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Deferred Compensation Contract

Deferred Compensation Contract Template for Indonesia

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Key Requirements PROMPT example:

Deferred Compensation Contract

"I need a Deferred Compensation Contract under Indonesian law for a senior technology executive, with quarterly vesting over three years starting January 2025, including provisions for international transfers and currency protection."

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Document background
The Deferred Compensation Contract serves as a crucial instrument in Indonesian employment arrangements where a portion of an employee's compensation is to be paid at a future date. This document is typically used for executive compensation packages, retention programs, or tax-efficient compensation structures. It must comply with Indonesian labor laws, particularly Law No. 13 of 2003 on Manpower and the Omnibus Law (Law No. 11 of 2020), while addressing tax implications under Indonesian tax regulations. The contract specifies the deferred amount, vesting conditions, payment terms, and protection mechanisms, making it essential for both employers seeking to retain key talent and employees participating in long-term compensation arrangements. It includes necessary provisions for regulatory compliance, risk management, and dispute resolution under Indonesian jurisdiction.
Suggested Sections

1. Parties: Identification of the employer and employee, including their complete legal names, addresses, and registration details

2. Background: Context of the agreement, employment relationship, and reason for establishing the deferred compensation arrangement

3. Definitions: Key terms used throughout the agreement, including specific Indonesian legal and regulatory terms

4. Deferred Compensation Amount: Specification of the amount of compensation to be deferred and calculation methodology

5. Deferral Period: Duration of the deferral period and relevant dates for compensation payments

6. Vesting Schedule: Details of when and how the deferred compensation becomes vested

7. Payment Terms: Conditions and mechanism for payment of the deferred compensation

8. Tax Treatment: Provisions regarding tax implications and responsibilities under Indonesian tax law

9. Regulatory Compliance: Statements ensuring compliance with Indonesian labor laws and regulations

10. Termination Provisions: Conditions and consequences of early termination or employment separation

11. Governing Law: Specification of Indonesian law as governing law and relevant jurisdictional details

12. Dispute Resolution: Process for resolving disputes under Indonesian law

13. Execution: Signature blocks and execution requirements

Optional Sections

1. Change in Control: Provisions addressing what happens to deferred compensation in case of company ownership changes or mergers

2. Disability and Death: Special provisions for payment in case of employee disability or death

3. Non-Competition: Restrictions on employee's competitive activities during the deferral period

4. Currency Protection: Provisions for protecting against currency fluctuations if applicable

5. International Transfer: Provisions for handling deferred compensation if employee transfers internationally

6. Clawback Provisions: Conditions under which the company may reclaim paid compensation

7. Social Security Integration: Details on how the deferred compensation integrates with Indonesian social security benefits

Suggested Schedules

1. Schedule A - Calculation Method: Detailed methodology for calculating the deferred compensation amount

2. Schedule B - Vesting Schedule: Detailed timeline and conditions for vesting of deferred compensation

3. Schedule C - Payment Schedule: Timeline and amounts of scheduled payments

4. Schedule D - Tax Calculations: Examples of tax calculations and withholding requirements

5. Appendix 1 - Regulatory Compliance Checklist: Checklist ensuring compliance with relevant Indonesian regulations

6. Appendix 2 - Required Government Forms: Copies of mandatory government forms and filings

7. Appendix 3 - Company Policies: Relevant company policies affecting the deferred compensation arrangement

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Applicable Law
Base Salary
Board of Directors
Business Day
Change in Control
Company
Compensation Committee
Confidential Information
Deferral Account
Deferral Amount
Deferral Election
Deferral Period
Deferred Compensation
Effective Date
Eligible Employee
Employment Agreement
Force Majeure
Good Reason
Governing Law
Indonesian Rupiah
Investment Options
Manpower Law
Notice
Omnibus Law
Parent Company
Participant
Payment Date
Performance Metrics
Plan
Plan Administrator
Plan Year
Retirement Age
Retirement Date
Separation from Service
Service Period
Social Security Administrator (BPJS)
Subsidiary
Tax Year
Termination Date
Trust
Trustee
Vested Amount
Vesting Date
Vesting Period
Vesting Schedule
Working Day
Clauses
Deferral Elections
Vesting Conditions
Payment Terms
Taxation
Regulatory Compliance
Termination
Modification
Confidentiality
Non-Competition
Non-Solicitation
Force Majeure
Assignment
Severability
Entire Agreement
Governing Law
Dispute Resolution
Notices
Amendment
Waiver
Representations and Warranties
Social Security Compliance
Currency
Change in Control
Death and Disability
Forfeiture
Clawback
Account Administration
Investment Options
Beneficiary Designation
Company Rights
Employee Obligations
Documentation
Withholding Rights
Compliance with Company Policies
Third Party Rights
Data Protection
Survival
Relevant Industries

Financial Services

Technology

Manufacturing

Professional Services

Mining and Resources

Telecommunications

Healthcare

Real Estate

Consumer Goods

Energy

Banking

Insurance

Relevant Teams

Human Resources

Legal

Finance

Compensation and Benefits

Tax

Compliance

Executive Management

Payroll

Risk Management

Corporate Governance

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Executive Director

Senior Manager

Department Head

Regional Director

Vice President

Managing Director

Senior Consultant

Key Account Manager

Technical Director

Operations Manager

Human Resources Director

Legal Counsel

Financial Controller

Industries
Law No. 13 of 2003 on Manpower: The primary labor law in Indonesia that governs employment relationships, including compensation arrangements and workers' rights
Law No. 11 of 2020 on Job Creation (Omnibus Law): Recent comprehensive law that amended various provisions related to employment, including changes to labor regulations and compensation structures
Law No. 36 of 2008 on Income Tax: Regulates taxation of various forms of compensation, including provisions for deferred compensation and its tax treatment
Government Regulation No. 35 of 2021: Implements specific provisions of the Job Creation Law regarding fixed-term employment, outsourcing, and compensation arrangements
Law No. 40 of 2004 on National Social Security System: Governs mandatory social security contributions and benefits, which must be considered in compensation arrangements
Bank Indonesia Regulation No. 17/3/PBI/2015: Regulates mandatory use of Indonesian Rupiah for transactions in Indonesia, affecting payment structures in compensation agreements
Minister of Manpower Regulation No. 1 of 2017: Provides guidelines on wage structures and scales, which must be considered in designing deferred compensation arrangements
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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