Is Employee Transfer within One Company Group Allowed 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.