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Employment Termination Agreement Template for Indonesia

A comprehensive legal document governed by Indonesian law that formalizes the mutual agreement to terminate an employment relationship between an employer and employee. The agreement complies with Law No. 13 of 2003 on Manpower and its amendments under the Job Creation Law (Law No. 11 of 2020), detailing the terms and conditions of separation, including severance payments, final settlements, and post-employment obligations. It provides legal protection for both parties by clearly outlining their rights and responsibilities, ensuring compliance with Indonesian labor regulations while establishing a clear framework for the termination process.

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What is a Employment Termination Agreement?

The Employment Termination Agreement is a crucial document used in Indonesia when an employer and employee mutually agree to end their employment relationship. It serves as a formal record of the termination terms while ensuring compliance with Indonesian labor laws, particularly the Manpower Law (Law No. 13 of 2003) and the Job Creation Law (Law No. 11 of 2020). This agreement is typically used in scenarios of mutual separation, voluntary resignation, or restructuring, providing comprehensive documentation of final settlements, severance payments, and ongoing obligations. The document helps prevent future disputes by clearly outlining the terms of separation, release of claims, and post-employment obligations, while ensuring all statutory requirements under Indonesian employment law are met.

What sections should be included in a Employment Termination Agreement?

1. Parties: Identification of the employer and employee, including their complete legal names, addresses, and positions

2. Background: Brief history of employment relationship, including start date, position, and context leading to termination

3. Definitions: Definitions of key terms used throughout the agreement

4. Termination Date: Specific date when employment relationship will end and last working day

5. Reason for Termination: Clear statement of the grounds for termination in accordance with Indonesian labor law

6. Final Payments: Details of all final payments including salary, severance pay, service appreciation pay, and compensation rights

7. Company Property: Requirements for return of company property, documents, and confidential information

8. Continuation of Benefits: Details of any benefits that continue post-termination, including health insurance extension

9. Release and Waiver: Mutual release of claims and waiver of rights related to employment relationship

10. Confidentiality: Ongoing obligations regarding confidential information and trade secrets

11. Governing Law: Specification of Indonesian law as governing law and relevant jurisdiction

12. Execution: Signature block and execution requirements

What sections are optional to include in a Employment Termination Agreement?

1. Non-Competition: Restrictions on working for competitors, if applicable and enforceable under Indonesian law

2. Non-Solicitation: Restrictions on soliciting employees or customers, if applicable

3. Reference Letter: Terms regarding the provision of employment references

4. Outplacement Support: Details of any career transition or outplacement services provided

5. Outstanding Leave: Calculation and treatment of unused annual leave, if applicable

6. Performance Bonus: Treatment of any outstanding bonus or incentive payments

7. Share Options: Treatment of existing share options or equity arrangements

8. Legal Fees: Provisions regarding payment of legal fees for agreement review

What schedules should be included in a Employment Termination Agreement?

1. Schedule 1 - Calculation of Final Payments: Detailed breakdown of severance pay, service appreciation pay, and other entitlements as per Indonesian labor law

2. Schedule 2 - Company Property List: Itemized list of company property to be returned

3. Schedule 3 - Benefits Summary: Details of any continuing benefits and their duration

4. Appendix A - Employee Data: Employee's employment history, position, and salary details

5. Appendix B - Statutory Declarations: Required declarations under Indonesian labor law

6. Appendix C - Release Form: Detailed release of claims form in Indonesian and English

Authors

Alex Denne

Advisor @ GenieAI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Indonesia

Publisher

GenieAI

Cost

Free to use

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