Menaker: Only 7 percent of companies can pay severance pay pay 32 times the total salary

JAKARTA, KOMPAS.com – The Labor Minister (Menaker) Ida Fauziyah revealed that only 7 percent of the companies were able to comply with the compensation provisions stipulated in Law No. 13 of 2003 on Manpower.

In the Labor Law, Ida continued, until now companies have to pay severance pay to workers up to 32 times their salary.

In fact, not all companies do.

Also read: Consider the commercial scale, the government changes severance pay provisions

“In Law Number 13 of 2003 regarding the provisions for severance pay, 32 times are very good. In practice, only 7 percent follow the provisions of Law 13/2003 on severance pay,” he said in a virtual broadcast, on Wednesday (10/14/2020).

The minister of the National Awakening Party (PKB) also said that up to 27 percent of companies had paid severance pay, but did not agree with the provisions of the Manpower Law.

This means that you do not agree to the agreement to pay severance pay 32 times.

“The practice in the field (severance pay is not in accordance with the Labor Law) should not be allowed. Why? Because it turns out that the company does not have the ability to pay it because it is considered too high,” he said. .

Also read: Regarding the Job Creation Law, Hotman Paris explains the difficulties of workers to demand severance pay

Based on these considerations, the government also changed the provisions for severance pay in the Omnibus Law of the Employment Creation Law, which was originally 32 times, to 25 times the salary.

With a distribution of 19 times it is borne by the employer / business actor and 6 times (cash benefit) is granted through the Job Loss Guarantee Program (JKP) which is run by the government through BPJS Ketenagakerjaan.

“The government doesn’t want it to be like this. The government wants to make sure that the severance pay is truly a right and can be accepted by the workers or the day laborers are reduced with certainty of reception ”, he said.

For information purposes, the severance pay conditions stipulated in article 156 of the 812-page Employment Creation Law have been modified to read as follows.

Art 156

(1) In the event of termination of employment, the employer is obliged to pay severance and / or service compensation and compensation for the rights that he should have received.

(2) The severance pay referred to in paragraph (1) shall be provided with the following conditions.

1. working time less than 1 (one) year, 1 (one) month’s salary.
2. working time 1 (one) year or more but less than 2 (two) years, 2 (two) months of salary.
3. working time 2 (two) years or more but less than 3 (three) years, 3 (three) months of salary.
4. working time 3 (three) years or more but less than 4 (four) years, 4 (four) months of salary.
5. working time 4 (four) years or more but less than 5 (five) years, 5 (five) months of salary.
6. working time 5 (five) years or more, but less than 6 (six) years, 6 (six) months of salary.
7. working time 6 (six) years or more but less than 7 (seven) years, 7 (seven) months of salary.
8. work period of 7 (seven) years or more but less than 8 (eight) years, 8 (eight) months of salary.
9. work period of 8 (eight) years or more, 9 (nine) months of salary.

Also read: In the Job Creation Act, compensation is cut, employers: even higher than Thailand to Malaysia

Meanwhile, article 156 paragraph (3) of the Employment Creation Law, in addition to receiving severance pay according to the length of service, also receives compensation for the period of work referred to in paragraph (1 ) with the following conditions.

1. working time 3 (three) years or more but less than 6 (six) years, 2 (two) months of salary.
2. working time 6 (six) years or more but less than 9 (nine) years, 3 (three) months of salary.
3. working time 9 (nine) years or more but less than 12 (twelve) years, 4 (four) months of salary.
4. working time 12 (twelve) years or more but less than 15 (fifteen) years, 5 (five) months of salary.
5. working time 15 (fifteen) years or more but less than 18 (eighteen) years, 6 (six) months of salary.
6. Work period of 18 (eighteen) years or more but less than 21 (twenty-one) years, 7 (seven) months of salary.
7. Work period of 21 (twenty-one) years or more but less than 24 (twenty-four) years, 8 (eight) months of salary.
8. working time 24 (twenty-four) years or more, 10 (ten) months of salary.