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Legal Consequences of an Employment Agreement that is Against the Labor Law

Basically, the validity of an agreement that is made based on the conditions of Article 1320 IndonesianCivil Code (“Indonesian Civil Code”) shall fulfill these four conditions:

  1. The consent of those who bind them-selves;
  2. The capability to make an agreement;
  3. A particular object;
  4. A lawful cause

The conditions of an agreement above include the subjective conditions and objective conditions. In the event the agreement does not fulfill the subjective conditions as stated in number 1 and number 2, then the agreement can be canceled. And in the event the agreement does not fulfill the objective conditions as stated in number 3 and number 4, then the agreement is null and void by law.

Under Article 52 paragraph (1) and (3)of Law Number 13 of 2003 on Labor (“Labor Law”),it is regulatedthe legal consequences of an employment agreement that is against the Labor Law. An employment agreement shall be made based on:

  1. The consent of those who bind them-selves;
  2. The capability to take legal actions;
  3. A particular job; and
  4. A job is forbidden, if it is forbidden by the law, or if it is in contrary to good morals or public order.

In the event anemployment agreement, which has been made by both parties, does not fulfill the condition as stated in letter a andb, then the agreement can be canceled. And in the event an employment agreement, which has been made by both sides, does not fulfill the conditions as statedin letter c and d, then the agreement is null and void by law.

The meaning of can be canceled (vernietigbaar) is that one of the parties can apply for the cancellation. The agreement still binds the parties, as long as the agreement is not canceled (by the judge) as requested by the party that is entitled to apply for the cancellation (the parties that is not competent, or the party that gives the agreement un-freely)

The meaning of null and void by the law is as from the beginning the agreement is cancelled and considered to be never existed if the objectiveconditions are not fulfilled. The work agreement is null and void by the law, as if from the beginning the agreement has never been borne and/or the engagement has never been made.

Under Article 1265 of IndonesianCivil Code, a condition of cancellation is a condition that if it is fulfilled, will cease the agreement and bring all conditions back to its original conditions as if the agreement has never been signed.

Maria Amanda

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