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Aug

03

Reasons for Termination of Employment Without Severance Pay

Disputes within the realm of labor can lead to the termination of employment (PHK). Before carrying out the PHK, specific procedures must be adhered to. Termination of employment entails responsibilities for employers, including the provision of compensation to employees. However, it is essential to note that compensation does not always involve severance pay.

The Regulation in Indonesia which regulate the Termination Of Employment is as follows:

  1. Government Regulation in Lieu of Law Number 2 of 2022 (PERPPU 2/2022)
  2. Government Regulation No. 35/2021 (PP 35/2021)

Here are several reasons elucidating why PHK does not invariably entail the obligation for employers to provide severance pay:

  1. The consequence of a commercial dispute court. In accordance with Article 49, termination of employment may occur if a court decision declares that the employer did not commit the alleged actions as accused by the worker, or if the termination request submitted by the worker is rejected by the court. In such cases, the worker is entitled to receive compensation in the form of UPH and Uang Pisah.
  2. Resignation without pressure in accordance with the procedure. Article 50 states that workers who resign voluntarily and meet the requirements as referred to in Article 36 letter I shall not receive severance pay. The compensation they are entitled to receive is only UPH and Uang Pisah.
  3. Worker's absence from duties for 5 days or more and has been called twice in succession. Workers who are categorized as absent from work for 5 consecutive working days or more without a valid written explanation supported by valid evidence and have been duly and written warned by the employer twice, as mandated by Article 51, are entitled only to UPH and Uang Pisah.
  4. Urgent Violations Fourthly, Article 52 paragraph (2) stipulates that employers may terminate the employment of workers due to urgent violations committed by the workers. These urgent violations must be specified in the employment agreement, company regulations, or collective labor agreement. Workers are entitled to receive compensation in the form of UPH and Uang Pisah.
  5. Worker detained and unable to perform duties. Severance pay is also not provided to workers who experience termination of employment due to the inability to perform their duties for 6 months as a result of being detained by the competent authority due to alleged criminal acts as stipulated in Article 36 letter l, which caused losses to the company. Similarly, if the worker is convicted before the end of the 6-month detention period, severance pay will not be granted. The compensation received by the worker only includes UPH and Uang Pisah.

However, compensation in the form of service appreciation pay (UPMK) and compensation for rights shall (UPH) be provided to workers who are detained by the competent authority, resulting in their inability to perform their duties for a period of 6 months, due to alleged criminal acts that do not harm the company, as regulated in Article 54 paragraph (2). This compensation also applies to workers who are convicted by the court before the end of the 6-month detention period for committing criminal acts that do not harm the company.

Worker detained and found not guilty. According to Article 54 paragraph (3), the worker shall be reinstated if the criminal court issues a verdict of acquittal before the end of the 6-month detention period, stating that the worker is not guilty of committing the criminal act.

If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of many corporate law firms in Indonesia that has handled numerous similar matters, with many experienced and professional corporate and civil lawyers in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.

Author: Budhi Satya Makmur

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Dear valued Visitor,

Data is a valuable currency in this new world. In the midst of digital transformation, the Indonesian government has taken the final decision to pass the Pelindungan Data Pribadi (PDP) Bill by September 2022. The PDP Law applies to all businesses established in Indonesia and puts the consumer in control. The task of complying with this regulation falls upon businesses.

The PDP Law affects a variety of business operations, including how your sales team prospect and how marketing initiatives are managed. Businesses have had to reassess their business procedures, applications, and forms. Additionally, all businesses that work with personal data should designate a Data Protection Officer (DPO) or data controller to oversee PDP compliance.

In line with this spirit, it gives us great pleasure to announce and share with all our esteemed clients and business associates that Schinder Law Firm is prepared to assist your company to understand the impacts of the Personal Data Protection Law (PDPL) and take the required measures to comply with the law. Our Privacy, Data Protection, and Cybersecurity practice group is a pioneer in providing data privacy law services in Indonesia. Personal data protection services include but are not limited to:

  • Assessing the existing systems, processes, and controls, etc.
  • Providing provide gap assessment on the existing systems, processes, and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDP Law
  • Developing policies, best practices, and procedures
  • Advising on the security of personal data and managing data breaches
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role, and responsibilities of a data protection officer
  • Advising on cross-border transfers of personal data
  • Carrying out data protection impact assessments and data protection audits
  • Recommending other necessary corrective actions in order to comply with the PDP Law
  • Training on the PDP Law tailored to clients’ businesses

We look forward to many more opportunities in the year ahead with your continued support and trust. For consultation, please send us a WhatsApp or Email.

Warmest regards,
Naz Schinder
Managing Partner

Keep Up with the New Law in Indonesia: Personal Data Protection

  • Assessing the existing systems, processes and controls, etc.
  • Providing provide gap assessment on the existing systems, processes and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDPL.
  • Developing policies, best practices and procedures.
  • Advising on security of personal data and managing data breaches.
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role and responsibilities of a data protection officer.
  • Advising on cross-border transfers of personal data.
  • Carrying out data protection impact assessments and data protection audits.
  • Recommending other necessary corrective actions in order to comply with the PDPL.
  • Training on the PDPL tailored to clients’ businesses.
Privacy, Data Protection and Cyber Security
We help our clients to understand the impact of the Personal Data Protection Law (PDPL) on their companies and take the required measures to comply with the law.