The death of a foreign employee in Indonesia may raise a practical question for the employer: can the employee’s outstanding employment entitlements be paid to a foreign executor rather than directly to the heirs?
In principle, this may be possible, but the employer must first ensure that the executor has valid authority to receive the relevant assets on behalf of the estate. This becomes particularly important where the executor is appointed under foreign succession law and the relevant succession documents are issued outside Indonesia.
Accordingly, distinguishing between an heir and an executor is important.
Who Is Entitled to the Employment Entitlements of a Deceased Employee?
Under Government Regulation No. 35 of 2021, the death of an employee is one of the grounds for termination of employment and gives rise to certain entitlements for the employee’s heirs, including severance pay, long-service award, and compensation for rights.
These entitlements generally form part of the estate of the deceased employee. The Indonesian Civil Code provides that succession is opened upon death, whereby the rights and obligations of the deceased are transferred to the heirs in accordance with the applicable succession law.
For foreign employees, determining the heirs may require consideration of the succession law applicable to the employee as well as succession documents issued by the competent authorities in the relevant jurisdiction.
Can an Executor Receive the Payment?
An executor is not necessarily an heir. An executor may be appointed to administer the estate and collect assets on behalf of the estate or the beneficiaries.
With respect to employment entitlements owed to the deceased employee, payment to an executor may in principle be possible where the executor has been lawfully appointed and has the authority to receive or collect the employee’s assets on behalf of the estate or the heirs.
Accordingly, the employer should review not only the executor’s appointment documents but also the scope of the executor’s authority. A document merely identifying a person as an “executor” does not necessarily, by itself, establish that the person is authorized to receive a particular payment from the employer.
Where the executor is also one of the heirs, the situation is relatively more straightforward, as the payment may be made to that person in their capacity as an heir, subject to adequate supporting evidence.
BPJS Benefits Require a Different Analysis
This position should be distinguished from benefits provided by BPJS Ketenagakerjaan.
For Death Benefit (Jaminan Kematian or “JKM“), Government Regulation No. 44 of 2015 establishes a specific order of beneficiaries, generally prioritizing the lawful heirs. Under certain circumstances, the regulations also recognize a person designated under a will.
Accordingly, a person is not automatically entitled to receive JKM merely because they have been appointed as an executor. The executor must fall within the applicable category of beneficiaries or satisfy specific requirements under the relevant regulations.
A similar consideration applies to death benefits arising from Work Accident Insurance (Jaminan Kecelakaan Kerja or “JKK“).
Therefore, the employer should separately assess employment termination entitlements and BPJS benefits, as authority to administer the estate does not automatically mean that the executor is authorized to receive all benefits arising from the employee’s death.
Managing the Risk of Duplicate Claims
The primary risk for an employer is that the heirs may subsequently claim that the employee’s entitlements were not validly paid.
If the employer pays an executor without sufficient evidence of authority, the employer may face difficulties in demonstrating that the payment discharged its obligations to the deceased employee or the heirs.
Conversely, where the executor’s appointment and authority have been adequately established and supported by valid succession documents, the employer has a stronger basis to demonstrate that the payment was made in good faith to a party duly authorized to represent the estate.
Accordingly, an employer should not treat a payment request from an executor as sufficient on its own. The payment should be based on a documented assessment of who is legally entitled to receive the relevant benefit and who is authorized to receive the payment on their behalf.
Key Considerations
For employers in Indonesia dealing with the death of a foreign employee, payment to a foreign executor may in principle be possible, but it should not be made automatically.
The employer should first determine the applicable beneficiary requirements for each type of benefit and verify the executor’s authority under the applicable succession law. Where succession documents are issued overseas, their formal validity and whether they can be relied upon in Indonesia should also be considered before payment is made.
How TAMA Global Mobility Can Assist
- Foreign Employee Exit & Benefits Assessment, assessing the employment implications and outstanding entitlements following the death of a foreign employee in Indonesia.
- Benefits & Entitlements Review, reviewing employment entitlements arising from the termination of employment as well as BPJS Ketenagakerjaan benefits that may be payable to the estate or beneficiaries.
- Executor & Heir Documentation Review, reviewing succession documents, wills, probate documents, and executor appointments to assess the authority of the party receiving the payment.
- Cross-Border Estate Coordination, assisting in coordinating communications with heirs, executors, and relevant parties overseas in handling employment-related matters in Indonesia.
- Employer Risk & Compliance Advisory, advising employers on appropriate documentation and payment procedures to mitigate the risk of subsequent claims or disputes.
TAMA Global Mobility assists employers in addressing cross-border employment matters through a structured approach to employment, immigration, and global mobility compliance.
Disclaimer: Here
– – – ||| – – –
TAMA Global Mobility
WhatsApp: +62 821-1015-402
Email: info@tamaglobalmobility.com
For additional insights on Indonesian immigration compliance and global mobility matters, explore our related publications:
Foreign Founder as a Director of a PT PMA: RPTKA and Work Stay Permit Requirements
Can a Foreign Company Operate in Indonesia Without Establishing a PT PMA?
Entering the Indonesian Market: PT PMA, Representative Office or Permanent Establishment?
Immigration Compliance for Foreign National Heads of KPPA in Indonesia
Permanent Establishment (BUT) in Indonesia: A Guide for Foreign Companies
Can a Foreign National Hold More Than One Stay Permit in Indonesia?
