An employment contract in Indonesia can be terminated at the end of the contract period (if for a fixed term), by the employer or by the employee. Employers are not required to provide notice before dismissing an employee. However, employers must negotiate the termination of employment with the labor union, if there is one, or the employee. If an agreement cannot be reached, the employer must get approval from the Industrial Relation Court (IRC). If a mutual termination agreement was signed, it needs to be filed with the IRC. IRC approval is not required if the employee is still on probation, provided that these terms were agreed to in writing. The probation period cannot exceed three months.
Employers in Indonesia can terminate an employment relationship for the following reasons:
violation of rules and regulations (including three warnings),
employee reaches pension age of 55,
employee abandons position for five days, or
employee is incarcerated.
Employees in Indonesia cannot be terminated for:
race, religion, ethnicity, political beliefs, opinions, gender, color, physical conditions or marital status,
missing work due to an illness certified by a doctor for more than 12 consecutive months,
disability or illness caused by an occupational disease certified by a doctor where the recovery period cannot be determined,
missing work for religious reasons, or to fulfill obligations to the state,
missing work to get married,
being related by blood or marriage to another employee in the business (unless prohibited under a relevant labor contract or collective bargaining agreement),
becoming pregnant, having a miscarriage or nursing a child,
becoming a member of a labor union or participating in labor union activities either outside of work hours or during work hours with permission of the employer, or
reporting the employer to the authorities for committing a crime.
An employee who is wrongfully terminated for one of the above reasons must be rehired. When a termination has taken place, the employer is required to pay the separated employee severance and/or a sum of money as a reward for services rendered.