Dismissal/retirement procedures in Indonesia | Practical matters and troubleshooting
When developing business in Indonesia, dealing with labor issues related to employee dismissal and retirement is a very important topic that comes with legal risks.
In this column, we will explain in an easy-to-understand manner the difference between fixed-term employment and indefinite-term employment, the practical flow, how to calculate retirement benefits, and how to deal with common problems.
Types of resignation/dismissal and basic procedure flow
Dismissal/retirement procedures in Indonesia vary depending on the type of employment (fixed term/indefinite term) and reason for resignation.
Voluntary resignation flow
By law,At least 30 days before the retirement date, in writing (email, etc.)Expressed resignation to human resources(verbal is not allowed).
After that, the employee signs a handover completion report prepared by the company, and retires after working until the retirement date or completing paid leave.
*If there is a separate provision in the employment regulations, the deadline for resignation notice shall be followed.
Flow of dismissal due to company circumstances
At least 14 business days before the dismissal date, specifying the reason for dismissal and the amount of allowance.Issuance of “Notice of Dismissal”(Personal delivery or delivery with confirmation of receipt).
7If the employee does not give notice of dissatisfaction within a business day, the dismissal will be finalized, but if the dismissal is refused, the process will proceed to two-party negotiations, three-party negotiations (with a labor bureau conciliator present), or to a labor court.
Flow when the employee has a reason (poor attendance, etc.)
It does not mean that you can be fired immediately, but there are three stages: SP-1 (first stage), SP-2 (second stage), and SP-3 (third/final stage).Issuing warning letters in stagesHowever, it is necessary to meet the legal requirement that ``an opportunity for improvement was given but was not possible.''
*Each warning letter is valid for 6 months.
Differences in retirement benefits and compensation (fixed-term contract vs. indefinite-term contract)
Benefits that accrue upon retirement or dismissal in Indonesia are clearly divided depending on the contract type.
[Fixed-term contract employee (PKWT)]
| situation (reason) | payment item | Japanese approx. |
| The contract is up
(Contract expired) |
Compensation money | Contract expiration deposit |
| Replacement Money | Rights compensation money | |
| Resignation
(Voluntary resignation) |
Fine | Mid-term cancellation penalty* |
| Replacement Money | Rights compensation money | |
| Compensation Money | Contract expiration deposit | |
| Layoffs
(dismissal) |
Compensation Money | Compensation (penalty) |
| Compensation money | Contract expiration deposit | |
| Replacement Money | Rights compensation money |
*Payment from the contract employee (employee) to the company (employer).
However, in reality, there are cases where companies run into trouble with employees over payments, and cases where employees claim that their salaries are not enough to pay them.
Therefore, in many cases, Uang kompensasi (contract expiration deposit) and Uang Penggantian Hak (rights compensation deposit) are offset.
[Indefinite term contract employee (PKWTT)]
| situation (reason) | payment item | Japanese translation |
| Resignation
(Voluntary resignation) |
Severance payment | farewell money |
| Replacement Money | Rights compensation money | |
| Layoffs
(dismissal) |
Severance pay | retirement allowance |
| Long service award money | Continuance merit pay | |
| Replacement money for rights | Rights compensation money |
Labor trouble Q&A
We will introduce examples of problems that often occur in the workplace and how to deal with them.
Q. What should you do if an employee is suddenly absent from work without prior notice and you cannot contact them?
Delivered to the registered address with proof of delivery (POS Indonesia, etc.)Send “call letter” twicePlease.
If the employee is absent from work without a valid reason for ``5 consecutive business days or more'' and does not respond to two calls,A legal basis has been established to treat it as “equivalent to voluntary resignation”I will.
※If you leave the termination process unattended, there is a risk that you will be in trouble later for being unfairly dismissed.There is.
Q. The employment regulations state that ``resignation notice must be given 60 days in advance,'' but what if the employee insists that ``the notice of resignation is 30 days in advance,'' and is forced to resign?
"30 days ago" in the labor law is just thatminimum legal standards(minimum rule).
Securing a handover period, etc.Generally, if the company has a reasonable reason, the ``60 days before'' stipulation in the work regulations is interpreted as valid.is.
summary
The legal requirements for dismissal and retirement procedures in Indonesia are extremely complex.
If the initial response is incorrect, there is a risk that serious problems such as labor disputes will develop.
The flow and calculation methods introduced this time are just the basics, and in actual situations, careful judgment is required depending on each individual situation.
At our company, Keystone Consulting Group, we provide one-stop support for legal, tax, and accounting consultations, including these complex personnel and labor issues.
It doesn't matter if it's a trivial question, such as, ``I'm not sure if my company's current work rules are okay,'' or ``I'm not sure how to deal with problems with employees.''
Please feel free to contact us, as our experienced professionals will be happy to assist you.
[For inquiries, please contacthereFrom (free initial consultation!) ]
