With more multinational companies setting up shop in Indonesia, the question of background checks is becoming increasingly important. So, what does Indonesian law allow when it comes to looking into a potential employer’s background?

 

There are no specific privacy or data protection requirements under Indonesian employment laws for employers who want to obtain criminal records, school records, employment or financial information. However, Indonesia has enacted various laws relating to data privacy in a number of areas.

 

Indonesian legal scholars often refer to Article 28G of the 1945 Constitution as the rather vague basis for more specific data privacy legislation. The article reads:

 

Each person shall have the right to protection of their personal selves, families, respect, dignity and possessions under their control and shall have the right to security and protection from threat of fear for doing or for not doing something which constitutes a human right.

 

More specifically, Law No. 11 of 2008 regarding Electronic Information and Transactions (“Law No. 11″) prohibits the transmission or use of the personal data of an individual through electronic media without the consent of such individual.

 

Handling Background Information

 

Indonesia does not have a data protection authority or governmental agency that controls background checks. However, prior written consent of the employee or candidate is necessary if the background check will involve personal data in an electronic format. This consent must be in the Indonesian language or in a bilingual format. Such written consents may be in an electronic format.

 

Law No. 11 does not provide specific sanctions for violations of the obligation to obtain an individual’s consent for the transmission or use of personal data through electronic media.  It does, though, provide that any person whose rights are infringed may file a claim for losses caused by such violation.

 

In practice, employers in Indonesia regulate the data privacy of their employees by way of unilateral employee consents, employment agreements, Company Regulations and collective labor agreements. Such agreements permit the collection, retention, disclosure and use of the employee’s personal data or other confidential information, including transmission within Indonesia or overseas to affiliates, services providers and government agencies. Such agreements and consents are justified by the freedom of contract principle under the Indonesian Civil Code.

 

Criminal Records

 

Employers may require prospective or existing employees to obtain a Statement of Good Behavior, orSurat Keterangan Catatan Kepolisian (“SKCK”), from the local district office of the Indonesian National Police.

 

An SKCK is a letter issued by or on behalf of the Chief of Police in the district in which an individual is domiciled confirming that the individual named in the letter is of good behavior and not presently involved in any criminal investigation or proceedings. This statement from the Chief of Police is based on the information provided by the head of the village or sub-regency where the individual lives and a review of the local criminal record. An SKCK does not indicate whether an individual has a criminal record but confirms that the individual is not currently involved in criminal proceedings within that specific district only. Centralized/national criminal records are not available or searchable.

 

An SKCK is valid for six months and only relates to the specific police district where the individual is domiciled. Only the employee concerned may apply for and obtain an SKCK but prospective employers are entitled to require a “clean” SKCK as a precondition to hiring, and the employment agreement and related terms and conditions of employment may include an obligation for the employee to produce a valid, “clean” SKCK at any time.

 

If a company wishes to appoint an individual as a Director or Commissioner, Articles 93 and 110 of Law No. 40 of 2007 regarding Limited Liability Companies (the “Company Law”) stipulate that persons appointed as members of the Board of Directors or Commissioners must be individuals who have not been punished for a criminal offense causing losses to the state during a period of five years prior to their nomination.

 

Education Records

 

For educational qualifications, employers in Indonesia often request copies of the applicant’s degrees or certificates that are certified as a true copy by the educational institution or by a public notary to verify authenticity. If necessary, employers may conduct further verification by directly making general inquiries to the educational institution. Whether or not the individual’s consent is required depends upon the school policy, unless the data is transmitted in an electronic format, in which case a written or electronic consent is required.

 

Employers in Indonesia should request copies of the applicant’s degrees or certificates that are certified as a true copy by the educational institution or by a public notary to verify authenticity.

 

Employment Records

 

For employment records, a request for letters of recommendation from previous employers is common. Employers are obligated to furnish an employment statement or reference letter upon request to any outgoing employee. The prospective employer may further verify the information contained therein by making general inquiries directly to the previous employer(s). The previous employer may respond to such inquiries, but care must be taken not to divulge information that may be construed as defamatory, recognizing that defamation is a civil cause of action and a criminal offense.

 

There are no specific rules governing the maintenance of records related to employee background checks. The primary regulations on maintaining corporate documents are: (i) Law No. 8 of 1997 regarding Corporate Documents; (ii) Government Regulation No. 87 of 1999 regarding Procedures on the Delivery and Destruction of Corporate Documents; and (iii) Government Regulation No. 88 of 1999 regarding Procedures for the Conversion of Corporate Documents into Microfilm or Other Media and Legalization.

 

The exact retention period for employee files is unspecified and falls under the discretion of a company’s Board of Directors. However, we suggest a company maintain employee files from the date of the commencement of employment until two years after the employee concerned leaves the company. Pursuant to Article 96 of Law No. 13 of 2003 regarding Manpower, the limitation period for employee claims is two years.

 

Pursuant to Article 1602 Z of the Indonesian Civil Code, a letter of recommendation shall contain an accurate description of the nature of the tasks performed and the duration of service, as well as, but only at the specific request of the employee to whom the letter of recommendation shall be issued, details of the manner in which the employee fulfilled his or her obligations and the manner in which the relationship of employment was terminated. However, if the employer terminated the relationship without providing any reasons, the employer shall be obligated only to make a statement to such effect, and shall not be obligated to notify the reasons as such. If the employee terminated the employment unlawfully (e.g., resignation without 30 days notice or absent without leave), then the employer shall be entitled to specify the same in the letter of recommendation. But, again, care must be taken not to divulge information that may be construed as defamatory, recognizing that defamation is a civil cause of action and a criminal offense.

 

Past salary/compensation information is not publicly available and a prospective employer would be advised to obtain the consent of a candidate to verify past salary/compensation.

 

Credit Reports, Bankruptcy, Sanction Searches

 

Credit reports and bankruptcy searches are not common for employment purposes in Indonesia.  Sanction searches are unknown in the country. Private service companies could provide credit reports on well-known businesspeople but not on ordinary members of the public. A new credit rating bureau has recently been established by Bank Indonesia but is not yet fully functioning and is only searchable by financial institutions. Personal bankruptcy is rare in Indonesia.

 

Companies coming into Indonesia for the first time and opening an office would be well advised to obtain professional counsel who can guide them through all the ins and outs of doing business here, including the process of conducting background checks.

 

 

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