The Retrenchment Letter is a crucial document used in Indonesia when terminating employment due to redundancy, restructuring, or economic reasons. It must comply with Indonesian labor laws, particularly Law No. 13 of 2003 on Manpower and the Job Creation Law (Omnibus Law). The document serves multiple purposes: officially notifying the employee of their termination, detailing the severance package and final entitlements, and ensuring legal compliance with local regulations. It should be used when a position becomes redundant due to organizational restructuring, economic downturn, technological changes, or business closure. The letter must include specific elements required by Indonesian law, such as the reason for termination, notice period, calculation of severance pay, and other statutory benefits. Proper documentation is essential as it may be required for labor dispute resolution or regulatory reporting.
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1. Letter Header and Date: Company letterhead, date, and reference number if applicable
2. Employee Details: Full name, employee ID, position, and department of the affected employee
3. Subject Line: Clear indication that this is a retrenchment notice
4. Opening Statement: Professional and empathetic introduction addressing the current business situation
5. Reason for Retrenchment: Clear explanation of the business circumstances necessitating the retrenchment
6. Termination Date: Specific last day of employment and notice period details
7. Severance Package: Overview of the statutory severance payment, long service pay, and other mandatory benefits as per Indonesian law
8. Final Payment Details: Information about final salary, unused leave, and other entitlements
9. Company Property: Instructions regarding the return of company property and handling of work responsibilities
10. Acknowledgment: Space for both employer and employee signatures to confirm receipt and understanding
1. Outplacement Support: Details of any career transition assistance offered by the company
2. Non-Compete Clause: If applicable, reminder of existing non-compete obligations
3. Reference Letter Offer: Information about providing employment references
4. Extended Benefits: Any additional benefits beyond statutory requirements that the company is offering
5. Rehiring Policy: Information about potential future employment opportunities with the company
6. Confidentiality Reminder: Reminder of ongoing confidentiality obligations post-employment
1. Schedule A - Severance Calculation: Detailed breakdown of severance payment calculation as per Indonesian labor law
2. Schedule B - Final Payment Breakdown: Itemized list of all final payments including salary, leave encashment, and other benefits
3. Schedule C - Company Property Checklist: List of company assets to be returned before final clearance
4. Schedule D - Employee Clearance Form: Checklist for various department clearances before final settlement
Relevant legal definitions
Clauses
Relevant Industries
Manufacturing
Technology
Financial Services
Retail
Mining
Construction
Agriculture
Healthcare
Education
Telecommunications
Transportation
Hospitality
Professional Services
Energy
Media and Entertainment
Relevant Teams
Human Resources
Legal
Compliance
Employee Relations
Compensation and Benefits
Senior Management
Operations
Finance
Administration
Relevant Roles
Human Resources Director
HR Manager
Legal Counsel
Human Resources Business Partner
Compensation and Benefits Manager
Employee Relations Manager
HR Operations Manager
Department Head
Line Manager
Chief Executive Officer
Chief Human Resources Officer
HR Administrator
Legal Manager
Compliance Officer
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