One type of retirement allowance is a farewell allowance called uang pisah. Farewell money is one of the retirement benefits that must be paid when the employment relationship is terminated due to six specific reasons.If you pay farewell money, you are not obligated to pay severance allowance or continuous service allowance. On the other hand, the rights compensation uang penggantian hak must be paid regardless of the reason for resignation, so this is the same as for any other reason. What is most different from other retirement benefits is that each company can freely set the rules for the farewell payment. So what kind of rules should we set?

[Reason for resignation for which payment of farewell allowance is required]

There are six types of reasons for resignation for which payment of farewell allowance is required: 1) Amicable voluntary resignation, 2) Absenteeism for 5 consecutive days without permission, 3) Disciplinary dismissal, 4) Detention for more than 6 months by a criminal case involving damage to the company, 5) Conviction after being detained for less than 6 months by a criminal case for damage to the company, 6) An employee applied for termination of his/her own employment relationship based on a violation by the management, but it has been proven that there was no violation by the management. Consideration should also be given to voluntary resignations that are similar to this reason and are not amicable. "Amicable" here refers to the case where all the obligations set by the company at the time of retirement have been fulfilled. Legally, you are required to submit your resignation 30 calendar days in advance, but you can also make conditions such as handing over your resignation to someone else, returning all items that should be returned, or completing duties ordered by the company. If these conditions are not met, there is no need to pay farewell money, but if you resign for one of the other five reasons, you can receive farewell money, so if there are conditions that cannot be met, there is a possibility that some people will be tempted to punch their boss and have them fired, so you need to consider the balance.

[Is it illegal to not send farewell money?]

There are many companies that have farewell payment regulations that are similar to continuous service payment regulations. This is probably a vestige from the long time when the retirement allowance in the case of voluntary resignation was 1 times the continuous service allowance. Therefore, it is relatively common to have provisions for no farewell payments depending on the length of service. However, it cannot be zero for everyone. This is because there is an obligation to provide. On the other hand, there are many people who say they don't understand why they have to pay retirement benefits for the reasons listed above. In that case, you can set it to a small amount, or if it is calculated according to your wage, you can set it to be multiplied by a small percentage.
Although it is rare, we sometimes see regulations that require different calculation methods for each position. In that case, is it possible to set a zero farewell payment for people above a certain level? Although it is not legally prohibited, it can be said to be a very frustrating rule. Although it would be acceptable for reasons after 2 above, it would be quite difficult to accept zero farewell payment for managers and above who resigned amicably and voluntarily. The company wants to retain talented executives, so it may be that they are harsh on those who quit, but I think this could be interpreted as a dislike for giving too much priority to the convenience of the company.

Related laws and regulations: Articles 49 to 59 of Cabinet Order No. 35 of 2021