Guide To Restrictive Covenants

(A) GENERAL

1. What are the principal types of restrictive covenants used by employers in your jurisdiction in relation to their employees?

In Indonesia, there are no statutory provisions nor requirement on the use of restrictive covenants in employment relationships. However, as Indonesian contractual laws recognise the concept of principal of freedom of contract pursuant to Article 1338 of the Indonesian Civil Code (“ICC”), employers can govern any kind of restrictive covenants to be embedded in the employment agreement, company regulations, or a standalone confidentiality or non-compete undertaking.

Based on market practice, the most common use restrictive covenants include:

• post-termination non-compete clauses restricting the employee from working for or setting up a competing business;