The Termination Settlement Agreement serves as a critical document in Indonesian employment relationships where both parties agree to end their employment relationship amicably. It is primarily used when an employer and employee mutually agree to terminate employment, requiring compliance with Indonesian Labor Law, particularly Law No. 13 of 2003 (as amended by Law No. 11 of 2020) and Government Regulation No. 35 of 2021. The document encompasses mandatory severance calculations, final settlements, benefit arrangements, and mutual releases, providing legal protection for both parties. It's essential in preventing future disputes by clearly documenting all termination terms and ensuring all statutory requirements are met. The agreement must be drafted in both Indonesian and English languages to be legally enforceable, with the Indonesian version prevailing in case of inconsistencies.
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1. Parties: Identification of the employer and employee, including their complete legal names, addresses, and positions
2. Background: Context of the employment relationship, including start date, position, and mutual agreement to terminate
3. Definitions: Key terms used in the agreement, including specific Indonesian legal terminology
4. Termination Date: Clear statement of the employment termination effective date
5. Settlement Payment: Detailed breakdown of all payments including statutory severance, service appreciation pay, and compensation rights
6. Payment Terms: Timeline and method of settlement payment disbursement
7. Tax Treatment: Clarification of tax obligations and handling of settlement payments
8. Release and Waiver: Mutual release of claims and obligations post-termination
9. Return of Company Property: Requirements and timeline for returning company assets and documents
10. Confidentiality: Ongoing obligations regarding confidential information
11. Governing Law: Confirmation of Indonesian law application and jurisdiction
12. Execution: Signature blocks and formal closing of the agreement
1. Non-Competition: Restrictions on future employment, if applicable and agreed (note: must be reasonable under Indonesian law)
2. References: Agreement on the nature and content of employment references
3. Ongoing Benefits: Continuation of specific benefits post-termination, such as health insurance
4. Training Costs Waiver: Waiver of training bond or costs if applicable
5. Remaining Leave Entitlement: Treatment of unused annual leave or other leave types
6. Legal Consultation: Acknowledgment of opportunity to seek legal advice before signing
7. Social Security Status: Handling of BPJS Employment and Health insurance status
1. Schedule 1 - Severance Calculation: Detailed calculation of severance pay according to Indonesian labor law formulas
2. Schedule 2 - Outstanding Payments: List of any pro-rated salary, bonuses, or other outstanding payments
3. Schedule 3 - Company Property: Itemized list of company property to be returned
4. Schedule 4 - Final Settlement Amount: Summary of all payments and deductions
5. Appendix A - Employee Data: Details of employment history, position, and salary information
6. Appendix B - Settlement Payment Timeline: Detailed payment schedule if payments are to be made in installments
Relevant legal definitions
Clauses
Relevant Industries
Manufacturing
Technology
Financial Services
Retail
Healthcare
Construction
Mining
Agriculture
Education
Telecommunications
Hospitality
Professional Services
Energy
Transportation
Consumer Goods
Media and Entertainment
Relevant Teams
Human Resources
Legal
Compliance
Employee Relations
Industrial Relations
Executive Leadership
Finance
Compensation and Benefits
Operations
Relevant Roles
HR Director
Legal Counsel
HR Manager
Compliance Officer
Employee Relations Manager
HR Business Partner
General Counsel
Company Secretary
Managing Director
Chief Human Resources Officer
Industrial Relations Manager
Compensation and Benefits Manager
HR Operations Manager
Legal Manager
Department Heads
Line Managers
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