A New Era in Employment Law
This tool provides an interactive guide to Indonesia's employment termination framework under the Job Creation Law (UU Cipta Kerja) and its key regulation, PP 35/2021. The law has shifted from rigid protectionism to a more pragmatic, formula-driven system. This application helps employers and employees understand their rights and obligations by calculating potential severance packages and explaining the specific rules for various termination scenarios.
Interactive Severance Calculator
Your Estimated Entitlements
Severance Pay (UP)
IDR 0
Long Service Pay (UPMK)
IDR 0
Compensation for Rights (UPH)
Unused Leave + Costs
Separation Pay (Uang Pisah)
As per Agreement
TOTAL ESTIMATED PAYOUT
IDR 0
Termination Scenarios Explorer
Mergers, Acquisitions & Separations
The law provides specific compensation rules for corporate restructuring. In a merger, consolidation, or separation, if either the employer or employee is unwilling to continue the relationship, it is treated as a standard business termination, entitling the employee to a full 1x Severance Pay (UP) package.
Acquisitions have two distinct scenarios. A standard termination due to the acquisition (e.g., redundancy) grants a 1x UP package. However, if the acquisition leads to a change in employment terms and the employee refuses to continue under the new terms, the compensation is significantly reduced to 0.5x UP. This distinction is a critical strategic point for both employers and employees during a takeover.
Understanding the Law: Key Concepts
Termination compensation generally consists of three parts: 1. Severance Pay (Uang Pesangon - UP): Based on length of service. 2. Long Service Award Pay (Uang Penghargaan Masa Kerja - UPMK): An additional award for employees with over 3 years of service. 3. Compensation for Rights (Uang Penggantian Hak - UPH): Covers unused annual leave and repatriation costs. The new law removed the previous 15% housing and medical allowance from UPH.
The core of the new law is a multiplier system that adjusts the amount of Severance Pay (UP) based on the specific, legally defined reason for termination. This creates a tiered system of liability, with multipliers ranging from 0x (for employee fault) to 0.5x (for business distress), 1x (for standard business reasons), and up to 2x (for social protection cases like death). The legal "battleground" has shifted from contesting the termination itself to contesting the *reason* for it, as this directly determines the payout.
A Mutual Termination Agreement (PB) is a contract to end employment amicably. However, it is subject to labor law's protective principles. A PB that provides compensation *below* the mandatory statutory minimum is legally precarious and likely void by operation of law, as severance entitlements are considered a matter of public order. To be legally binding and enforceable like a court judgment, a PB must be registered with the Industrial Relations Court. The true value of a PB for an employer is not to reduce costs, but to achieve legal finality and avoid future litigation.
Strategic Recommendations
- Emphasize Proactive Documentation: Employers must meticulously document the business rationale and evidence supporting their chosen grounds for termination. A robust evidentiary file is the best defense against a legal challenge.
- Utilize Mutual Agreements for Certainty, Not Circumvention: Use Mutual Termination Agreements (PB) to achieve legal finality, not to unlawfully reduce statutory severance. The best practice is to offer a fully compliant package in exchange for a final settlement.
- Navigate Corporate Restructuring with Precision: In M&A contexts, be acutely aware of the different scenarios and their impact on severance calculations, especially when planning to change employment terms post-acquisition.