Introduction
In mid-2022, a fintech startup in Jakarta faced a sudden wave of resignations. Young employees, many from Gen Z, left after just one year, citing burnout and unclear career growth. Meanwhile, the HR team struggled with another issue—terminating underperforming staff. The company realized that understanding the difference between resignation and termination in Indonesia was essential not only for compliance but also for building trust and stability.

Explanation
In Indonesia, resignation (pengunduran diri) is an employee-initiated separation, while termination (pemutusan hubungan kerja/PHK) is employer-initiated. The legal obligations differ:

• Resignation: Employees must submit a written notice at least 30 days in advance, continue working during the notice, and are entitled to compensation of rights (unused leave, relocation allowance if applicable). Severance and service appreciation pay are not mandatory unless otherwise agreed in the contract.
• Termination: Employers must provide valid legal grounds (e.g., redundancy, business closure, misconduct) under Law No. 13/2003, amended by Law No. 11/2020, and Government Regulation No. 35/2021. Terminated employees are entitled to severance pay, long-service pay, and compensation of rights, unless termination falls under gross misconduct.

Legal Framework

• Article 36 GR 35/2021: resignation rules.
• Article 40–50 GR 35/2021: termination grounds and compensation formulas.
• All disputes unresolved at bipartite stage may proceed to the Industrial Relations Court.

Real Case
In 2021, the Industrial Relations Court in Bandung handled a case where an employer labeled an employee’s resignation as “mutual termination” to avoid paying rights. The court ruled in favor of the employee, clarifying that resignation requires clear written proof and cannot be disguised as termination.

Best Practices

• Employers should document all resignations with signed letters.
• HR should calculate entitlements carefully and transparently.
• Avoid coercing employees into resignation, as it may be considered constructive dismissal.
• Offer exit interviews to understand employee motivations and improve retention.

Conclusion
Resignation and termination in Indonesia carry very different legal and financial consequences. Employers who respect the distinction, follow due process, and handle separation with fairness will safeguard compliance while strengthening their reputation as responsible employers.

References

• Law No. 13 of 2003 (Manpower Law)
• Law No. 11 of 2020 (Omnibus Law)
• Government Regulation No. 35 of 2021 (Employment Relations)