Observer: Employee Severance Pay Is More Guaranteed In The Job Creation Law Than In The Previous Regulation

Illustrated. (Irfan Meidianto / VOI)

JAKARTA - The Indonesian Center of Reform on Economics (CORE) economic studies institute assesses that certainty of severance pay for workers is more secure in Law Number 11 of 2020 concerning Job Creation or Ciptaker.

"Why would the matter of severance pay for workers affected by layoffs be paid? That is certain, because the clause is no longer civil, but criminal. If the company is not willing to pay for the workers' rights as stated in the law, it could be subject to criminal penalties and could be convicted," said the Research Director of CORE. Indonesia Piter Abdullah Redjalam, quoted from Antara, Saturday, December 26.

According to him, the weakness of Law 13/2003 is that companies that do not pay severance pay can only be prosecuted in a civil manner. If it is civil, he continued, the process will be long and the burden arising from this problem lies with the workers.

Ironically, if the company still does not pay, then there will be a civil prosecution and ironically, the costs will be borne by the prosecution or the workers.

If in the Job Creation Law, entrepreneurs who are not willing to pay severance pay can be subject to criminal charges and employers will face the state. This means that the state is in front of the workers, protecting workers, facing the employers. The government pays special attention to workers affected by layoffs in order to get their rights in the form of severance pay from companies and related institutions.

The CORE Research Director confirmed that the Job Creation Law was a breath of fresh air for workers because it was able to be a solution to the problem of severance pay for workers affected by layoffs. Thus, providing certainty for severance pay for workers in any sector affected by layoffs. Although the amount of severance pay is multiplied smaller, from 32 times the salary to 25 times the salary, this is more certain to protect workers' rights.

"I make sure that nothing is detrimental to workers. Why not detrimental, because behind the reduction from 32 times the salary to 25 times the salary, there is certainty that it will be paid. Which is more profitable, given the lure of severance pay 32 times but not paid, or severance pay is 25 times the salary but it will definitely pay off. I will definitely choose the 25 times salary, "said Piter.

Quoting data from the Ministry of Manpower (Kemenaker) in 2019, it was stated that only 27 percent of employers met compensation payments in accordance with the provisions of Law 13/2003 on Manpower.

The remaining 73 percent did not pay compensation for layoffs in accordance with the Manpower Law. The reasons for companies vary from admitting to bankruptcy that they are unable to pay severance pay to workers resigning.

In fact, a World Bank report that cites 2018 BPS National Labor Force Survey data states that 66 percent of workers do not receive severance pay according to regulations, 27 percent of workers receive less than they should have received, and 7 percent of workers who receive severance pay according to regulations.