Losing a job is stressful, and the process is often confusing. The Job Creation Law and Government Regulation No. 35 of 2021 set out when an employer may terminate employment and what the employee is entitled to.
What you may be entitled to
Depending on the reason for termination and your length of service, the law provides for three components:
- Severance pay (uang pesangon), based on years of service;
- Long-service pay (uang penghargaan masa kerja), for employees with at least three years of service;
- Compensation for rights (uang penggantian hak), such as unused annual leave.
The amount also depends on the reason for termination, for example company efficiency, a merger, or a serious breach by the employee. This is where many calculations go wrong.
The process if you disagree
- Bipartite negotiation between you and your employer, which must be attempted first.
- Mediation or conciliation at the local manpower office (Disnaker) if negotiation fails.
- The Industrial Relations Court if mediation does not resolve the dispute.
What to prepare
- Your employment contract or appointment letter
- Company regulations or collective labour agreement
- Recent payslips
- The termination letter and any warning letters
Do not sign a termination agreement before you understand what you are giving up. A short consultation can make a real difference.