Vol. 8 No. 1 (2025): IJUS Vol. 8, Issue 1, January 2025
Articles

APPLYING THE ULTRA VIRES DOCTRINE TO DIRECTORS’ MISCONDUCT IN WAGE PAYMENTS UNDER INDONESIAN CORPORATE LAW

PDF
  • Wanda Rahma1,
  • Wahyu Rasyid,
  • Nur Ainun Syafillah Safah
Wanda Rahma1
Muhammadiyah University of Parepare, Indonesia
Wahyu Rasyid
Muhammadiyah University of Parepare, Indonesia
Nur Ainun Syafillah Safah
Muhammadiyah University of Parepare, Indonesia

Published 2025-03-25

Keywords

  • Ultra Vires Doctrine,
  • Directors’ Liability,
  • Wage Payment,
  • Fiduciary Duty,
  • Corporate Governance,
  • Indonesian Corporate Law
    • ...More
    Less

How to Cite

Wanda Rahma1, Wahyu Rasyid, & Nur Ainun Syafillah Safah. (2025). APPLYING THE ULTRA VIRES DOCTRINE TO DIRECTORS’ MISCONDUCT IN WAGE PAYMENTS UNDER INDONESIAN CORPORATE LAW. IJUS | International Journal of Umranic Studies, 8(1), 47–57. Retrieved from https://unissa.edu.bn/journal/index.php/ijus/article/view/978
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Copyright Notice

Abstract

Methodology: This study employs a normative legal research methodology incorporating the statutory, conceptual, and case approaches. The statutory approach analyzes relevant Indonesian laws, particularly the Limited Liability Company Law (UUPT) and the Manpower Law. The conceptual approach explores the doctrine of ultra vires and fiduciary duty, while the case approach examines two court decisions to evaluate judicial reasoning and the implications for directors’ liability in wage payment violations.

Main Findings: The study finds that directors' failure to fulfill wage obligations can be categorized as ultra vires actions when such acts exceed their authority as stipulated in the company's Articles of Association and result in losses to the company due to negligence or lack of good faith. The research identifies three indicators to classify such actions as ultra vires: occurrence of losses, negligence or misconduct by directors, and absence of good faith and responsibility in decision-making.

Application of this Study: The findings of this study can inform corporate governance practices by emphasizing the need for directors to operate within their lawful authority and uphold fiduciary duties, particularly in managing employee-related responsibilities. Legal practitioners and corporate policymakers can use these insights to improve regulatory frameworks and accountability mechanisms in company law and labor protection.

Novelty/Originality of this Study: This study provides a novel legal interpretation by linking the ultra vires doctrine—traditionally used in corporate scope limitations—with directors’ unlawful acts in wage management. It highlights an underexplored area in Indonesian corporate law and offers an analytical framework for assessing directors’ personal liability in employment-related disputes.

Significance: The research contributes to the development of corporate and labor law discourse in Indonesia by proposing a legal basis for holding directors personally accountable for wage-related violations through the application of the ultra vires doctrine. It emphasizes the importance of enhancing legal clarity and sanctions to protect workers’ rights and prevent the misuse of corporate authority.

PDF

References

  1. Books
  2. Khakim, A. Aspek Hukum Pengupahan: Berdasarkan UU Nomor 13 Tahun 2003 (Legal Aspects of Wages: Based on Law Number 13 of 2003). Citra Aditya Bakti, 2006.
  3. Bainbridge, S. M. Corporate Law. Foundation Press, 2020.
  4. Rokan, Mustapa Khamal, and Hasanah, Aida Nur. Hukum Perusahaan: Konsep Hukum Positif dan Islam Serta Berbasis Kasus (Company Law: Positive and Islamic Legal Concepts, Case-Based). Medan: Perdana Publishing, 2020.
  5. Santoso, B. Keagenan (Agency): Prinsip-Prinsip Dasar, Teori, dan Problematika Hukum Keagenan (Agency: Basic Principles, Theory, and Legal Problems in Agency). Ghalia Indonesia, 2015.
  6. Yahya Harahap. Hukum Perseroan Terbatas (Limited Liability Company Law). Jakarta: Sinar Grafika, 2019.
  7. Journals
  8. Barnes, A. J., Dworkin, T. M., and Richards, E. L. Law for Business, 4th ed. Homewood, IL: Irwin, 1991.
  9. Suryahartati, Dwi. "Doktrin Ultra Vires: Perspektif Undang-Undang Nomor 40 Tahun 2007 tentang Perseroan Terbatas" ("The Ultra Vires Doctrine: Perspective of Law Number 40 of 2007 concerning Limited Liability Companies"). Jurnal Hukum 34, no. 2 (2022): 118–124.
  10. Doe, J. "Pengaruh Direksi terhadap Kinerja Perusahaan" ("The Influence of Directors on Company Performance"). Lex Administratum IX (1) (2021): 15–30.
  11. Rissy, Yafet Yosafet Wilben. “Analisis Yuridis Terkini terhadap Kewajiban Berhati-hati (Duty of Care) dan Fidusia Direktur di Inggris, Amerika, Kanada dan Indonesia” ("Recent Legal Analysis on Duty of Care and Fiduciary Obligations of Directors in England, America, Canada and Indonesia"). Mimbar Hukum 34, no. 2 (2022): 654.
  12. Syarief, Elza, and Balqist, Attika. "Doktrin Fiduciary Duty dan Corporate Opportunity Terhadap Pertanggungjawaban Direksi dan Dewan Komisaris" ("Fiduciary Duty Doctrine and Corporate Opportunity Against the Responsibility of Directors and Board of Commissioners"). Journal of Law and Policy Transformation 2 (2017): 80–102.
  13. Legislation
  14. Kitab Undang-undang Hukum Perdata (Civil Code).
  15. Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth).
  16. Undang-Undang Nomor 40 Tahun 2007 tentang Perseroan Terbatas (Law Number 40 of 2007 concerning Limited Liability Companies).
  17. Undang-Undang Nomor 13 Tahun 2003 tentang Ketenagakerjaan (Law Number 13 of 2003 concerning Manpower).
  18. Kitab Undang-undang Hukum Dagang (Commercial Code).
  19. Court Decisions
  20. Putusan Pengadilan Nomor 3/Pdt.Sus-PHI/2021/PN Kdi[2021] PN Kdi
  21. Putusan Pengadilan Nomor 29/Pdt.Sus-PHI/2021/PN Mks[2021] PN Mks
  22. Website
  23. SIP Law Firm. "Tugas Direksi Perusahaan" ("Duties of Company Directors"). SIP Law Firm. Accessed March 18, 2025. https://siplawfirm.id/tugas-direksi-perusahaan/?lang=id.
  24. Istakhori, Khamid. "Dua Hal Hukum Ketenagakerjaan yang Belum Berjalan Optimal" ("Two Aspects of Labor Law That Have Not Been Optimally Implemented"). Hukumonline. Accessed March 18, 2025. https://www.hukumonline.com/berita/a/dua-hal-hukum-ketenagakerjaan-yang-belum-berjalan-optimal-lt5cbe09e5f2b91/.