The Employment Settlement Agreement is a crucial document used in Indonesian employment contexts when an employer and employee agree to terminate their employment relationship through mutual consent. This document is particularly important under Indonesian labor law, which requires clear documentation of separation terms and statutory entitlements. The agreement typically comes into play during voluntary separations, redundancies, or when parties wish to amicably resolve potential employment disputes. It must comply with Law No. 13 of 2003 on Manpower (as amended by Law No. 11 of 2020) and related regulations, ensuring proper calculation of severance payments, long service pay, and other entitlements. The document serves as a legally binding record of the settlement terms while protecting both parties' interests through mutual releases and clear obligations.
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1. Parties: Identification of the employer and employee, including their full legal names, addresses, and relevant registration/identification numbers
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 'Termination Date', 'Settlement Sum', 'Confidential Information'
4. Termination of Employment: Formal statement of employment termination, specifying the last day of employment and immediate obligations
5. Settlement Payments: Details of all payments to be made, including statutory severance, service appreciation pay, and other entitlements under Indonesian law
6. Tax and Deductions: Treatment of tax obligations and any authorized deductions from settlement payments
7. Company Property: Requirements for return of company property, documents, and data
8. Confidentiality Obligations: Ongoing confidentiality obligations post-employment
9. Full and Final Settlement: Mutual release of claims and waiver of rights to future claims
10. Reference and Announcement: Agreement on how the departure will be communicated and terms of employment references
11. Governing Law and Jurisdiction: Confirmation of Indonesian law governance and dispute resolution procedures
12. Execution: Signature blocks and execution requirements
1. Non-Competition and Non-Solicitation: Post-employment restrictions, used when the employee had access to sensitive information or key client relationships
2. Ongoing Cooperation: Terms for employee assistance in transitioning duties or future inquiries, used when handover is complex or litigation is pending
3. Medical Benefits Continuation: Terms for extending medical coverage, used when agreed as part of the settlement package
4. Share Options/Awards: Treatment of outstanding equity compensation, used when employee participated in share schemes
5. Legal Fees: Agreement regarding payment of legal fees, used when employer agrees to cover employee's legal costs
6. Reinstatement of Employment: Conditions under which employment relationship could be reinstated, used in specific regulatory contexts
1. Schedule 1 - Settlement Payment Calculation: Detailed breakdown of all payment components including statutory severance, long service pay, and other entitlements
2. Schedule 2 - Company Property Register: List of all company property to be returned and confirmation of return
3. Schedule 3 - Outstanding Benefits: Detail of any pro-rated bonus, unused leave, and other benefits calculations
4. Appendix A - Resignation Letter: Standard format resignation letter if termination is documented as resignation
5. Appendix B - Release Form: Detailed release of claims form in compliance with Indonesian law
6. Appendix C - Handover Report: Template for documenting handover of duties and ongoing projects
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