The Settlement Agreement Between Employee And Employer is a crucial document used in Indonesian employment relationships when terminating employment by mutual agreement or resolving employment-related disputes. It is governed by Indonesian Labor Law (Law No. 13/2003), the Job Creation Law (Law No. 11/2020), and related regulations. This document is typically used when parties wish to formally document the terms of employment separation, including financial settlements, statutory entitlements, and mutual releases of claims. It becomes particularly important in situations involving senior employees, dispute resolutions, or complex termination scenarios. The agreement must comply with minimum statutory requirements for severance payments and other entitlements under Indonesian law while providing clarity and finality to the employment relationship.
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1. Parties: Identification of the employer and employee, including their legal details and addresses
2. Background: Context of the employment relationship, reason for termination/settlement, and reference to any disputes or claims
3. Definitions: Definitions of key terms used throughout the agreement
4. Settlement Terms: Core terms of the settlement including financial compensation, payment terms, and timing
5. Release of Claims: Mutual release of all claims between parties as permitted under Indonesian law
6. Payment Details: Breakdown of settlement amount, including statutory entitlements under Indonesian Labor Law
7. Tax Implications: Treatment of tax obligations for settlement payments
8. Confidentiality: Obligations regarding confidentiality of the agreement and its terms
9. Return of Company Property: Requirements and timeline for returning company assets and documents
10. Non-disparagement: Mutual obligations to refrain from making negative statements
11. Governing Law: Specification of Indonesian law as governing law and jurisdiction
12. Execution: Signing requirements and effective date of the agreement
1. Post-Employment Restrictions: Non-compete and non-solicitation clauses, if applicable and agreed (subject to Indonesian law restrictions)
2. Reference: Terms regarding future employment references
3. Continuing Obligations: Survival of specific employment contract terms post-termination
4. Medical Benefits Extension: Any agreed continuation of medical benefits
5. Outstanding Leave: Treatment of unused annual leave or other leave entitlements
6. Legal Representation: Acknowledgment that parties had opportunity for legal counsel
7. Assistance with Transition: Terms for knowledge transfer or handover if required
1. Schedule 1 - Payment Calculation: Detailed breakdown of settlement payment including statutory severance, service pay, and other entitlements
2. Schedule 2 - Company Property List: Itemized list of company property to be returned
3. Schedule 3 - Employee Benefits Summary: Summary of benefits and their treatment post-termination
4. Appendix A - Resignation Letter: Standard format resignation letter if termination is structured as resignation
5. Appendix B - Release Form: Detailed release of claims form in compliance with Indonesian law
6. Appendix C - Certificate of Service: Standard form employment certificate confirming dates and nature of employment
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