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This is Severance Pay for Laid-off Workers and Retirees in the Latest Job Creation Law

Adi Ahdiat 24/03/2023 11:10 WIB

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The latest Job Creation Law stipulates that employers are obligated to provide severance pay to employees who are laid off or retire, with a maximum amount of nine times their monthly salary.

Severance Pay for Employees Affected by Layoffs or Retirement under the Indonesian Job Creation Law (March 2023)

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This is Severance Pay for Laid-off Workers and Retirees in the Latest Job Creation Law

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~~Rp100.000~~

Rp50.000/month

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Severance Pay for Employees Affected by Layoffs or Retirement under the Indonesian Job Creation Law (March 2023)

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The House of Representatives (DPR) has ratified Government Regulation in Lieu of Law (Perppu) Number 2 of 2022 on the Job Creation Law into Law (UU) on Tuesday (21/3/2023).

The latest Job Creation Law stipulates that employers are obligated to provide severance pay to employees who experience termination of employment (PHK) or retirement, with the following details:

* Less than 1 year of service: 1 month's salary as severance pay
* 1 year or more, but less than 2 years of service: 2 months' salary as severance pay
* 2 years or more, but less than 3 years of service: 3 months' salary as severance pay
* 3 years or more, but less than 4 years of service: 4 months' salary as severance pay
* 4 years or more, but less than 5 years of service: 5 months' salary as severance pay
* 5 years or more, but less than 6 years of service: 6 months' salary as severance pay
* 6 years or more, but less than 7 years of service: 7 months' salary as severance pay
* 7 years or more, but less than 8 years of service: 8 months' salary as severance pay
* 8 years or more of service: 9 months' salary as severance pay

In addition to severance pay, employers may also provide service awards and compensation for entitlements to employees experiencing PHK or retirement.

However, this is not an absolute obligation, as the rule in Article 156 Paragraph (1) of the Job Creation Law contains the term "and/or," indicating that employers can choose between providing severance pay, or a service award and compensation for entitlements, or providing all three.

The full text of Article 156 Paragraph (1) of the Job Creation Law reads: "In the event of termination of employment, the employer is obligated to pay severance pay and/or service award and compensation for entitlements that should be received."

The amount of service award for employees experiencing PHK or retirement is as follows:

* 3 years or more, but less than 6 years of service: 2 months' salary as service award
* 6 years or more, but less than 9 years of service: 3 months' salary as service award
* 9 years or more, but less than 12 years of service: 4 months' salary as service award
* 12 years or more, but less than 15 years of service: 5 months' salary as service award
* 15 years or more, but less than 18 years of service: 6 months' salary as service award
* 18 years or more, but less than 21 years of service: 7 months' salary as service award
* 21 years or more, but less than 24 years of service: 8 months' salary as service award
* 24 years or more of service: 10 months' salary as service award.

Then, compensation for entitlements for employees experiencing PHK or retirement is determined based on:

* Unused and not lapsed annual leave
* Travel expenses for the worker and their family to the place where the worker was employed
* Other matters stipulated in the employment agreement, company regulations, or collective bargaining agreement

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."

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This is Severance Pay for Laid-off Workers and Retirees in the Latest Job Creation Law

This is Severance Pay for Laid-off Workers and Retirees in the Latest Job Creation Law

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This is Severance Pay for Laid-off Workers and Retirees in the Latest Job Creation Law

This is Severance Pay for Laid-off Workers and Retirees in the Latest Job Creation Law

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Mount Semeru Erupts Again This Morning (Friday, December 26, 2025)

10 Regions with the Least Air Pollution in Indonesia, Malang Ranks 1st on Friday Morning

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South Sumatra's Air Quality Tonight (25/12) Worst in Indonesia

Warning! Mount Ibu Erupts Again This Afternoon (Thursday, December 25, 2025)

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