Employment Termination in Indonesia: Urgent Reasons (Alasan Mendesak)

Not every violation committed by an employee requires the employer to go through a progressive warning process before terminating the employment relationship. In certain circumstances, where an employee commits a serious and urgent violation, the employer may terminate the employment relationship without first issuing Warning Letter 1, Warning Letter 2, and Warning Letter 3.

This concept is commonly referred to as termination for urgent reasons or alasan mendesak, as regulated under Government Regulation No. 35 of 2021 concerning Fixed-Term Employment Agreements, Outsourcing, Working Hours and Rest Periods, and Termination of Employment (“GR 35/2021”).

Overview of Employment Termination Based on Violation of Employment Contract in Indonesia

Indonesian employment law recognizes several grounds on which an employment relationship may be terminated, including circumstances arising from the employee’s conduct. In cases involving a violation of the employment agreement, company regulations, or a collective labor agreement, termination is generally not intended to be the employer’s immediate response to a single ordinary violation. Instead, the applicable legal framework generally requires the employer to follow a progressive disciplinary process before proceeding with termination.

Under this approach, an employee who commits a violation may first be issued a warning letter. Depending on the nature and continuation of the violation, the disciplinary process may proceed through a first, second, and third warning letter before the employer terminates the employment relationship. Each warning letter generally remains valid for a specified period, and the employer may proceed to a subsequent warning where the employee commits another violation during that period. The specific procedure, including the circumstances in which warnings may be issued and the consequences of repeated violations, should also be regulated in the employment agreement, company regulations, or collective labor agreement.

The progressive warning mechanism serves an important purpose in ordinary disciplinary cases. It gives the employee notice that their conduct does not comply with their employment obligations and provides an opportunity to correct that conduct before the employer takes the more serious step of terminating the employment relationship. In this respect, termination should generally be regarded as a measure that follows when earlier disciplinary measures have not successfully addressed the employee's misconduct.

The warning process may also help distinguish between an isolated or relatively minor breach and repeated misconduct demonstrating an employee's unwillingness or inability to comply with applicable workplace rules. For example, repeated lateness, failure to follow ordinary administrative procedures, or other violations that do not immediately create serious consequences may, depending on the applicable employment documentation, be addressed through progressive disciplinary measures rather than immediate termination.

However, not every violation necessarily has to go through the ordinary progressive disciplinary process. Indonesian employment law also recognizes the concept of urgent reasons, which may allow an employer to terminate an employee without first issuing the usual sequence of warning letters. This exception is intended to address misconduct of such seriousness that the continuation of the employment relationship can no longer reasonably be expected.

What is Termination Based on “Urgent Reasons”?

Employment termination in indonesia based on urgent reasons generally refer to serious violations committed by an employee that make it unreasonable for the employment relationship to continue. The nature of the violation is considered sufficiently serious that the usual progressive disciplinary process is no longer appropriate.

Article 52(2) of GR 35/2021 provides examples of conduct that may constitute urgent violations, including fraud, theft or embezzlement of company property and/or funds; providing false information that causes losses to the company; being intoxicated or using narcotics in the workplace; engaging in immoral conduct or gambling at the workplace; assaulting, abusing, threatening, or intimidating co-workers or the employer; disclosing company secrets; and committing other acts within the company that are punishable by imprisonment of five years or more.

Conduct constituting an urgent reason does not necessarily have to amount to a criminal offence. Although certain serious acts may simultaneously constitute both an urgent reason for termination and a criminal act, the concept of urgent reasons is broader than criminal liability. An act may justify immediate termination because it fundamentally breaches the employer’s trust, creates a serious safety risk, or is incompatible with the essential obligations of the employee’s position, even where the conduct does not result in criminal prosecution.

The nature of the employee's work and workplace may therefore be particularly relevant in determining whether certain conduct constitutes an urgent reason. For example, smoking at the workplace may not ordinarily be treated as conduct warranting immediate termination in every type of employment. However, where an employee works at a petrol station or another workplace involving highly flammable materials, smoking while on duty or within the work area may create a serious risk not only to the employee but also to customers, colleagues, company property, and the surrounding environment. In such circumstances, the conduct may reasonably be regarded as sufficiently serious to constitute an urgent reason, particularly where the employer's applicable employment agreement, company regulations, or collective labor agreement expressly classifies such conduct as a serious violation.

Employers should therefore avoid assuming that urgent reasons are limited to a fixed list of criminal or inherently unlawful acts. The assessment should instead take into account the nature of the misconduct, the employee's role and responsibilities, the risks associated with the workplace, and whether the relevant conduct has been clearly identified as a basis for immediate termination in the applicable employment documentation. Clear and specific provisions are particularly important, as they help establish the standard of conduct expected from employees and provide a legal basis for distinguishing ordinary violations, which may be subject to progressive warnings, from serious violations that may justify termination on the basis of urgent reasons.

Importantly, these types of violations should not be applied automatically in every case. GR 35/2021 provides that violations of an urgent nature may be regulated in the Employment Agreement, Company Regulation, or Collective Labor Agreement. Accordingly, employers should first ensure that the relevant conduct is expressly covered and qualifies as an urgent violation under the applicable internal employment regulations.

Company is not Required to Issue Warning Letters to Terminate the Employee Based on Urgent Reasons

One of the key features of termination for urgent reasons is that the employer does not need to follow the progressive warning letter mechanism.

For ordinary disciplinary violations, an employer may generally use a progressive warning system, whereby the employee is given an opportunity to correct their conduct before termination is considered. This may involve issuing a first warning letter, followed by a second warning letter and a third warning letter. The situation is different where the employee's conduct qualifies as an urgent violation.

In the case of termination due to urgent reasons, the employer does not have to wait for the employee to commit the same violation repeatedly or complete all three stages of warning letters before taking termination action. This mechanism is particularly relevant, in cases where allowing the employee to remain in the employment relationship while completing the warning process could expose the company to further operational, financial, reputational, or legal risks.

Can the Employee Be Terminated Immediately?

Termination for urgent reasons does not mean that the employer can terminate the employment relationship without following any termination procedure whatsoever.

Rather, the primary consequence of an urgent violation is that the employer may dispense with the usual progressive disciplinary process, including the requirement to issue a first warning letter, second warning letter, and third warning letter. This is because the nature and seriousness of the violation may make it unreasonable to expect the employer to continue the employment relationship while waiting for further violations to occur.

Nevertheless, the employer must still comply with the applicable termination procedures under Indonesian law. This includes providing the required notification of termination and following the applicable dispute resolution process if the employee rejects or challenges the termination. The absence of a requirement to issue progressive warning letters should therefore not be interpreted as allowing the employer to bypass all procedural requirements.

In addition, the employer should carefully assess the facts and ensure that there is sufficient evidence to support the alleged urgent violation before proceeding with termination. The relevant conduct should also have a clear basis under the applicable Employment Agreement, Company Regulation, or Collective Labor Agreement. Proper documentation of the facts, the legal basis for termination, and the steps taken during the termination process is therefore important.

Therefore, the existence of an urgent reason does not automatically prevent an employee from challenging the termination. If the employee challenges the decision, the employer may need to demonstrate that the alleged misconduct genuinely constituted an urgent violation and that the termination was carried out in accordance with the applicable legal and contractual requirements.

What are the Rights of The Employee Facing Termination due to Urgent Reasons?

Another important aspect of termination for urgent reasons is its impact on the employee's termination benefits. Termination for urgent reasons carries different consequences from other types of termination. In such circumstances, the employee is generally not entitled to severance pay in the same manner as employees whose employment is terminated for other grounds.

However, this does not necessarily mean that the employee is entitled to nothing. Pursuant to Article 52 paragraph (2) of GR 35/2021, Workers whose employment is terminated due to Urgent Violations shall be entitled to the following:

1. Compensation for Rights, in accordance with Article 40 paragraph (4) of GR 35/2021, which includes compensation for unused annual leave that has not expired; the cost of returning the employee and their family to the place where the employee was hired; and other rights provided for in the Employment Agreement, Company Regulation, or Collective Labor Agreement; and

   
   

2. Separation Pay, at the rate stipulated in the Employment Agreement, Company Regulation, or Collective Labor Agreement.

Accordingly, it would be inaccurate to simply state that an employer “does not have to pay anything” when terminating an employee for urgent reasons. The more accurate position is that the employee's termination entitlements differ from those applicable to other grounds for termination.

Why Are Termination Based on Urgent Reasons Important for Employers?

From an employer's perspective, the urgent-reasons mechanism provides a legal basis for taking decisive action against particularly serious misconduct. For example, consider an employee who is proven to have embezzled company funds. It may be inappropriate to treat such conduct in the same manner as an ordinary disciplinary violation, such as repeated lateness, where the employee may first receive a first warning letter and subsequently further warnings.

Where the conduct qualifies as an urgent violation, the employer may proceed with termination without completing the progressive warning process, provided that the conduct qualifies as an urgent violation and has been properly regulated in the Employment Agreement, Company Regulation, or Collective Labor Agreement.

At the same time, the urgent-reasons mechanism should not be treated as a shortcut for bypassing the normal disciplinary process whenever an employer considers an employee's conduct undesirable. Because termination has significant consequences for the employee, employers should be able to demonstrate why the particular conduct was sufficiently serious to justify dispensing with the ordinary warning mechanism. Proper internal documentation, a clear description of the violation, and sufficient supporting evidence are therefore important in reducing the risk of disputes.

Final Notes

Termination for urgent reasons (alasan mendesak) provides an important mechanism under Indonesian employment law for employers to terminate employees who commit serious misconduct without first going through the progressive Warning Letter 1, 2, and 3 process.

However, “immediate” termination does not mean that the employer is free to terminate the employment relationship without following any procedure. The termination must still be carried out in accordance with applicable employment laws and procedures, and the employee's conduct must genuinely qualify as an urgent violation.

Although the progressive warning process may be dispensed with, employers should exercise caution when relying on urgent reasons as the basis for termination.

In particular, employers should ensure that:

1. The employee's conduct genuinely qualifies as an urgent violation.

2. The violation is regulated in the Employment Agreement, Company Regulation, or Collective Labor Agreement.

3. There is sufficient evidence to substantiate the alleged misconduct.

4. The applicable termination procedure is still followed.

5. The employee's termination entitlements are properly calculated and paid in accordance with applicable law.

Disclaimer: This article is written for educational and informational purposes only. It does not constitute legal advice and should not be relied upon as a substitute for professional guidance. The process and outcome of divorce in Indonesia can vary significantly depending on the unique facts, circumstances, and legal issues of each case. For accurate and tailored advice, it is essential to consult directly with a qualified lawyer who can assess your specific situation.

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