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Termination Employment Contract for Indonesia

Termination Employment Contract Template for Indonesia

A comprehensive legal document governed by Indonesian law that formalizes the termination of employment between an employer and employee. This agreement ensures compliance with Indonesian Labor Law No. 13 of 2003 (as amended by Job Creation Law No. 11 of 2020) and related regulations, detailing the terms of separation including termination date, severance payments, final settlements, and post-employment obligations. The document addresses mandatory notice periods, calculation of entitlements, return of company property, and ongoing confidentiality requirements while providing legal protection for both parties through clear documentation of the separation terms.

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What is a Termination Employment Contract?

The Termination Employment Contract is a crucial document used in Indonesia when ending an employment relationship, whether through mutual agreement, unilateral termination, or due to specific circumstances outlined in Indonesian labor law. This document must strictly comply with Law No. 13 of 2003 on Manpower (as amended by Job Creation Law No. 11 of 2020) and related regulations, including Government Regulation No. 35 of 2021. It serves as a comprehensive record of the termination terms, including severance calculations, final settlements, and post-employment obligations. The agreement is essential for protecting both employer and employee interests, ensuring proper documentation of the separation process, and preventing future disputes. It should be prepared with careful attention to mandatory notice periods, statutory entitlements, and specific requirements based on the termination grounds.

What sections should be included in a Termination Employment Contract?

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

2. Background: Brief overview of the employment relationship, including start date, position, and reference to original employment agreement

3. Definitions: Key terms used throughout the agreement, including but not limited to Termination Date, Final Settlement, and Severance Package

4. Termination Date: Clear specification of the last day of employment and any notice period requirements

5. Grounds for Termination: Specific legal basis for termination under Indonesian law and any relevant circumstances

6. Financial Settlement: Detailed breakdown of all payments including severance pay, service pay, and compensation rights as per regulations

7. Company Property: Requirements for return of company assets, documents, and intellectual property

8. Confidentiality Obligations: Ongoing obligations regarding confidential information post-employment

9. Final Release: Mutual release of claims following settlement payment

10. Governing Law: Confirmation of Indonesian law as governing law and relevant jurisdiction

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

1. Garden Leave: Used when employee is required to serve notice period away from office while remaining on payroll

2. Non-Competition: Include when there are post-employment restrictions on working with competitors

3. Misconduct Acknowledgment: Required in cases where termination is due to proven misconduct

4. Resignation Letter: Include in mutual separation agreements where formal resignation is part of the arrangement

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

6. Training Cost Recovery: Include when there are outstanding training costs to be recovered from employee

7. Outstanding Loans: Used when there are company loans to be settled as part of termination

What schedules should be included in a Termination Employment Contract?

1. Schedule 1 - Severance Calculation: Detailed calculation of severance pay, service pay, and other entitlements as per Indonesian regulations

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

3. Schedule 3 - Final Settlement Statement: Comprehensive statement showing all payments and deductions

4. Appendix A - Handover Checklist: Detailed checklist for handover of work responsibilities and documents

5. Appendix B - Clearance Form: Internal clearance form from various departments

6. Appendix C - Benefits Settlement: Details of settlement of benefits including health insurance, pension funds, and other benefits

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Indonesia

Publisher

Ƶ

Document Type

Cancellation Letter

Sector

Sales

Cost

Free to use

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