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A Demotion Letter is a crucial document used in Indonesian employment contexts when an organization needs to formally communicate and document the downward movement of an employee's position within the company hierarchy. This document, governed by Indonesian Labor Law (Law No. 13/2003) and related regulations, is typically used in situations involving performance issues, organizational restructuring, or employee-requested position changes. The letter must carefully detail the changes in position, responsibilities, and compensation while ensuring compliance with local labor laws and regulations. It serves multiple purposes: providing clear communication to the employee, documenting the change for legal and HR purposes, and establishing new terms of employment. The Demotion Letter should be drafted with particular attention to Indonesian legal requirements regarding employment changes and must include specific elements to ensure its validity and enforceability under local law.

1. Letter Header: Company letterhead, date, reference number, and document title

2. Employee Information: Complete details of the employee including full name, employee ID, current position, and department

3. Current Employment Status: Details of the employee's current position, grade, and responsibilities

4. Demotion Details: Specific information about the new position, including title, grade, and responsibilities

5. Effective Date: Clear statement of when the demotion takes effect

6. Reason for Demotion: Clear and objective explanation of the grounds for demotion

7. Compensation Adjustment: Details of any changes to salary, benefits, or other compensation components

8. Acknowledgment: Space for both employer and employee signatures, including date of signing