The Termination of Contract of Employment is a crucial document used when ending an employment relationship in Indonesia, whether through mutual agreement, resignation, or company-initiated termination. It must comply with Indonesian labor laws, particularly Law No. 13 of 2003 on Manpower and its amendments under the Job Creation Law No. 11 of 2020. This document is essential for properly documenting the termination process, protecting both employer and employee interests, and ensuring compliance with legal requirements regarding severance payments, final settlements, and procedural matters. It includes specific provisions for notice periods, compensation calculations, and ongoing obligations, while also addressing requirements for social security, tax implications, and dispute resolution mechanisms under Indonesian jurisdiction. The document becomes particularly important in contexts requiring clear documentation of termination terms and conditions for legal and administrative purposes.
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1. Parties: Identification of the employer and employee, including full legal names, addresses, and positions
2. Background: Brief context of the employment relationship, including original employment date and current position
3. Definitions: Key terms used in the termination agreement
4. Effective Date of Termination: Clear statement of when the employment relationship will end
5. Grounds for Termination: Specific legal basis for termination under Indonesian law
6. Financial Settlement: Details of severance pay, service pay, and other compensation as required by law
7. Return of Company Property: Requirements and timeline for returning company assets and documents
8. Confidentiality Obligations: Ongoing obligations regarding confidential information
9. Final Payments: Details of final salary, unused leave, and other entitlements
10. Release and Waiver: Mutual release of claims between parties
11. Governing Law: Confirmation of Indonesian law as governing law
12. Signatures: Execution section for both parties
1. Non-Competition: Restrictions on future employment, if applicable and agreed upon (note: must comply with Indonesian labor law restrictions)
2. Reference Agreement: Terms regarding future employment references
3. Ongoing Benefits: Any continuation of benefits post-termination
4. Training Cost Recovery: Requirements for repayment of training costs, if applicable
5. Dispute Resolution: Specific procedures for resolving disputes, including mediation requirements
6. Social Security Arrangements: Specific arrangements regarding BPJS and other social security matters
1. Schedule 1 - Calculation of Final Payments: Detailed breakdown of severance pay, service pay, and other entitlements
2. Schedule 2 - Company Property Register: List of company property to be returned
3. Schedule 3 - Outstanding Benefits: Details of any pro-rated or outstanding benefits
4. Appendix A - Handover Checklist: Checklist for employment transition and handover requirements
5. Appendix B - Release Form: Detailed release and waiver form in Indonesian and English
6. Appendix C - Certificate of Employment: Standard form of employment certificate to be issued
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