INDONESIA Law and Practice Contributed by: Indra Setiawan, Ridzky Firmansyah Amin, Marintan Panjaitan and Tifanny Natalia, ABNR Counsellors at Law
• the existence of a final and binding court decision declaring that the employer did not act as stated in the preceding paragraph, and the employer decided to terminate the employment; • employee’s voluntary resignation; • employee’s absence for five consecutive days or more without written notification accompanied by valid evidence, despite being properly summoned by the employer twice; • employee’s violation of the employment agree - ment, employee handbook or collective bargaining agreements after having received warning letters; • employee’s serious violation (gross misconduct); • detention of the employee by the authorities for at least six months; • prolonged illness or disability (for more than 12 consecutive months) due to a work accident; • reaching retirement age; and • the employee has passed away. For Business-Related Reasons Employment may be terminated in the following cir - cumstances: • merger, consolidation, acquisition or spin-off of the employer (and where the employee is not willing to continue the employment), or the employer is not willing to accept the employee; • redundancy, whether or not followed by closure of the employer’s business due to losses or their prevention; • employer permanently closes down the business owing to continuous losses for two years; • employer permanently closes down the business owing to force majeure; • employer is under a state of suspension of pay - ment; and • employer is declared bankrupt. Other than the grounds for termination listed above, an employment relationship can also be terminated by way of mutual agreement (ie, with the consent of both the employer and the employee) via execution of a Mutual Employment Termination Agreement (META) (see 7.4 Termination Agreements ). Specifically, for a contract employee employed under a definite-term employment agreement, the employ -
er has the right to terminate the employment (before the expiry of the agreement’s term) regardless of the grounds for termination. The employer must pay compensation to the employee, the amount of which is equal to the amount of salary that the contract employee would have received until the expiry of the definite-term employment agreement and (only for an Indonesian contract employee) the compensation at the end of the employment, amount of which depends on the employee’s length of service. There are no procedures for specific grounds for termination that differ according to the number of employees that will be terminated (including collective redundancy/mass termination). All terminations will be implemented with the same procedure. 7.2 Notice Periods If the employer unilaterally terminates the employ - ment, they must provide written notice of termina - tion to both the employee and the labour union (if the employee is a member) at least 14 business days before the intended termination date. For employees in a probationary period, the notice period is seven business days. If the employment agreement, employ - ee handbook or collective labour agreement stipulates a longer notice period, the employer must comply with this specified notice period or make payment in lieu of notice, if permissible. As for termination due to an employee’s serious violation (gross misconduct), prior notification is not required; thus, the termination can be effective immediately upon issuance of notice of termination. The employee may reject the termination in writing, with reasons for rejection, within seven business days of receipt of the notice of termination. If, after being notified, the employee rejects termina - tion, the employer and the employee will undergo the bipartite negotiation. If the employer and the employ - ee successfully reach a mutual agreement during the bipartite, the parties may settle the issue amicably by entering into a META (see 7.4. Termination Agree - ments) reflecting the terms of the settlement. How - ever, if that fails, the parties shall undergo the indus - trial relations dispute settlement mechanism provided under prevailing laws and regulations. These include:
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