One of the most common ways in which a company can use a person's services is by entering into a partnership agreement and thereby treating them as a partner instead of an employee. However, partnership agreements often give rise to disputes, especially if they are terminated. There have been many cases in which the Manpower Office or the Industrial Relations Court have deemed poorly drafted partnership agreements to be employment agreements.
Previously, under the Manpower Law, employers in Indonesia could include an article in their employment agreements, company regulations or collective labour agreements which allowed them to terminate employees for having a marital or blood relationship with another employee in the same company. However, the Constitutional Court recently sided with eight individual claimants who contended that the wording of the law contravened their constitutional rights.
The number of expatriate employees taking legal action against their employers for terminating their employment contracts, whether for economic reasons or for misconduct, has grown in recent years. Although most jurists maintain that expatriates cannot be permanent employees or receive the same severance entitlements as Indonesian permanent employees, this has not always been the case.