The Termination and Release Agreement is a crucial document used in Indonesian employment relationships when parties agree to formally end their employment relationship on mutually accepted terms. It is particularly relevant in situations involving voluntary resignations, mutual separation arrangements, or negotiated exits. The agreement must comply with Indonesian Labor Law (Law No. 13 of 2003 on Manpower) and related regulations, including Government Regulation No. 35 of 2021, especially regarding mandatory severance calculations and employee entitlements. This document serves multiple purposes: it formally documents the termination terms, provides clarity on financial settlements, ensures proper release of claims, and establishes post-employment obligations. It's an essential tool for risk management and legal compliance in Indonesian employment relationships, providing both parties with certainty and protection against future disputes.
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1. Parties: Identification of the employer and employee, including their complete legal names, addresses, and any relevant registration numbers
2. Background: Context of the employment relationship, including original employment date, position, and brief reason for termination
3. Definitions: Key terms used throughout the agreement, including 'Effective Date', 'Termination Date', 'Settlement Amount', and other relevant terms
4. Termination of Employment: Formal statement of employment termination, specifying the termination date and immediate cessation of duties
5. Settlement Payments: Details of all payments to be made, including statutory severance, service appreciation pay, and any additional compensation
6. Return of Company Property: Requirements and timeline for returning all company assets, documents, and confidential information
7. Mutual Release: Comprehensive release of claims by both parties, specifically tailored to comply with Indonesian law
8. Continuing Obligations: Surviving obligations from the employment agreement, such as confidentiality and non-disclosure obligations
9. Tax Implications: Statement regarding the tax treatment of settlement payments and responsibilities of each party
10. Governing Law: Specification of Indonesian law as governing law and jurisdiction for disputes
11. Execution: Signature blocks and formal execution requirements
1. Non-Disparagement: Mutual obligations not to make negative statements about each other, used when there's concern about potential reputational damage
2. Reference Letter: Terms regarding the provision of employment references, included when agreed as part of the settlement
3. Benefits Continuation: Details of any continued benefits post-termination, used when extending certain benefits beyond termination
4. Cooperation: Requirements for post-termination cooperation on specific matters, included when needed for business continuity
5. Immigration Status: Provisions regarding work permits and immigration status, included for foreign employees
6. Non-Competition: Post-employment competition restrictions, included when permitted by Indonesian law and circumstances
7. Reinstatement Waiver: Specific waiver of right to seek reinstatement, included in contentious terminations
1. Schedule 1 - Settlement Payment Calculation: Detailed breakdown of all payment components including statutory and discretionary amounts
2. Schedule 2 - Company Property Register: List of all company property to be returned by the employee
3. Schedule 3 - Benefits Summary: Summary of any benefits and their treatment post-termination
4. Appendix A - Form of Release: Standard form of release to be signed by the employee
5. Appendix B - Reference Letter Template: Agreed format and content of any reference letter to be provided
Relevant legal definitions
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Manufacturing
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Financial Services
Retail
Healthcare
Education
Mining
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Telecommunications
Professional Services
Hospitality
Energy
Agriculture
Transportation
Media and Entertainment
Relevant Teams
Human Resources
Legal
Finance
Operations
Administration
Compliance
Risk Management
Corporate Secretariat
Industrial Relations
Employee Relations
Relevant Roles
Chief Executive Officer
Managing Director
General Manager
Department Head
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Project Manager
Financial Controller
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Sales Executive
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Production Supervisor
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Customer Service Representative
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