See the calculation of the last severance pay in the Employment Creation Law

JAKARTA, KOMPAS.com – The Omnibus Job Creation Law Project was officially ratified as the Employment Creation Law in plenary session on Monday (10/5/2020). The Job Creation Bill is a bill proposed by President Jokowi as the 2020 priority bill.

The ratification of the Employment Creation Law was supported by all the parties that support the government coalition. Meanwhile, two factions declared that they rejected this bill, namely the Prosperous Justice Party (PKS) and the Democratic Party.

The seven party factions supporting the Labor Creation Bill to become law include the Indonesian Democratic Struggle Party (PDI-P), the Golkar Party, the Gerindra Party, the Nasdem Party, the Awakening Party. National (PKB), the National Mandate Party (PAN) and the United Development Party. (PPP).

One of the controversial articles of the Employment Creation Law is that the amount of severance pay for employees who are laid off victims is considered to have been reduced. The last severance pay is regulated in article 156 of the Employment Creation Law.

Also read: In the Employment Creation Law, can the status of a hired employee last a lifetime?

This is because the government and DPR agreed to change the maximum amount of severance pay that workers receive to be 25 times the salary consisting of 19 times the workers’ monthly salary and 6 times the job loss guarantee. (JKP).

The Employment Creation Law, the article related to the additional compensation received by workers if the company performs efficiency, is eliminated. This is different from the article of the Labor Law which requires a higher compensation if the layoffs are made for efficiency reasons.

The following are the detailed rules for severance pay that workers receive in the Employment Creation Law:

Severance pay

1. Work period of less than 1 year, get severance pay equal to 1 month’s salary
2. Work period of 1 year or more but less than 2 years, get 2 months of compensation.
3. Work period of 2 years or more but less than 3 years, get 3 months of severance pay
4. Work period of 3 years or more but less than 4 years, get 4 months of severance pay
5. Work period of 4 years or more but less than 5 years, get 5 months of severance pay
6. Work periods of 5 years or more, but less than 6 years, receive 6 months of severance pay
7. Work period of 6 years or more but less than 7 years, get 7 months of severance pay
8. Work period of 7 years or more but less than 8 years, get 8 months severance pay
9. Work period of 8 years or more, get 9 months of severance pay.

Also read: The full content of the Employment Creation Law can be downloaded here

Employee award money

1. Work period of 3 years or more but less than 6 years, get a reward of 2 months of salary
2. Work period of 6 years or more but less than 9 years, obtaining a reward of 3 months of salary
3. Work period of 9 years or more but less than 12 years, get a cash reward equal to 4 months of salary
4. Work periods of 12 years or more but less than 15 years, get a reward of 5 months of salary
5. Work period of 15 years or more but less than 18 years, get a reward of 6 months of salary
6. Period of employment of 18 years or more, but less than 21 years, obtaining a reward of 7 months of salary.
7. Work periods of 21 years or more but less than 24 years, receive 8 months of salary
8. Work period of 24 years or more, get a reward of 10 months of salary.

Previously, the Special Staff of Finance Minister Yustinus Prastowo, said that the severance pay was reduced. However, workers can still get other benefits in the Job Creation Law.

Also read: Ministry of Finance: We are grateful that the DPR approved the Omnibus Law for Job Creation …

“With regard to the reduced severance pay, the government offered Unemployment benefit which in fact guarantees the continuity of the workers ”, explained Yustinus some time ago.

The components of wages used by the government as the basis for calculating severance pay and compensation consist of the basic salary and fixed allowances.

The calculation, the amount of severance pay is adjusted to the years of service. The more you work, the greater the compensation you receive.

The lowest severance pay is workers with a period of service of less than one year and only one month’s salary. Then the largest is the work period of more than eight years with severance pay amounting to nine months of salary.

Meanwhile, the calculation of the reward money also refers to the number of years of service. The highest amount is 21 years with the amount of reward money for eight months of salary.

Then, with a work period of between 3-6 years, the amount of the award received is 2 months of salary.

Also read: The government guarantees that menstrual leave and pregnancy are not eliminated in the Omnibus Create Work Act