The Employee Termination Agreement and Release is a crucial document used in Indonesia when formalizing the end of an employment relationship. It is designed to comply with Indonesian labor laws, particularly the Job Creation Law (Omnibus Law) and Government Regulation No. 35/2021, which set strict requirements for employment termination. This document is essential when both parties have agreed to end the employment relationship and wish to document the terms of separation, including statutory severance payments, final settlements, and mutual releases. It protects both employer and employee by clearly defining their rights and obligations, preventing future disputes, and ensuring compliance with local labor regulations. The agreement is particularly important in Indonesia's complex labor law environment, where proper documentation and strict adherence to legal requirements are crucial for valid termination processes.
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1. Parties: Identification of the employer and employee, including complete legal names, addresses, and positions
2. Background: Brief context of the employment relationship, including start date, position, and high-level reason for termination
3. Definitions: Key terms used throughout the agreement, including but not limited to Termination Date, Settlement Amount, and Release
4. Termination of Employment: Formal statement of employment termination, specifying the effective date and basis for termination under Indonesian law
5. Final Settlement: Detailed breakdown of all payments including statutory severance, service appreciation pay, and compensation rights as per PP 35/2021
6. Company Property: Requirements for return of company property, documents, and confidential information
7. Continuing Obligations: Ongoing obligations such as confidentiality and non-disparagement
8. Release and Waiver: Mutual release of claims and legal rights, subject to Indonesian law limitations
9. Tax and Social Security: Treatment of tax obligations and BPJS (social security) matters
10. Governing Law and Jurisdiction: Specification of Indonesian law as governing law and jurisdiction for disputes
11. Execution: Signature blocks and execution requirements
1. Non-Competition: Restrictions on working for competitors, if applicable and agreed (note: enforceability is limited in Indonesia)
2. Reference Letter: Terms regarding the provision of employment references
3. Outstanding Leave: Calculation and payment of unused leave entitlements, if applicable
4. Pro-rated Religious Holiday Allowance: Calculation of THR (Religious Holiday Allowance) if termination occurs near the religious holiday period
5. Assistance with Handover: Terms for knowledge transfer and handover of duties
6. Medical Benefits Extension: Any post-termination medical coverage terms, if offered
7. Dispute Resolution: Optional detailed dispute resolution procedure, including potential mediation before court proceedings
1. Schedule 1 - Calculation of Final Settlement: Detailed calculations of all termination payments including basic severance, service appreciation, and other entitlements as per PP 35/2021
2. Schedule 2 - Company Property Register: List of company property to be returned by the employee
3. Schedule 3 - Release Form: Detailed release form in Indonesian language (required for legal validity)
4. Appendix A - Employee Information: Details of employee's employment history, position, and salary information
5. Appendix B - Outstanding Benefits Statement: Statement of any outstanding benefits, bonuses, or reimbursements
6. Appendix C - Compliance Checklist: Checklist ensuring compliance with Indonesian termination requirements
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