Document background
The Mutual Severance Agreement is a crucial document used in Indonesia when an employer and employee mutually agree to terminate their employment relationship. It serves as a comprehensive record of the separation terms while ensuring compliance with Indonesian labor laws, particularly the Job Creation Law (Omnibus Law) and Manpower Law. This document is typically used when both parties wish to document a clean break and mutually agreeable termination, protecting both parties' interests while providing clarity on severance payments, benefits, ongoing obligations, and release of claims. The agreement must carefully balance statutory requirements with practical business needs, incorporating mandatory severance calculations, tax considerations, and social security obligations specific to Indonesian jurisdiction.
