Thirty days of negotiation, and a letter that must contain six things

Indonesian termination is procedural. Getting the amount right is not enough if the process was not followed.

The 30-day negotiation

Employers must show they attempted bipartite negotiation for at least 30 days.

That is a documented requirement, not a courtesy. If no negotiation was attempted, the process is defective.

What the termination letter must contain

• Final work date — it determines payroll cutoffs, BPJS reporting and severance calculation
• Breakdown of compensation — severance, long service pay, compensation of rights, unused leave and any contractual benefits
• Summary of negotiation attempts
• Rights and obligations for both parties
• Return-of-property clause — keys, ID cards, laptops, intellectual property, confidential materials
• Final payment deadlines

A termination letter lacking these elements can be rejected by the Industrial Relations Court, even if the underlying reason is valid.

The dispute route

1. Bipartite negotiation first
2. Mediation through the local Manpower Office
3. The Industrial Relations Court if unresolved

This can take months and typically increases the eventual cost to the employer.

Evidence matters

Indonesia's labour system places strong emphasis on evidence. Accurate and consistent recordkeeping is essential to demonstrate fair process and compliance with PP 35/2021.

That cuts both ways: your own records of the process matter as much as the employer's.

BPJS must be current

BPJS contributions must be current before a PHK process can close cleanly. Termination compliance and BPJS compliance are directly linked.

Other termination grounds

If an employee is medically unable to work for more than 12 consecutive months, the parties may lawfully terminate, with compensation based on medical records and proper procedure.

Reaching pension age ends employment automatically, with a defined compensation entitlement.

For PKWT contracts, employment ends automatically on the agreed expiry date.

The cost of small errors

Improper documentation, incorrect severance calculation, or failure to follow the mandatory negotiation steps can result in penalties, reinstatement orders, or lengthy disputes.