezzlement of goods and/or money belonging to the Company;
- Provide false or falsified information to the detriment of the Company;
- Getting drunk, drinking intoxicating liquor, using and/or distributing narcotics, psychotropic substances, and other addictive substances in the work environment;
- Commit immoral acts or gambling in the work environment;
- Attacking, persecuting, threatening, or intimidating coworker or the Employers in the work environment;
- Persuade co-workers or entrepreneurs to take actions that are contrary to the laws and regulations;
- Carelessly or intentionally damage or leave the Company’s property in danger which causes losses to the Company;
- Carelessly or intentionally leave a co-worker or employer in danger at work;
- Disclose or divulge Company secrets that should be kept secret except for the interests of the state; or
- Commit other acts within the Company which are punishable by imprisonment of 5 (five) years or more.
The above violations must be listed down in writing as Urgent Violations in the Employment Agreement, the Company Regulation or the Collective Labor Agreement and ratify such documents pursuant to the applicable Manpower regulations, to ensure that the violations are deemed as urgent violations and the employer is able to take action pursuant to GR 35/2021 in the event the employee commits them. If not, the employer is required to go through the procedure of serving warning letters to the employee.
Rights of Employees who are Terminated due to Having Committed Urgent Violations
Even though the employees are terminated due to having committed urgent violations as listed above, under GR 35/2021, the employer still has the obligation to award the rights of the terminated employees, which is stipulated under Article 52 paragraph (2) GR 35/2021 to be reimbursement of rights pay (uang penggantian hak) pursuant to Article 40 paragraph (4) GR 35/2021 as well as detachment pay (uang pisah). For detachment pay, the amount is as regulated in the Employment Agreement, the Company Regulation or the Collective Labor Agreement in writing.
It must be noted that the reason for termination determines the amount of rights that the employees are entitled to receive. This is prominent especially when comparing the rights that are received by the employees who are terminated due to having committed urgent violations, to the employees who are terminated after committed violations and served by continuous first, second, and third warning letters.
Under Article 52 paragraph (1) GR 35/2021, the employees who are terminated after committed violations and served by continuous first, second, and third warning letters are entitled to:
- Severance Pay (uang pesangon) in amount of 0,5 times Article 40 paragraph (2) GR 35/2021;
- Reward for Service Pay (uang penghargaan kerja) in amount of 1 times Article 40 paragraph (3) GR 35/2021; and
- Reimbursement of Rights Pay (uang penggantian hak) pursuant to Article 40 paragraph (4) GR 35/2021.
Therefore, it is essential to put in writing in the Employment Agreement, the Company Regulation and/or the Collective Labor Agreement, the right of the Employer to conduct Termination of Employment without a prior warning letter in the event of an urgent violation. If not, then it is not regulated, the Termination of Employment because of a violation must use a warning letter as referred to in Article 52 paragraph (1) GR 35/2021. No less important is that it must be ensured that the Company Regulation or Collective Labor Agreement are still valid under ratification of the authorized government institutions in the manpower sector.
Termination of Employment Relations must be carried out carefully and precisely and in accordance with the applicable laws and regulations. This is to avoid disputes in the future. In the event of a dispute, the process proceeds from mediation at the Dinas Ketenagakerjaan (Disnaker), and ends at the Industrial Relations Court (PHI) and even at the Supreme Court level. Of course this can be detrimental to one party both in terms of time and cost. Therefore, a mature legal strategy is needed so that losses are minimized in the disputes.
To avoid greater losses, if a legal action is required to be taken, then you must develop an effective legal strategy so that your goals are achieved. If you want to consult a legal strategy in dealing with your company’s dispute, please contact BP Lawyers via ask@bplawyers.co.id or 082112341235.