The Job Creation Law Allows Entrepreneurs To Cut Down Severance Pay

JAKARTA - The government has adjusted the amount of severance pay that workers will receive if they are getting cut off in Law Number 11 of 2020 concerning Job Creation (Ciptaker).

Through the derivative rules of the Draft of Government Regulation (RPP) on Specific Time Work Agreements, Transfer, Working Time and Rest, as well as Termination of Employment, the state is preparing a scheme that has the potential to reduce the component of giving severance pay to workers.

Furthermore, in the Draft of Government Regulation Article 39 paragraph 2, it is revealed that severance pay is given a minimum of one month's wages for workers with a service period of one year or more.

Then, the provision of severance pay with a service period of more than one year has eight separate provisions. This is stated in Article 39 paragraph 3.

The first stipulation is that employees with a service period of 3 years or more but less than 6 years are only given two months of wages.

The second provision, a work period of 6 years or more but less than 9 years is only entitled to 3 months of wages.

The third provision is that the work period is 9 years or more but less than 12 years, then the severance pay received is 4 months of wages.

The fourth provision is workers who have a work period of 12 years or more but less than 15 years with only 5 months of wages.

The fifth provision is that the work period is 15 years but less than 18 years is only given 6 months of wages.

The sixth provision is if the worker has worked 18 years or more but less than 21 years is only given 7 months of wages severance pay.

The seventh provision is that a work period of 21 years or more and less than 24 years is only given 8 months of wages.

Meanwhile, the last or the eighth provision states that the work period is 24 years or more, only 10 months of wages are given.

It should be noted that this severance pay provision only applies if the employing company is in good health.

Article 41-46 and Article 51 stipulate a policy that if the company experiences certain conditions, then the company may give half of the obligations stipulated in Article 39.

In implementing the deduction of 0.5 severance pay as stated in Articles 41-46 and Article 51 it is necessary to pay attention to these seven provisions:

1. When there is a taking of the company which results in the company changing working conditions and workers who are not willing to continue the working relationship.

2. When the company performs efficiency due to experiencing losses.

3. When the company closes because it has suffered losses for two consecutive years or not.

4. When the company closes due to force majeure.

5. When the company is postponing its debt payment obligations due to losses.

6. When the company goes bankrupt.

7. When workers violate work regulations and have been given three warning letters.