Home Blog Is Employee Transfer within One Company Group Allowed in Indonesia? Uncategorized Is Employee Transfer within One Company Group Allowed in Indonesia? InCorp Editorial Team 1 October 2020 3 minutes reading time Table of Contents Employment in Indonesia: Is Employee Transfer Allowed? Conditions to Fulfill for Employee Transfer Be Sure to Prepare a New Employment Contract for Employee Transfer How Cekindo can Assist with Employment in Indonesia Employee transfer may sometimes be needed for organisations to achieve their business objectives in Indonesia. An employee transfer is the relocation of employees from one company or department to another company or department. The transfer will cause a change in employment status, legal condition, and status of employment in Indonesia. This is especially common for companies within one company group. There are many reasons for companies to transfer their employees within their subsidiaries: To avoid work monotony To prevent nepotism and favoritism from the management or successors To make employees accountable for their positions and responsibilities To deal with work fluctuations To eliminate excess dependency on certain employees. This dependency will lead to loss of control of employees To create workplace transparency in terms of employees and the jobs they perform To eradicate the negative influence of employees on others for their advantages To expand employee’s skills, experience, competence, and versatility, especially for key positions To rectify wrong placement To maintain positive relationships among employees and promote a healthy work environment Employment in Indonesia: Is Employee Transfer Allowed? Employee transfer is allowed in Indonesia as long as the parent company and its subsidiaries have policies in place and fulfill certain legal requirements. Unlike promotion, the transfer can be permanent or temporary. It makes no changes to the employee’s responsibilities, duties, compensation, and skills required. There are several types of employee transfers for employment in Indonesia: Replacement transfers Production transfers Personnel or remedial transfers Versatility transfers Shift transfers Conditions to Fulfill for Employee Transfer According to the Indonesian Labor Act Article 31, companies must fulfill the basic criteria of employee transfer for legal employment in Indonesia: Employee transfers must be performed without biases and discrimination. It must also be fair, open, free, and fit the objectives An employee can only be transferred to the right positions per their skills, expertise, talents, qualifications, abilities, and interests. The transfer shall take human rights, dignity, and legal protection into consideration Employee transfers can only be carried out based on equal employment opportunities. The transfer of employees must also meet the requirements of regional and national legislation and programs Be Sure to Prepare a New Employment Contract for Employee Transfer An employee transfer must be legalised with a transfer contract or a new employment contract. A new employment contract is compulsory so that the parent company, employees, and subsidiaries know their rights and obligations. The agreement must include the following details: Business name, address, and type Employee’s name, age, and sex Work location Employee’s positions and type of work Employee’s salary amount and salary payment method Working conditions Employers’ and employees’ rights and obligations Starting date and employment period Where and when the new employment contract is created, i.e. date and location Both parties’ signatures How Cekindo can Assist with Employment in Indonesia Navigating complex laws of employment in Indonesia can be a huge challenge for employers, especially foreign employers. Legal compliances can impact all phases of the employment process, from recruitment to interview to termination. Therefore, employers must meet the ever-changing laws and market conditions to achieve the ultimate success. Cekindo’s experienced legal consultants can help you create well-drafted employment contracts, which are the foundation for effective human resource functions and business operations. To organise an employment contract drafting session or contract review, please take some time to fill out the request form below. One of Cekindo’s advisors will get back to you. Read Full Bio Verified by Daris Salam COO Indonesia at InCorp Indonesia With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships. Frequently Asked Questions What needs to be included in an employment background check? These are a few things you need to examine while performing an employee background check: Criminal record Educational background, qualifications, and professional certifications Work and employment history Sexual offense record Alcohol and drug tests Credit and financial background What other things should be considered when hiring local and foreign employees in Indonesia? There are a few things to consider, such as: Prohibit any form of discrimination and provide equal opportunity for Indonesians and expatriates Increase the competence of workers by giving or encouraging job training. Follow the termination procedures (Terminating an employee in Indonesia can be long, tedious, and expensive. Observe working hours, holidays, and overtime regulations Give mandatory employee benefits, including social security and health insurance Withhold only the right amount of income tax on behalf of the employees Follow the wages and other benefits outlined by the law Process work permits for foreign employees Should a foreigner deposit the minimum paid-up capital in a bank account to start a business in Indonesia? It is advisable to make a minimum paid-up capital deposit after the company completes its establishment process. Another option is after the company receives the Articles of Association and Deed of Establishment. What is PT (Perseroan Terbatas)? PT (Perseroan Terbatas) is the Indonesian term for a limited liability company. Get in touch with us. 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