Reassessing the Enforceability of Non-Compete Clauses in Indonesia: Good Faith, Proportionality, and Comparative Insights from the United States

Abstrak

This article analyzes the enforceability of post-employment non-compete clauses in employment agreements, with particular emphasis on Supreme Court Decision No. 3549 K/Pdt/2023 juncto Supreme Court Decision No. 1248 PK/Pdt/2024. It explores how the Supreme Court interprets such clauses in balancing the protection of trade secrets with the constitutional right to work, and the limits of their application to ensure compliance with the principles of justice and proportionality. It employs a normative juridical method, utilizing a case approach and a comparative study with the United States law. The findings indicate that the Supreme Court starts to adopt a substantive approach by emphasizing the principles of good faith and proportionality, thereby reframing non-compete clauses not merely as restrictions on the right to work but as instruments for safeguarding legitimate business interests. This approach enhances the legal protection of trade secrets while promoting a fair balance between the interests of employers and employees. Accordingly, this article recommends the formulation of clearer judicial guidelines for assessing the enforceability of non-compete clauses and calls for more comprehensive regulatory frameworks to strengthen legal certainty and fairness in employment relationships.