Navigating Non-Compete Clauses for Freelancers in Indonesia’s Coworking Landscape

Coworking is flourishing in Indonesia, with the nation’s capital, Jakarta, already a well-known startup hub. Globally, 135 new spaces were opened in August 2019 alone, according to research carried out by GCUC. As of 2018, the total number of shared offices had reached 1.7 million people working in over 19,000 coworking centers worldwide.

While much hype surrounds coworking, independent contractors also need to pay close attention to the small print in the legal agreements they enter into. In particular, it’s worth devoting some time to understanding whether a non-compete clause exists and what it means. Such a clause is a common addition for even the smallest businesses and its implications could impact future business interests and how work is carried out. Therefore, this article tries to answer the question: does a non-compete clause apply to shared office space?

A non-compete agreement, or non-compete clause, is a contract between an employee and a former or potential employer. It can also be put in place between an independent contractor and the company for which he or she contracts. Its stated aim is to reduce competition immediately following the termination of a contract or after employment. This is done by prohibiting an ex-staff member from setting up a similar business or taking on staff who worked for their former employer when that individual leaves. Think about the implications this might have in a shared office space which 20 or more other people.

Jakarta, like many big cities, has a great deal of coworking spaces to choose from. But it also has a high number of independent contractors who enjoy the flexibility of working from a hot desk, or who only need a long-term space once in a while. The good news is that coworking spaces are not necessarily any better or worse for those with numerous contracts than they are for those with just one, but a usual model is for independent contractors and business owners to sign a rental agreement for a desk space.

Most are flexible with rental terms so there is no obligation to stay when a contract has run its course, or a coworking space is suitable for both local individuals and those based abroad or elsewhere in the country. This makes them a pretty good solution for freelancers, providing social interaction (because most of the spaces tend to be full) and the independence of choosing one’s own work hours. Networking opportunities abound.

However, this kind of flexibility can come at a cost where a non-compete clause applies to each member of a coworking space. This is where it is particularly important to understand how the agreement works. For example, does it restrict individuals from using a separate office space altogether – and for how long? The following are some simple steps to bear in mind.

For independent contractors and employees alike, the balance between healthy client competition and stifling it is one that needs careful thought. Non-compete clauses clearly have their role and can keep businesses from being poached. Ultimately, individual contract holders need to know where they stand.

The takeaway for independent contractors is that the coworking space you use may not be as important as financial considerations and the flexibility to adapt quickly to market changes.