Employment Transfer Agreement Template for Indonesia

When your business undergoes restructuring, mergers, or acquisitions in Indonesia, you need an Employment Transfer Agreement to legally transfer employees between entities while maintaining compliance with Indonesian labor law. This document ensures that employment relationships continue seamlessly under the new employer while preserving employee rights and benefits as mandated by Law No. 13 of 2003 on Manpower.

When do you need this document?

You require an Employment Transfer Agreement during corporate mergers where one company absorbs another's workforce, business acquisitions involving employee transfers, internal group restructuring where employees move between subsidiaries, and spin-off transactions creating new legal entities. The agreement is also essential when outsourcing operations to third parties or when consolidating multiple business units under a single employer entity. Indonesian law mandates this documentation to ensure transparency and legal compliance during any employment transfer process.

Key legal considerations

Your Employment Transfer Agreement must address several critical legal requirements under Indonesian employment law. The document must guarantee continuity of employment terms, ensuring transferred employees maintain their existing salary levels, benefits, and working conditions as required by Government Regulation No. 78 of 2015 on Wages. You need to include provisions for social security benefit transfers under Law No. 40 of 2004 on National Social Security System, ensuring employees' BPJS coverage continues uninterrupted. The agreement must also address union consultation requirements as outlined in Law No. 21 of 2000 on Trade Unions, particularly when unionized employees are involved in the transfer. Additionally, you should include dispute resolution mechanisms referencing Law No. 2 of 2004 on Industrial Relations Dispute Settlement to handle any conflicts arising from the transfer process.

Legal requirements in Indonesia

Under Indonesian employment law, your Employment Transfer Agreement must comply with specific mandatory provisions to be legally valid. The document must explicitly state that transferred employees retain all accrued benefits, including unused leave, overtime payments, and seniority rights as protected under the Manpower Law. You are required to obtain written consent from employees before the transfer, ensuring they understand the implications and agree to the new employment arrangement. The agreement must detail how social security contributions will be handled, ensuring seamless transfer of BPJS Ketenagakerjaan and BPJS Kesehatan coverage. When union members are involved, you must conduct mandatory consultations with labor union representatives before executing the transfer. The document should also specify the effective transfer date, ensuring adequate notice periods are provided as required by Indonesian labor regulations. Finally, you need to ensure proper registration with local Manpower authorities and compliance with any industry-specific transfer requirements that may apply to your business sector.