The Authority and Legal Risks of HR Officers Under Law Number 1 of 2023 (the New Criminal Code)

In business, the Human Resources Development (HRD) division plays a strategic role as the function responsible for managing the workforce. In practice, HR officers recruit staff, sign employment agreements, impose sanctions and even represent the company in industrial relations disputes. These responsibilities often create the perception that an HR officer has absolute authority to act on behalf of the limited liability company (PT). That perception, however, often clashes with the principles of company law in Indonesia. Under Law Number 40 of 2007 on Limited Liability Companies (the “Company Law” or “UUPT”), a company is an independent legal entity that can only be lawfully represented by its Board of Directors. Meanwhile, an HR officer, even in a managerial position, remains an “Employee” under Law Number 13 of 2003 on Manpower, as amended by Law Number 6 of 2023 on the Enactment of Government Regulation in Lieu of Law Number 2 of 2022 on Job Creation into Law (the “Manpower Law”). What needs to be understood is the clear separation between administrative authority based on a Job Description or Standard Operating Procedure (SOP) and the legal authority to perform legal acts that bind the company.

Legal problems often arise from a failure to distinguish between a “work instruction” and a “grant of authority”. Many HR practitioners carry out their duties in good faith armed only with an SOP, without any specific authority from the Board of Directors. Yet a legal act performed without valid authority not only risks being null and void, but may also shift liability from the company to the HR officer personally. This risk has become more real with recent developments in Indonesian criminal law, particularly following the entry into force of Law Number 1 of 2023 (the new Criminal Code, “KUHP”) and Law Number 20 of 2025 (the new Criminal Procedure Code, “KUHAP”). These laws make it even clearer that whoever commits the act bears responsibility for it. If an HR officer takes action that harms other employees, or that may even be unlawful, such as withholding diplomas or withholding wages for certain reasons, without a legally valid delegation of authority, they cannot hide behind the defence that they were carrying out their duties or following orders. The HR officer personally risks being treated as an individual offender.

This article has therefore been written as advice for HR practitioners, to help them understand the limits of their authority so that they can work professionally without exposing themselves to legal risk. The author examines the issue in depth under the title “The Authority and Legal Risks of HR Officers in a Company”. To analyse the matter comprehensively, the author poses the following questions:

1. What is the legal position of HR, and what are the limits of its authority to represent the company?

2. What is the criminal liability of an HR officer who acts beyond their authority?

To answer these questions, this article uses a normative juridical research method, examining library materials and secondary data through statutory and conceptual approaches in order to analyse the relationship between the applicable legislation and the general practice of HR authority.

The Legal Position of HR and the Limits of Its Authority to Represent the Company

In practice, it is often assumed that an HR officer, particularly at a certain level such as Manager or an equivalent or higher title used in the company’s structure, may act on matters relating to their core duties and functions as though they themselves represent the company. To determine authority, we must first understand the company’s organs. Company law recognises the Organ Theory put forward by Von Gierke. This theory holds that a legal entity is a living reality with its own will and purpose, but because it exists only in the abstract, it needs instruments (“organs”) to act in the real world. Article 1 point 2 of the Company Law expressly defines the organs of a company as consisting only of the General Meeting of Shareholders (GMS), the Board of Directors and the Board of Commissioners. Article 98(1) of the Company Law further provides: “The Board of Directors represents the Company both in and out of court.” This provision confers representative authority by attribution on the Board of Directors alone. In legal doctrine, this is known as persona standi in judicio. Legally, the only party entitled to perform legal acts on behalf of the company is the Board of Directors.

An HR officer, whether a Manager, a Vice President or even a Chief Human Resources Officer (CHRO), is not an organ of the company unless their name appears in the company’s deed as a member of the Board of Directors. They are a non-organ. As a non-organ, HR has no legal authority to act on behalf of the company. Any legal act performed by HR in the company’s name is legally invalid. So, despite holding a particular position, an HR officer does not automatically have legal authority to act, all the more so because they are bound by an employment relationship. The essential elements of an employment relationship are work, wages and instruction. The element of instruction places HR in the position of the person instructed, not the party holding authority to act for and on behalf of the company. A common example is when an HR officer acts for the employer in signing an employment agreement (PKWT/PKWTT, i.e. fixed-term or permanent) with a new employee. The legal implications are serious. When the Manpower Law sets out the employer’s obligations, such as paying wages and the religious holiday allowance (THR) and providing health insurance, the employer referred to is the legal entity (the company) represented by its Board of Directors. If HR takes over these acts without valid authority, an invalid shift of obligations may occur. The risk can lead to legal disputes, in which an employment agreement signed by HR may be annulled or held not to bind the company if the Board of Directors later disowns it.

To prevent these risks, there must be a legally valid delegation of authority. This may take the form of a power of attorney (lastgeving) under Article 1792 of the Indonesian Civil Code (KUHPerdata), which provides: “A power of attorney is an agreement whereby a person grants authority to another person, who accepts it, to conduct a matter for and on their behalf.” The phrase “to conduct a matter” refers to legal acts. Herein lies the difference between a Job Description or SOP and a power of attorney (volmacht). A Job Description or SOP is an internal document governing operations. In legal doctrine, it is categorised as an instruction, and the relationship it creates is that of superior and subordinate. A Job Description or SOP typically contains technical instructions, such as “HR is responsible for preparing employment agreements” or “HR is tasked with negotiating disputes”. These documents set out HR’s duties, but do not automatically confer authority to perform legal acts.

For HR’s actions to be valid and binding on the company, the Board of Directors, as principal, must grant a power of attorney or authority to HR, as attorney, so that the acts have legal effect for the principal. Without such a grant, HR has no capacity to act on behalf of the company. Let us take a concrete example. The company’s Job Description or SOP states: “HR is authorised to terminate employment (PHK).” Relying on this, HR negotiates and finally signs a Joint Agreement (Perjanjian Bersama, PB) ending an employee’s employment. Relying solely on the Job Description or SOP here is a misinterpretation. Let us break it down:

1. Signing a PB is a legal act (rechtshandeling) that extinguishes a legal relationship and gives rise to an obligation to provide the employee’s termination entitlements.

2. Under the Company Law, only the Board of Directors is entitled to do this.

3. A Job Description or SOP is an internal document describing HR’s duties, not an instrument granting authority.

4. Without a power of attorney from the Board of Directors specifically granting the right to terminate employment, negotiate and sign the PB, HR’s signature on the PB constitutes onbevoegde vertegenwoordiging (representation without authority).

Acting without the principal’s authority means that the person who took the action must bear the legal consequences. This places HR in a highly vulnerable position: if the Board of Directors refuses to acknowledge the act, HR is personally liable for any resulting loss. A Power of Attorney setting out the authority granted by the Board of Directors to HR is therefore essential.

In addition to a Power of Attorney, an HR officer can also be equipped with a Letter of Assignment (Surat Tugas). Conceptually, the two serve different but mutually reinforcing functions. A Power of Attorney is the legal basis for performing legal acts, while a Letter of Assignment is formal evidence of a work instruction from the Board of Directors to act at a particular time and place. A Letter of Assignment proves that HR’s actions were genuinely taken in the course of duty, not as a personal matter, in line with the principles of evidence in employment relationships. It should be stressed, however, that a Letter of Assignment is only supplementary. With it, an HR officer can attend, listen and convey messages, but it does not confer authority to decide or sign binding agreements unless accompanied by a Power of Attorney. The ideal legal protection for an HR officer is therefore to hold both a Letter of Assignment, showing they are acting on their superior’s instructions, and a Power of Attorney, showing they are entitled to represent the company’s legal interests.

Criminal Liability of HR Officers Who Act Beyond Their Authority

Having established that HR has no absolute authority to represent the company, what are the legal consequences if HR nonetheless acts for and on behalf of the company without a valid Power of Attorney? In civil law, the consequences may be limited to material damages or the annulment of an agreement. In criminal law, however, the consequences may include imprisonment. To establish that someone has committed a criminal offence, a causal link must be proven between the act and the prohibited consequence. For acts beyond authority, the author uses two main theories:

1. The theory of conditio sine qua non (Von Buri): Every condition is a cause. Without the act, the consequence would not have occurred; the act is an absolute condition.

2. The adequacy theory (Von Kries): The act must reasonably be capable of producing the consequence according to normal human experience. Knowledge of, and the intention to act without, authority make an act the cause of the offence.

The author offers several examples of acts that expose an HR officer to criminal risk under the KUHP:

Alleged Forgery of Documents

One example of the criminal risk faced by an HR officer acting without authority is alleged forgery of documents. Article 391(1) of the KUHP provides:

“Any Person who falsely makes or forges a Document that may give rise to a right, an obligation or a release from debt, or that is intended as evidence of a matter, with the intention of using it or asking others to use it as though its contents were true and not forged, where the use of such Document may cause loss, shall be punished for forgery of a Document by imprisonment for a maximum of 6 (six) years or a fine of up to category VI.”

Many people assume that forging a document is limited to forging someone else’s signature or altering a figure. This is a narrow understanding. In criminal law doctrine, forgery also covers misrepresenting the capacity or authority of the person who made the document. When an HR officer signs a contract without holding a Power of Attorney from the Board of Directors, they may be misrepresenting their authority to act for and on behalf of the company, giving a false statement about their own capacity. Let us break down the elements:

• Cause (causa): An HR officer signs as though acting as the company’s lawful representative, without holding a Power of Attorney.

• Consequence (gevolg): The third party believes it has a contract with the company. When a dispute arises, the company may disown the contract, saying it never approved its contents or never granted any authority. As a result, the contract does not satisfy the requirements of a binding obligation. The third party’s losses, whether time, effort or money (material or immaterial), are a direct consequence of the HR officer’s act.

Alleged Embezzlement

Another risk an HR officer may face is alleged embezzlement in office, governed by Article 486 in conjunction with Article 488 of the KUHP. Why? In some companies, HR withholds outstanding wages or third-party property because exit clearance has not been completed, citing company SOPs or instructions. But are they entitled to do so? Article 486 of the KUHP defines embezzlement as unlawfully appropriating Property that belongs wholly or partly to another person and is in one’s possession other than as a result of a criminal offence. The aggravated offence in Article 488 of the KUHP applies where this is done in the course of employment. In such a case, there is possession of property, i.e. lawfully holding an employee’s diploma or money in the course of duty, followed by an unlawful act when HR refuses to return it on the owner’s request without a sound legal basis. Here lies the causal link. If HR withholds a diploma based solely on an SOP without having been granted authority:

• Cause: HR’s decision to withhold outstanding wages or another person’s property.

• Consequence: If the Board of Directors says it never instructed anyone to withhold wages or forcibly retain property, HR is deemed to have personal mens rea (criminal intent) to appropriate another person’s property. HR becomes the sole perpetrator of embezzlement, while the company is cleared.

Alleged Fraud

Another example arises in severance negotiations. An HR officer without a Power of Attorney promises the trade union severance of twice the amount set by the Minister of Manpower’s regulation in exchange for agreeing to mass redundancies. If the company says it never approved this and does not pay the severance HR promised, HR may be in breach of the criminal provisions on fraud. Article 492 of the KUHP provides:

“Any Person who, with the intention of unlawfully benefiting themselves or another person, by using a false name or false position, by deceit or a series of lies, induces a person to hand over Property, extend a loan, acknowledge a debt or write off a receivable, shall be punished for fraud by imprisonment for a maximum of 4 (four) years or a fine of up to category V.”

The analysis is as follows:

• • Cause: HR’s promise, made beyond its authority.

• • Consequence: The workers agree to the redundancies, but the company then refuses to pay because it never approved that figure, causing loss to the employees because HR promised something beyond its authority. HR may be charged with fraud for inducing others with false promises. The company is not bound by the promise because it was made by the HR officer personally.

Law Number 20 of 2025 on Criminal Procedure (KUHAP) also brings a new approach to evidence, particularly regarding corporate crime versus individual crime. Investigators will trace who held the criminal intent (mens rea). If HR acted under a Power of Attorney from the Board of Directors, any criminal intent is more likely to lie with the corporation. If HR acted without one, it is easy to conclude that the intent arose from HR’s own initiative. Why? Because, as a matter of legal logic, a person acting beyond their authority is presumed to have a personal motive, whether to curry favour, cover up a mistake or gain a personal advantage. During questioning, a common question put to HR is: “On what basis did you do this? Where is the written instruction?” If HR can only answer “verbal instructions” or “company custom”, their position is very weak under the KUHAP. Without a Power of Attorney, the principle of individual liability can readily be applied, and HR may be named a suspect if the elements of the offence are met.

It is important to note that Articles 45 to 50 of the KUHP recognise corporate criminal liability. A corporation may be punished if an offence is committed within the scope of its business or activities. However, legal doctrine offers corporations a way out known as the ultra vires doctrine. If an employee (HR) commits an act that is:

1. unlawful;

2. done without valid authority (no mandate or power of attorney); and

3. contrary to the duty of care,

then the act is deemed not to be an act of the corporation but of a rogue individual. The company may argue: “We are a law-abiding legal entity. We never authorised our HR officer to commit forgery or fraud. That was their own initiative.” With this argument, the causal link between the corporation and the offence is broken. Responsibility rests entirely with HR, who must face the legal process, pay for their own lawyer and face the threat of imprisonment alone.

A company can only perform legal acts through its Board of Directors. The legitimacy of HR’s actions therefore requires specific legal instruments. HR needs a Letter of Assignment as evidence of a valid work instruction. However, a Letter of Assignment alone is not enough. For legal acts such as signing agreements or representing the company in dispute resolution, a Power of Attorney under the Civil Code is essential. Without both a Letter of Assignment and a Power of Attorney, HR’s actions may be unlawful, since a job title, job description and SOP do not automatically confer the right to act for and on behalf of the company towards third parties.

As for criminal liability, where HR acts beyond its authority without a valid Power of Attorney, the burden of liability shifts from the corporation to the HR officer personally. The absence of valid authority releases the corporation from liability, so that HR is treated as the perpetrator with mens rea for offences such as alleged forgery, embezzlement in office or fraud. HR therefore cannot hide behind the doctrine of official or corporate orders and must bear the criminal sanctions personally for the legal harm caused.

Illustration: Gemini AI