The Termination Due To Closure Of Business document is a critical legal instrument used when a company in Indonesia ceases operations and needs to formally terminate its employment relationships. It is essential for businesses that are permanently closing their operations due to financial circumstances, force majeure, or strategic decisions. The document must comply with Indonesian labor laws, particularly Law No. 13 of 2003 on Manpower and its amendments under Law No. 11 of 2020, as well as Government Regulation No. 35 of 2021. It includes comprehensive details about severance calculations, notice periods, final settlements, and employee rights, while ensuring proper documentation of the closure process. This document is crucial for maintaining legal compliance and minimizing the risk of labor disputes during the sensitive process of business closure.
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1. Parties: Identification of the employer company and the employee(s) affected by the termination
2. Background: Context of the business closure decision and general circumstances leading to termination
3. Definitions: Key terms used throughout the document, including specific Indonesian legal terminology
4. Business Closure Declaration: Formal statement of business closure, including effective date and reasons
5. Legal Basis: Reference to relevant Indonesian laws and regulations supporting the termination
6. Notice Period: Specification of the notice period as required under Indonesian law
7. Termination Date: Clear statement of the employment termination effective date
8. Employee Entitlements: Detailed breakdown of all statutory entitlements including severance pay, service pay, and other compensation
9. Final Settlement: Terms for payment of final salary, unused leave, and other outstanding benefits
10. Company Property: Requirements for return of company property and handling of confidential information
11. Release and Waiver: Mutual release of claims and obligations post-termination
12. Governing Law: Confirmation of Indonesian law as the governing law
13. Execution: Signature blocks and execution requirements
1. Mass Termination Provisions: Additional provisions required when terminating more than 10 employees simultaneously
2. Union Consultation: Required when employees are union members or covered by collective labor agreements
3. Transition Assistance: Optional provisions for job search assistance or skill training support
4. Non-Competition: Restrictions on post-employment activities, if applicable under Indonesian law
5. Reference Letter: Terms regarding the provision of employment references
6. Severance Payment Schedule: Include when severance payments will be made in installments
7. Dispute Resolution: Specific procedures for handling disputes, recommended for senior employees
1. Schedule A - Calculation of Termination Payments: Detailed calculations of severance pay, service pay, and other entitlements
2. Schedule B - Timeline of Closure: Detailed timeline of the closure process and key dates
3. Schedule C - Employee Details: Complete employee information including position, tenure, and salary details
4. Schedule D - Company Property List: Itemized list of company property to be returned
5. Appendix 1 - Supporting Documents: Copies of relevant notices, communications regarding closure
6. Appendix 2 - Legal Compliance Checklist: Checklist ensuring compliance with Indonesian termination requirements
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