Jakarta, CNBC Indonesia – The wave of layoffs continues quietly to unfold. As we enter early 2025, the Confederation of Indonesian Trade Unions (KSPN) has revealed plans for layoffs by three labor-intensive factories in the country.

According to KSPN President Ristadi, these three companies, located in Tangerang, Subang, and Bandung regencies, plan to cut a total of 4,050 jobs. Two of these companies even intend to cease production entirely.

On the other hand, the government has decided to extend the retirement age from 56 to 59 years starting in 2025. This is stipulated in Article 15 of Government Regulation (PP) Number 45 of 2015 concerning the Implementation of Pension Program.

In this context, it is vital for workers to understand their rights when facing layoffs, even though no one wishes to be laid off.

However, when this nightmare truly happens, knowledge about those rights can provide some much-needed assistance.

According to Article 156, paragraph (1) of Law Number 6 of 2023 regarding the Ratification of Government Regulation in Lieu of Law Number 2 of 2022 on Job Creation becoming Law (UU Cipta Kerja), it states, “In the event of a Termination of Employment, the employer is obliged to pay severance pay and/or service award pay and compensation for rights that should be received.”

Here are the details of severance pay according to the Job Creation Law:

a. For a work period of less than 1 (one) year, 1 (one) month of salary;

b. For a work period of 1 (one) year or more but less than 2 (two) years, 2 (two) months of salary;

c. For a work period of 2 (two) years or more but less than 3 (three) years, 3 (three) months of salary;

d. For a work period of 3 (three) years or more but less than 4 (four) years, 4 (four) months of salary;

e. For a work period of 4 (four) years or more but less than 5 (five) years, 5 (five) months of salary;

f. For a work period of 5 (five) years or more but less than 6 (six) years, 6 (six) months of salary;

g. For a work period of 6 (six) years or more but less than 7 (seven) years, 7 (seven) months of salary;

h. For a work period of 7 (seven) years or more but less than 8 (eight) years, 8 (eight) months of salary;

i. For a work period of 8 (eight) years or more, 9 (nine) months of salary.

In addition to severance pay, the law also regulates the amount of award pay that workers are entitled to receive.

Here are the details:

a. For a work period of 3 (three) years or more but less than 6 (six) years, 2 (two) months of salary;

b. For a work period of 6 (six) years or more but less than 9 (nine) years, 3 (three) months of salary;

c. For a work period of 9 (nine) years or more but less than 12 (twelve) years, 4 (four) months of salary;

d. For a work period of 12 (twelve) years or more but less than 15 (fifteen) years, 5 (five) months of salary;

e. For a work period of 15 (fifteen) years or more but less than 18 (eighteen) years, 6 (six) months of salary;

f. For a work period of 18 (eighteen) years or more but less than 21 (twenty-one) years, 7 (seven) months of salary;

g. For a work period of 21 (twenty-one) years or more but less than 24 (twenty-four) years, 8 (eight) months of salary;

h. For a work period of 24 (twenty-four) years or more, 10 (ten) months of salary.

Employee Rights Compensation

Employees are also entitled to compensation for other rights, such as unused leave. This provision is stated in Article 156, paragraph 4, which reads:

a. Annual leave that has not been taken and has not expired;

b. The cost or fare for the employee and their family to return to the place where they were employed;

c. Other matters as stipulated in the employment agreement, company regulations, or collective bargaining agreement.

Pension Assurance

Furthermore, concerning pension assurance, it is outlined in Government Regulation (PP) Number 45 of 2015 about the Implementation of Pension Programs.

One of the provisions regulated is the old-age pension assurance.

Article 19 of PP No 45/2015 states, “The old-age pension benefit is received by participants who have reached retirement age and have at least 15 (fifteen) years of contribution equivalent to 180 (one hundred eighty) months.”

“The formula for pension benefits as referred to in paragraph (1), letter a is 1% (one percent) multiplied by the contribution period divided by 12 (twelve) months multiplied by the weighted average annual salary during the contribution period divided by 12 (twelve),” as stated in Article 17, paragraph (2) of PP No 45/2015.

(dce/dce)

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