The Insider's Guide to Hiring in Indonesia

Indonesia Employee Resignation

Notice

Form

Resignation must be in writing.

Notice period

An employee who resigns voluntarily must give written notice at least 30 calendar days before the effective date of resignation.

Payment in lieu of notice or notice waiver

• The law does not permit an employer unilaterally to require payment in lieu of notice in standard resignations.

• The notice period must be served.

• Waiver of notice (by mutual agreement)can be possible if contract/company policy allows.

End-of-Service Benefits

Severance/Gratuity

Under voluntary resignation, the employee generally is not entitled to severance pay.

Other Benefits

• Unused leave balances must be compensated.

• Any other contractual or policy‑based benefits (bonuses, housing, etc.) must be applied as per contract/company regulation.

Termination Documentation

The resignation letter from the employee (written) is required.

Employer Termination With Cause in Indonesia

Acceptable grounds

According to Indonesian Manpower Law (Law No. 13 of 2003 amended by Job Creation Law) and GR 35/2021, valid grounds for termination with cause include (but are not limited to):

• Serious misconduct / grave wrongdoing by the employee: Theft of company property; false/falsified information that causes company loss; intoxication (alcohol/narcotics) in workplace; immorality/indecency; gambling in workplace; threatening, intimidating, assaulting co‑workers or employer; divulging trade secrets.

• Violation of employment contract, company regulations, or collective labour agreement, especially after warnings (“up to three warning letters” in many practical cases)

• Absence from work for five consecutive working days without valid explanation or supporting evidence (depending on contract / regulation)

• Employee ordering or being persuaded to commit acts against law; assignment of work dangerous to life, safety, health or morality if not disclosed in contract

• Long‑term illness/disability or other incapacity under certain conditions (if the employee cannot perform work for more than 12 consecutive months, etc.)

• Also, under certain business related “cause” conditions: company losses over two consecutive years; bankruptcy; force majeure; company rationalization/efficiency measures; mergers, acquisition etc if certain conditions met.

Notice

Form

Written notice. Must include the reason / purpose for termination, and the payments / entitlements to be paid.

Notice period

In case of “urgent violations” (gross misconduct) that are defined in the employment agreement/company regulations/collective agreement, prior notice is not required and termination may be effective immediately.

Payment in lieu of notice or notice waiver

The law allows waiver of notice (i.e. no notice period) only if gross misconduct (“urgent violation”) justifies immediate termination.

End-of-Service Benefits

Severance

Not applicable in cases of termination with cause.

Other Benefits

Compensation of rights (“uang penggantian hak”): This includes things like:

• Payment for unused annual leave;

• Return home / repatriation costs (if applicable);

• Any other entitlements under contract, company regulation or collective agreement.

Termination Documentation

• Written notice of termination

• Proof of misconduct or cause

Employer Termination Without Cause in Indonesia

Acceptable Grounds

• This type of termination is also called unilateral termination, or “PHK.” It is carried out by the employer for standard/non‑misconduct reasons such as redundancy, business efficiency, prolonged illness, etc.

• Employers may terminate without cause if there are valid non‑misconduct reasons such as:

  • Company merger, consolidation, spin‑off, or business reorganization.

  • Company experiencing losses or restructuring for efficiency.

  • Closure of the company (partial or full) for business reasons.

  • Retirement, death, or prolonged illness/disability (after a certain period) where the employee cannot continue work.

Notice

Form

Must be a written notice from the employer specifying intention and reason for termination; must also include information on termination payments and other entitlements.

Notice period

• Under GR 35/2021, for employer‑initiated terminations, the employer must give written notice of termination at least 14 working days before the intended date of termination.

• If the employee is under probation, notice period is 7 working days.

Payment in lieu of notice or notice waiver

If the parties agree, notice requirement may be waived or notice period replaced by payment in lieu.

End-of-Service Benefits

Severance

• Severance Pay (Uang Pesangon): Amount depends on length of service and reason for termination. Severance pay begins at one month’s salary for employees with up to one year of service, increasing by an additional month’s salary for each extra year worked, capping at nine months’ pay for those with eight or more years of service.

• Service Appreciation / Long Service Pay (Uang Penghargaan Masa Kerja): Reward for years of service. Reward compensation starts at two months’ salary for those employed between three and six years, rising by one month’s pay for every additional three years, reaching a maximum of 10 months’ salary for 24 or more years of service.

Other Benefits

Compensation of Rights (Uang Penggantian Hak): For example, payment for unused annual leave, costs like repatriation or return travel (if applicable), other contractual entitlements.

Termination Documentation

Notice Letter: Written. It should include reason, effective date, details of the termination payments & entitlements. Delivered properly to the employee (and union if employee is a union member).

Mutual Termination Agreements in Indonesia

Mutual Termination Agreements (“META” / “Mutual Separation Agreement”) are covered in Indonesian law, especially under GR No. 35 of 2021 and the amendments via the Job Creation Law.

Notice

Form

Written agreement signed by both employer and employee documenting the mutual consent to terminate.

Notice period

The statutory notice periods (14 working days for permanent employees; 7 working days if on probation) apply for unilateral terminations, but for mutual terminations those can be waived or altered by agreement.

Waiver of notice

Parties in a MTAs may agree to waive the requirement for notice or to have payment in lieu of notice. Since the termination is by mutual consent, they can negotiate those details.

End-of-Service Benefits

When an MTA is agreed, the end‑of‑service benefits are whatever the law requires plus whatever the parties agree in the settlement. Key statutory benefits still apply unless law or regulation explicitly allows departure by mutual agreement.

Other Benefits

• All wages earned up to the agreed termination date must be paid.

• Compensation for unused statutory annual leave

• Any contractually agreed benefits that have accrued prior to termination

Termination Documentation

To properly document a mutual termination:

• A written Mutual Termination Agreement, clearly stating that both sides agree to end the employment relationship, the effective date, all payments / entitlements, waivers if any, and releases of claims.

• Signatures of both parties.

• If the employee is a union‑member, include the union where needed.

• Registering the agreement with the Industrial Relations Court. MTAs must be registered there.

• Reporting to the Ministry of Manpower / local Manpower Office.

Offboarding Process for the End of Fixed-term Contracts in Indonesia

If the Fixed-Term Contract Ends Normally

Notice

• There’s no special statutory “notice period” required in the law for PKWT when the contract ends because its term expires or the specified work is completed.
• The contract itself may specify procedures / notice, but legally the expiration triggers end without needing a prior “termination notice” if that was what the parties agreed.

End-of-Service Benefits

Severance/Gratuity

• When a PKWT ends normally (by expiry or completion of job), the employee is entitled to compensation pay. This is sometimes called “uang kompensasi”.
• The formula: if the employee has worked continuously for one month or more, the compensation pay = (period worked ÷ 12) × one month’s salary. If the term is less than one month, no compensation is required.
• This compensation does not apply to foreign workers under certain regulations.

Other Benefits

• Payment for any unused annual leave (if accrued) or similar rights under PKWT / employment contract.
• Any other entitlements stipulated in the contract, company regulation, or collective agreement.
• Benefits such as return travel or repatriation (if applicable), allowances, bonuses etc., if contract or regulation provides.

If the Employer Terminates Early

Notice

• If the employer ends the PKWT before its term ends, the employer must honor whatever, if any, notice requirement is in the PKWT contract. The law does not set a different standard “statutory notice period” for early termination beyond what is in the contract.
• However, in practice notice or warning processes may be required under general PHK (termination) rules if not waived in the agreement.

End-of-Service Benefits

Severance/Gratuity

• The employee is entitled to balance of contract pay (i.e. payment for what remains of the contract term) unless exceptions apply (death, contract expiration naturally, completion of work, court decision, or other agreed triggers).
• Also entitled to compensation pay as above, calculated based on the portion of the PKWT already served.

Other Benefits

• Payment for unused annual leave, benefits under the contract, etc., must be made.
• Any other contractual entitlements must be settled.

Final Payment Timing & Immigration and Visa Compliance in Indonesia

Final Payment Deadline

The law does not specify a fixed number of days after termination (or resignation) by which final payments must be made in all cases, but obligations must be fulfilled without undue delay, and companies are legally required to pay all termination payments/entitlements. Contracts or local regulations may specify deadlines.

Penalty

Failure to pay required amounts when due can lead to labor disputes; employers may face legal liabilities, including being ordered by the Industrial Relations Court to pay interest/damages.

Visa and Immigration Compliance

• If a foreign worker’s employment contract ends (resignation or termination), the employer must report the termination or expiry of the employment agreement to the relevant authorities (Ministry of Manpower, and/or immigration).
• Foreign worker’s stay (visa / work permit, e.g. KITAS/RPTKA) is tied to their employment. On termination, unless they secure a new valid basis for their stay (new employment/work permit or change of status), they are expected to leave Indonesia.
• Employers must ensure foreign workers are validly permitted under their work permit for the work they are doing. If employing or terminating without compliance, fines or other sanctions may apply.