THE VALIDITY OF AGREEMENT AND DOCUMENT WHICH ARE MADE WHILE WORKING FROM HOME

Laurences Aulina

The Covid-19 pandemic is raising high safety awareness among the public because it spreads fast. In order to reduce the spread of the virus wider, government and the company released some policies, one of them is a “work from home” policy. In this era of high technology, this is possible to be done; even the working hours  have become more flexible. However, what if there is an agreement that needs to be drafted, agreed and signed outside of working hours or while working from home, even when there’s no face to face interaction? How about the legal implication if the board of directors of the company or the workers who are  authorized by the director to sign an agreement/ a letter or other documents outside of working hours or while working from home?

An agreement is an act pursuant to which one or more individuals commit themselves to one another. This definition is stipulated in article 1313 Indonesian Civil Code. The conditions for agreement to be valid are stipulated in article 1320 Indonesian Civil Code, namely:

1. Consent of the individual who are bound thereby
2. Capacity of the respective parties to conclude an obligation
3. A specific subject matter
4. A legal cause

Point a and b are subjective conditions, point c and d are objective conditions.

Related to the “work from home” policy, how can you determine the validity of a digital agreement?

Referring to Law No.11 of 2008 on Electronic Information and Transactions as amended by Law No. 19 of 2016 on the Amendment to Law No. 11 of 2008 on Electronic Information and Transaction, articles 5 through 12 explained that electronic information and/or electronic documents and/or the printouts thereof are valid legal evidence, the expansion of lawful means of proof in accordance with the Law of Procedure applicable in Indonesia.  Electronic signatures shall have lawful legal force and legal effect to the extent satisfying the following requirements:

1. Electronic Signature creation data shall be associated only with the Signers.
2. Electronic Signature creation data at the time the electronic signing process shall be only in the power of the Signers.
3. Any alteration in Electronic Signatures that occur after the signing time is knowable.
4. Any alteration in Electronic Information associated with the Electronic Signatures after the signing time is knowable.
5. There are certain methods adopted to identify the identity of the Signers and;
6. There are certain methods to demonstrate that the Signers have given consent to the associated Electronic Information.

As long as the agreement has satisfied the conditions, the lawful legal force of the agreement which is made digitally is equal to agreement which is signed by the parties directly (face to face). It applies to the legal effect too.

Referring to the question above, the board of directors are authorised to undertake the management in accordance with any policy that seems appropriate within the limits specified in Law No. 40 of 2007 Concerning Limited Liability Companies and/or the articles of association. Article 92 paragraph (1) states that The Board of Directors shall undertake its duty to manage the Company for the interest of the Company in the pursuit of its purposes and objectives. This management is undertaken by each member of the board of directors in good faith and full responsibility.

In Article 98 Paragraph (1) Law No. 40 of 2007 Concerning Limited Liability Companies states that The Board of Directors shall represent the Company, in or outside the courts of justice. The authority of the board of directors to represent the company shall be unlimited and unconditional unless stipulated otherwise in this Law, article of association, or the resolution of GMS. So, the board of directors are authorised to make an agreement on behalf of and for the company while working from home or in the day off.

If there is a specified limitation for the board of directors to make an agreement with another party that is stipulated in the article of association or the resolution of the GMS, about the limitation of the time that is allowed to make agreement  or the act, the board of directors’ act is categorized as ultra vires or an act which is beyond their powers.

The legal effect of the agreement which is made by ultra vires is null and void, so:

• The company may reject to fulfill the agreement.
• Although the third party fulfills the agreement in good faith and is protected by the law, the responsibility of the execution of the agreement shall be asked to the board of directors personally.

Each member of the Board of Directors shall be fully personally liable for the Company’s losses if the Director concerned is at fault or negligent in carrying out his/her duties in accordance with the provisions stated in article 97 paragraph 3 Law No. 40 of 2007 Concerning Limited Liability Companies.

What about the agreement which is made outside of working hours by the authorised worker by virtue of a power of attorney?

In Article 1795 Indonesian Civil Code states that, “A mandate can be either specific, being related to one or more matters, or general, being related to all matters of the mandatory.”

Furthermore, Article 103 Law No. 40 of 2007  Concerning Limited Liability Companies states that “A Board of Directors may give a written power of attorney to 1 (one) or more employees of the Company or to some other person(s) for and on behalf of the Company to perform specific legal actions as described in the power of attorney.”

If the legal actions are done outside of working hours, overtime policy is applicable. Based on Article 1 Paragraph 1 The Decree of Ministry of Manpower and Transmigration Republic of Indonesia No. 102/MEN/VI/2004 Concerning Overtime Work Hours and Overtime Pay states that, “Overtime hours is the hours longer than 7 (seven) hours a day and 40 (forty) hours a week for 6 (six) work days per one week or 8 (eight) hours a day, and 40 (forty) hours a week for 5 (five) work days per one week or work hours during the weekly rest day or during the public holiday stipulated by the government.”

However, for the workers positioned in certain position levels, they are not eligible for overtime pay in the condition that they receive higher wage/salary. Those positioned in certain position level as mentioned are the worker who has function/responsibility as intellectual, planner, executive, and controller of the enterprise’s operation in which their work hours cannot be limited with the work hours regulated by the enterprise in accordance with prevailing provision/regulations.

If the agreement is made by the authorised worker, the agreement is valid as long as it satisfies the conditions of a valid agreement. The attorney must have had authority given by the board of directors. Keep in mind, the agreement has to be made with the third party which is stipulated in the power of attorney.