Compensation of Employment

Termination
 Component of
Employment Termination Compensation

Severance Pay (Pesangon) Legal basis:

A Act No.13/2003
Article 156 point 2

B Service Pay (Uang Penghargaan Masa Kerja)

Article 156 point 3

C Compensation Pay (Uang Penggantian Hak)

Article 156 point 4

D Detachment Pay (Uang Pisah)

Article 162 point 2 & 168 point 3

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 Component of
Employment Termination Compensation (cont.)

Severance Pay Service Pay

A B
(Pesangon) (Uang Penghargaan Masa Kerja)

…× …×
Service Period Service Period
monthly wage monthly wage
Less than 1 year 1 3 – 6 years 2
1 – 2 years 2 6 – 9 years 3
2 – 3 years 3 9 – 12 years 4
3 – 4 years 4 12 – 15 years 5
4 – 5 years 5 15 – 18 years 6
5 – 6 years 6 18 – 21 years 7
6 – 7 years 7 21 – 24 years 8
7 – 8 years 8  24 years 10
 8 years 9
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 Component of
Employment Termination Compensation (cont.)

C Compensation Pay
(Uang Penggantian Hak)

a. Annual leave that have not been expired & taken

b. Cost or expenses for transporting the employee & family back to the point of hire
c. Compensation for housing allowance, medical, and healthcare:
15% × (𝑆𝑒𝑣𝑒𝑟𝑎𝑛𝑐𝑒 𝑃𝑎𝑦 + 𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝑃𝑎𝑦)
d. Others, as stipulated in work agreement, company regulation, or collective labor agreement

Detachment Pay
D
(Uang Pisah)

• Not regulated by Government

• Refers to work agreement, company regulation, or collective labor agreement
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 Multiplier factor in various
employment termination reason
Article in Severance Service Compen. Detachment
No Termination reason
Act 13/2003 Pay Pay Pay Money
Not entitled Not entitled
1 Grave violation 158 * Entitled Entitled
** **
Detained by the authority, but
2 not because of complaint filed 160 * 1x ** 1x Entitled Not entitled
by the company
Violation after received first,
3 second, and third warning 161 1x 1x Entitled Not entitled
letters consecutively
4 Voluntary resignation 162 Not entitled Not entitled Entitled *** Entitled
Change of company status
(merger, fusion, or company
ownership):
5 a. Employee is unwilling to 163.1 2x 1x Entitled Not entitled
continue the employment
b. Company is unwilling to 163.2 1x 1x Entitled Not entitled
continue the employment
* These articles were annulled by the Constitutional Court under the basis of presumption of innocence.
Based on Minister of Manpower Circular Letter, the company may terminate before the court verdict (PHK dengan Alasan Mendesak)
but need affirmation from Industrial Relations Dispute Settlement. (SE 13/MEN/Sj-Hk/I/2005)
** Severance Pay & Service Pay for such case usually 1x, but it must be agreed in a mutual agreement .
*** As Severance Pay & Service Pay on resignation are 0, the Compensation Pay is also 0 (SE B.600/MEN/Sj-Hk/VIII/2005). 5
 Multiplier factor in various
employment termination reason
Article in Severance Service Compen. Detachment
No Termination reason
Act 13/2003 Pay Pay Pay Money
Company is closed due to
financial losses for 2 (two)
6 164.1 1x 1x Entitled Not entitled
consecutive years, or force
majeure
7 Efficiency (redundancy) 164.3 2x 1x Entitled Not entitled

8 Company went bankrupt 165 1x 1x Entitled Not entitled

9 Employee passed away 166 2x 1x Entitled Not entitled

Retirement
a. Employee is included in 167.1 Not entitled Not entitled Entitled Not entitled
pension plan and the
benefit is not lesser than
Art. 167.5
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b. Employee is included in 167.2 Company Company Company Not entitled
pension plan, but the paid the paid the paid the
benefit is lesser than Art. variance variance variance
167.5
c. No pension benefit 167.5 2x 1x Entitled Not entitled

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 Multiplier factor in various
employment termination reason
Article in Severance Service Compen. Detachment
No Termination reason
Act 13/2003 Pay Pay Pay Money
Absent for 5 (five) consecutive
days without explanation, and
11 168 Not entitled Not entitled Entitled Entitled
has been properly summoned
twice in writing
Employee submit official
request to the industrial
12 169 2x 1x Entitled Not entitled
relations dispute settlement,
due to employer’s violation
Prolonged sickness for 12
months, or disabled due to
13 172 2x 2x Entitled Not entitled
work accident and unable to
perform work. ****
**** The employee who is prolonged sickness shall be paid as follows:
- First 4 (four) months : 100% of wage
- Second 4 (four) months : 75% of wage
- Third 4 (four) months : 50% of wage
- Subsequent months : 25% of wage

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 Tax on Compensation of Employment Termination

Latest update: 2009

Taxable Income
Tier Tax Rate
From To
Tier 1 0 50,000,000 0%
Tier 2 50,000,000 100,000,000 5%
Tier 3 100,000,000 500,000,000 15%
Tier 4 500,000,000  25%
amounts in IDR

• Tax on compensation of employment termination is final.

• It means the calculation is not related with the annual progressive income.