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Indonesia: Termination of employment

Original and updating authors: Richard Cornwallis, Lia Alizia and Candace Anastassia Limbong, Makarim & Taira S.
Updating author: Hendrik Alfian Pasaribu, Makarim & Taira S.

Summary

  • Employers are under a statutory obligation to make all efforts to prevent termination of employment. (See General)
  • Where an employer terminates an employment contract, there is no statutory requirement for a notice period, but in most cases a pre-termination statutory procedure must be followed, which involves a delay between the employer notifying the employee of the planned termination and the termination date. (See Notice periods)
  • Where an employee breaches the terms of his or her employment contract, the employer's company regulations or an applicable collective agreement, the employer may dismiss the employee after issuing three warning letters to the employee. Such breaches are known as "minor mistakes". (See Dismissal for repeated "minor mistakes")
  • An employee may be dismissed for gross misconduct, but the legal situation with regard to such dismissals is currently unclear. (See Dismissal for gross misconduct)
  • An employee may be dismissed after being absent from work owing to illness for 12 consecutive months or longer, or on grounds of being absent from work without justification for five or more consecutive working days, or of being convicted of a criminal offence or being detained owing to criminal proceedings for more than six months. (See Dismissal on other grounds related to the individual employee)
  • Employees may be dismissed for various business-related reasons, for example where the enterprise where they work is closed down for certain reasons, where the employer is declared bankrupt, and in certain circumstances related to changes in the enterprise's ownership or status. (See Dismissal for business reasons)
  • An employer may terminate an employee's employment because the employee has reached pensionable age, which is generally 55 years. (See Retirement)
  • Employers are prohibited from dismissing employees on certain grounds - such as their pregnancy, marriage or trade union membership - and any such dismissals will be null and void. (See Prohibited grounds for dismissal)
  • Employees may resign of their own volition at any time, by giving at least 30 days' notice, and may initiate the termination of their employment in several other circumstances, for example in response to misconduct by the employer. (See Termination by the employee)
  • In most cases, before an employer terminates an employment relationship, it must follow a statutory procedure, whereby the termination must be approved by the Industrial Relations Court if the employer and employee cannot reach a mutual termination agreement through negotiations, conciliation or mediation. (See Termination procedures)
  • On termination of employment, the employee is usually entitled to receive various payments from the employer, including a service-related severance payment. (See Severance payments)
  • In some circumstances, employees may challenge their dismissal in the Industrial Relations Court, seeking reinstatement. (See Contesting dismissals in court)