Separation And Release Agreement Template for Indonesia

A comprehensive legal document governed by Indonesian labor law that formalizes the termination of employment between an employer and employee. The agreement outlines the terms and conditions of the separation, including statutory severance payments, final settlements, and mutual release of claims. It ensures compliance with Indonesian Labor Law No. 13 of 2003 (as amended by Job Creation Law No. 11 of 2020) and related regulations, while protecting both parties' interests through clear documentation of separation terms, confidentiality obligations, and post-employment arrangements.

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What is a Separation And Release Agreement?

The Separation and Release Agreement is a crucial document used in Indonesia when formally ending an employment relationship, whether through mutual consent, resignation, or termination. It serves as a comprehensive record of the separation terms while ensuring compliance with Indonesian labor laws, particularly Law No. 13 of 2003 on Manpower (as amended by Job Creation Law No. 11 of 2020) and related regulations. The agreement typically includes statutory severance calculations, final benefit settlements, confidentiality provisions, and release of claims. It's particularly important in the Indonesian context due to strict labor regulations regarding termination procedures and mandatory severance payments. This document helps prevent future disputes by clearly documenting all aspects of the separation, including financial settlements, continuing obligations, and mutual releases.

What sections should be included in a Separation And Release Agreement?

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

2. Background: Context of the employment relationship, including start date, position, and basis for separation

3. Definitions: Key terms used throughout the agreement, including statutory terms from Indonesian labor law

4. Effective Date of Separation: Clear statement of the employment termination date and last working day

5. Severance Package: Detailed breakdown of all termination payments including statutory severance, service pay, and compensation rights as per Indonesian Labor Law

6. Payment Terms: Timeline and method of payment for all separation benefits

7. Company Property: Requirements for return of company assets, documents, and intellectual property

8. Confidentiality Obligations: Ongoing obligations regarding confidential information and trade secrets

9. Release of Claims: Mutual release of claims and waiver of rights, subject to Indonesian law limitations

10. Tax Treatment: Tax obligations and responsibilities for separation payments

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

12. Dispute Resolution: Process for resolving disputes as per Law No. 2 of 2004 on Industrial Relations Dispute Settlement

What sections are optional to include in a Separation And Release Agreement?

1. Non-Competition: Restrictions on future employment, if applicable and enforceable under Indonesian law

2. Non-Solicitation: Restrictions on soliciting employees or customers, if applicable

3. Reference Letter: Terms regarding the provision of employment references

4. Continuing Obligations: Any ongoing obligations or benefits that survive termination

5. Medical Benefits Extension: Details of any post-employment medical coverage

6. Stock Options/Share Rights: Treatment of any outstanding equity compensation

7. Outplacement Services: Terms of any career transition assistance provided

8. Social Security Continuation: Details about BPJS Healthcare and Employment benefits continuation

What schedules should be included in a Separation And Release Agreement?

1. Schedule A - Calculation of Separation Benefits: Detailed calculation of statutory and contractual payments as per Indonesian Labor Law

2. Schedule B - Company Property Checklist: List of company assets to be returned

3. Schedule C - Final Payroll Calculation: Breakdown of final salary, unused leave, and other entitlements

4. Appendix 1 - Statutory Declaration: Employee's acknowledgment of receiving all entitlements under Indonesian law

5. Appendix 2 - Resignation Letter: If separation is by mutual consent, includes the formal resignation letter

6. Appendix 3 - Benefits Summary: Summary of any continuing benefits or insurance coverage

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

Jurisdiction

Indonesia

Publisher

Genie AI

Cost

Free to use

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