Introduction

In Indonesia’s dynamic employment landscape, businesses and employees may sometimes reach a mutual understanding to end their relationship amicably. This is known as a Mutual Termination Agreement (Perjanjian Pemutusan Hubungan Kerja Secara Sepakat) — a legal and ethical way to conclude employment when both sides agree. When managed properly, it prevents disputes and preserves goodwill.

Concept of Mutual Termination

A mutual termination is a voluntary written agreement between employer and employee. Unlike unilateral dismissal, it is based on clear, mutual consent. The agreement typically includes final settlement, severance compensation, confidentiality, and non-compete clauses, ensuring neither party can raise future claims.

Legal Framework

The legal basis lies in Article 36(d) and Article 37 of Law No. 13/2003, as amended by the Job Creation Law and Government Regulation (PP) No. 35/2021.
These laws emphasize that:

• The termination must be in writing and mutually signed.
  
• Both parties must confirm no remaining rights or obligations.
  
• Compensation is not mandatory, but fairness is encouraged.
  

Real Case

A multinational firm in Bekasi underwent restructuring. HR invited affected staff for transparent discussions, offering enhanced severance, health coverage extensions, and job placement support. The employees agreed voluntarily, and the company avoided legal challenges — a clear example of compliance and empathy.

Best Practices for Foreign Employers

1. Write Clearly — Use bilingual agreements.
   
2. Be Fair — Offer reasonable compensation.
   
3. Ensure Consent — No coercion or pressure.
   
4. Consult Legal Experts — Follow PP 35/2021.
   
5. Respect Confidentiality — Maintain dignity and professionalism.
   

Conclusion

A mutual termination executed with fairness not only ensures legal compliance but also strengthens the company’s reputation in Indonesia’s workforce ecosystem.

References

• Law No. 13/2003 on Manpower (amended by the Job Creation Law)
  
• Government Regulation (PP) No. 35/2021