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Jokowi publishes new rules for workers’ severance pay

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Jakarta, CNN Indonesia –

President Joko Widodo (Jokowi) published new rules regarding paymentseverance pay workers. The rules are contained in Government Regulation (PP) No 35 of 2021 regarding specific working time agreements, transfer, working time and rest time, and termination of employment (PHK).

Beleid is a rule derived from law number 11 concerning job creation (Ciptaker law).

However, in article 43 of the new regulation, victims of dismissal due to the closure of the company and the loss of money can pocket severance pay only 0.5 times the standard provided for in article 40, paragraph 2, of PP.


Employers can fire the worker / worker because the company is efficient because the company suffers losses, so the worker / worker has the right to: a. severance pay equal to 0.5 (zero point five) times the provisions of Article 40, paragraph (2)», Declared article 43 of the regulation quoted Sunday (21/2).

In contrast, employees continue to receive tenure rewards and compensation for their rights.

The same rule also applies to victims of layoffs due to the takeover of companies which leads to changes in working conditions.

For workers / workers who are unwilling to continue the employment relationship, employers can terminate the employment relationship with severance pay of half of the provisions of Article 40, paragraph (2).

Then the business closes due to continuous losses for 2 years or suffers non-continuous losses for 2 years, the business closes due to strong circumstances (major force), and the business is in a state of deferring debt payment obligations because the business suffers a loss.

Then the company goes bankrupt and the workers / workers violate the provisions stipulated in the employment contract, company regulations or collective labor agreement, and have previously received the first, second and third warning letters respectively. .

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Meanwhile, severance pay was reduced by 0.25% for reasons of forced layoffs (force majeure) which did not result in the closure of the business. In this case, the worker / blue-collar worker receives severance pay equal to 0.75 times the provisions of article 40, paragraph 2, remuneration and compensation.

Severance pay is paid once, the provisions of article 39, paragraph 2, apply to victims of dismissals caused by the merger, consolidation or separation of the company and workers / workers are not willing to continue working relationships or employers unwilling to accept workers / workers.

In addition, due to the takeover of the business, the business makes efficiency to avoid losses, the business closes because it is not because the business has suffered a loss, the business is in a state of postponement of its debt payment obligations not because the company has suffered prejudice and the dismissal requests are filed by the workers / workers on the grounds that the employers carry out the actions referred to in Article 35.

For victims of dismissal for the above reasons, they also receive an occupation premium equal to 1 times the provisions of article 39, paragraph 3, and compensation for their rights in accordance with the provisions of article 39, paragraph 4.

The provisions relating to severance pay in Article 39 (2) of the Regulation are as follows:

– working time less than 1 year, 1 month’s salary

– working time 1 year or more but less than 2 years, 2 months salary

– working time 2 years or more but less than 3 years, 3 months salary

– working time 3 years or more but less than 4 years, 4 months salary

– working time 4 years or more but less than 5 years, 5 months salary

– working time 5 years or more but less than 6 years, 6 months salary

– working time 6 years or more but less than 7 years, 7 months salary

– working time 7 years or more but less than 8 years, 8 months salary

– working time 8 years or more but less than 9 years, 8 months salary

– working time 8 years or more, 9 months salary.

(good / eight)




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