The Termination Letter Due To Financial Constraints is a crucial document used in Indonesian business operations when a company must reduce its workforce due to economic challenges. This document must strictly comply with Indonesian labor laws, particularly Law No. 13 of 2003 on Manpower (as amended by the Job Creation Law No. 11 of 2020) and Government Regulation No. 35 of 2021. It serves as official documentation of employment termination, incorporating mandatory elements such as proper notice periods, detailed severance calculations, and final benefit arrangements. The letter should be prepared when a company can demonstrate genuine financial difficulties necessitating workforce reduction, and must include sufficient supporting documentation to justify the termination. It's essential for risk management and legal compliance, potentially serving as a key document in any subsequent labor disputes.
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1. Letter Header: Company letterhead, date, reference number, and formal addressing of the employee
2. Employee Details: Full name, employee ID, position, and department of the employee being terminated
3. Notice of Termination: Clear statement of employment termination and the effective date
4. Reason for Termination: Detailed explanation of the company's financial constraints necessitating the termination
5. Last Working Day: Specification of the employee's final working day and any transition requirements
6. Termination Benefits: Detailed breakdown of severance pay, service appreciation pay, and other entitlements as per Indonesian law
7. Company Property Return: List of company properties to be returned and the process for returning them
8. Final Settlement: Information about the final salary, unused leave payments, and timing of benefit payments
9. Closing Statement: Expression of gratitude for service and professional closing
10. Signature Block: Space for authorized signatory's name, title, and signature
1. Reference Letter Offer: Optional offer to provide a reference letter, used when the employee has maintained good standing
2. Outplacement Support: Details of any career transition assistance, if the company provides such support
3. Non-Compete Reminder: Reminder of existing non-compete obligations, if applicable in the original employment agreement
4. Medical Benefits Extension: Information about any extended medical benefits, if offered by the company
5. Rehiring Possibility: Statement about potential future re-employment if conditions improve, if company policy allows
1. Schedule A - Termination Benefits Calculation: Detailed calculation of severance pay, appreciation pay, and other benefits as per Indonesian labor law
2. Schedule B - Company Property Checklist: Itemized list of company properties to be returned with their conditions
3. Schedule C - Final Settlement Statement: Comprehensive breakdown of final payment including salary, benefits, and deductions
4. Appendix 1 - Financial Justification: Supporting documentation demonstrating company's financial constraints
5. Appendix 2 - Employee Acknowledgment Form: Form for employee to acknowledge receipt and understanding of the termination letter
Relevant legal definitions
Clauses
Relevant Industries
Manufacturing
Technology
Retail
Financial Services
Construction
Mining
Agriculture
Healthcare
Education
Hospitality
Telecommunications
Transportation
Professional Services
Energy
Real Estate
Relevant Teams
Human Resources
Legal
Finance
Compliance
Industrial Relations
Employee Relations
Operations
Senior Management
Administration
Corporate Secretariat
Relevant Roles
Human Resources Manager
Legal Counsel
Finance Director
HR Director
Managing Director
Company Secretary
HR Business Partner
Compliance Officer
Industrial Relations Manager
Employee Relations Manager
HR Operations Manager
Legal Manager
Chief Financial Officer
General Manager
Country Manager
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