Founder Employment Agreement Template for Indonesia

A Founder Employment Agreement is a specialized contract that governs the employment relationship between you as a founder and your company under Indonesian law. Unlike standard employment contracts, this agreement addresses your unique position as both an employee and equity holder, ensuring compliance with Indonesia's Manpower Law while protecting your interests and those of other stakeholders.

When do you need this document?

You need this agreement when transitioning your startup from informal operations to a structured corporate entity. This typically occurs during early-stage investment rounds when investors require formalized governance structures, or when scaling operations beyond the initial founding team. The agreement is also essential if you're converting from a partnership or sole proprietorship to a limited liability company (PT), as Indonesian corporate law requires clear employment relationships for company officers. Additionally, if you're bringing on co-founders or employees, having your own founder employment agreement in place demonstrates proper corporate governance and helps establish consistent employment practices across your organization.

Key legal considerations

Your agreement must carefully balance your role as both founder and employee, addressing potential conflicts of interest and defining clear reporting structures. Intellectual property clauses are crucial, as they must comply with Indonesia's Copyright Law No. 28 of 2014 while ensuring that innovations you develop belong to the company. Equity vesting schedules should be structured to incentivize long-term commitment while protecting the company if you leave early. Termination provisions must distinguish between voluntary resignation and termination for cause, with different implications for equity acceleration and severance. The agreement should also address your fiduciary duties as a founder, including confidentiality obligations and non-compete restrictions that are enforceable under Indonesian law. Social security contributions under BPJS Law No. 24 of 2011 must be properly addressed, as founders are considered employees for social security purposes.

Legal requirements in Indonesia

Under Indonesia's Manpower Law No. 13 of 2003, your founder employment agreement must include mandatory provisions such as job description, working hours, compensation structure, and termination procedures. The agreement must comply with Indonesia's strict labor protection standards, including minimum wage requirements and maximum working hour limits, even though founders often work beyond standard schedules. If you're married, your spouse may need to provide consent for certain equity arrangements due to Indonesia's matrimonial property laws. The agreement must be registered with local manpower authorities if it exceeds one year in duration. Additionally, the document must align with your company's Articles of Association under Limited Liability Company Law No. 40 of 2007, ensuring consistency between corporate governance documents. Tax implications under Indonesian law must be properly structured, particularly regarding equity compensation and stock option exercises.