The Mutual Agreement To Terminate Employment is a crucial document used in Indonesian employment relations when both employer and employee agree to end their employment relationship by mutual consent. This document is particularly relevant in situations where a clean and amicable separation is desired, such as corporate restructuring, voluntary departures, or mutually agreed career transitions. It must comply with Indonesian labor laws, particularly Law No. 13 of 2003 on Manpower and Government Regulation No. 35 of 2021, and typically includes comprehensive details about termination payments, continuing obligations, and mutual releases. The agreement provides legal certainty for both parties and helps prevent future disputes by clearly documenting the terms of separation. It should be registered with the Industrial Relations Court for additional legal security.
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1. Parties: Identification of the employer and employee, including their complete legal names, addresses, and positions
2. Background: Brief history of employment relationship, including start date, position, and mutual intention to terminate
3. Definitions: Key terms used in the agreement including 'Effective Date', 'Termination Payment', and other relevant definitions
4. Mutual Agreement to Terminate: Clear statement of mutual consent to terminate the employment relationship and the effective date
5. Financial Settlement: Detailed breakdown of all payments including severance, service appreciation pay, and other entitlements as per Indonesian law
6. Release and Waiver: Mutual release of claims and obligations between parties post-termination
7. Return of Company Property: Requirements and timeline for returning company assets, documents, and confidential information
8. Continuing Obligations: Ongoing obligations such as confidentiality and non-disclosure that survive termination
9. Governing Law: Confirmation that the agreement is governed by Indonesian law
10. Execution: Signature blocks and formal closing of the agreement
1. Non-Competition: Restrictions on future employment, if applicable and agreed upon (noting that enforceability in Indonesia is limited)
2. Reference and Announcement: Terms regarding employment references and how the departure will be communicated
3. Outstanding Leave: Treatment of any accrued but unused leave entitlements
4. Benefits Continuation: Any continuation of benefits post-termination such as health insurance
5. Tax Provisions: Specific arrangements regarding tax treatment of termination payments
6. Transition Duties: If applicable, duties to be performed during any transition period before final termination
1. Schedule 1 - Calculation of Termination Payments: Detailed breakdown of all payment components including severance, service pay, and other entitlements
2. Schedule 2 - Company Property Register: List of all company property to be returned
3. Schedule 3 - Certificate of Handover: Form to document the return of company property and completion of handover duties
4. Appendix A - Original Employment Contract: Copy of the original employment agreement for reference
5. Appendix B - Employee Release Form: Standard form acknowledging receipt of all entitlements and releasing claims
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