Employment Termination Mechanism According to Indonesian New Job Creation Law [2021] was first published in Indonesia Global Law Firm.
]]>The enactment of Law No. 11 of 2020 on Job Creation (“Job Creation Law”) has changed most of the employment provisions previously stipulated in Law No. 13 of 2003 on Employment (“Employment Law”) especially on employment termination procedure.
Termination may be due to downsizing or restructuring in order to reduce costs. It could also occur if one’s performance fails repeatedly and only so much time will allow before termination becomes inevitable. An employee may also find themselves unemployed because they are unable to comply with certain regulations set forth in their contract such as those prohibiting potential liability risks; violating trade secrets or copyright violations; refusing job reassignment requests on reasonable grounds; failing drug tests despite providing evidence of rehabilitation twice within six months after first test result was confirmed negative; and any illegal actions including but not limited too theft, violence against persons/property and discrimination claims.
The following are other reasons an employer might offer for employment termination:
In addition to the reasons for employment termination as referred to above, other reasons for employment termination may be determined in employment agreements, company regulations, or collective labor agreements.
Basically both the Job Creation and Labor Law always seek to avoid layoffs, however if layoffs can not be avoided, according to Article 151 paragraph (2) of the Job Creation Law:
“(2)In the event that employment termination is inevitable, then the purpose and reason for employment termination shall be notified by the employer to employees and/or workers/labor union.”
So if the employer wants to do layoffs, then the employer first informs the purpose and reason for the layoffs to employees and/or unions/trade unions. After receiving the notice, employees can reject the layoffs, and bipartite negotiations between employer and employees must be conducted. If the bipartite negotiations fail, a settlement can be made in accordance with the mechanisms set forth in the Law No 2 of 2004 on Industrial Relations Dispute Resolution, as stated in Article 151 clause (3) and (4) Job Creation Law that states:
“(3)In the event that an employee has been notified and rejects termination of employment, the settlement of termination of employment shall be done through bipartite negotiations between the employer and the employee and/or the workers/labor union.
(4)In the event that the bipartite negotiations as referred to in paragraph (3) do not obtain an agreement, termination of employment shall be carried out through the next stage in accordance with the mechanism of settlement of industrial relations disputes.”
To protect the company, the company is obliged to make the following documents:
There are many anticipated regulations that will impact the contents of this publication. The content in this publication can and may change pending the issuance of various expected changes as per The Job Creation Law’s provisions.
Author: Rini Handayani, S.H.
Employment Termination Mechanism According to Indonesian New Job Creation Law [2021] was first published in Indonesia Global Law Firm.
]]>Duration of Indonesian Temporary or Fixed Term Employment Agreement was first published in Indonesia Global Law Firm.
]]>The company’s employment agreements are the most important thing when accepting a new employee. Employment contracts between employers and employees outline what rights each party has, as well as any obligations they have to uphold.
It’s important to have an employment agreement in place. There are two different types of agreements: time-limited and indefinite. The difference is that with an indefinite employment contract, employees may be subject to probationary periods or notice requirements even if they’re not expressly stated by the employer; but this does depend on the company’s industry as some industries require employees go through predetermined probation before full hiring procedures can take place (such as law enforcement).
On the other hand, a definite employment contract can only be made for certain jobs that according to the type and nature or activities of the work will be completed within a certain time.
The characterization of fixed term or definite employment agreement in accordance to Article 59 of Law no 13 of 2013 on Manpower (Manpower Law) that has been amended by Law No. 11 of 2020 (Job Creation Law) namely:
The issuance of the Job Creation Law, revises the employment period in the fixed term employment agreement stipulated in Article 59 of Manpower Law. Previously, the employment period is a maximum of 2 (two) years, extended 1 (one) year and can be renewed 1 (one) time and a maximum of 2 (two) years. Renewal of definite period employment agreement can only be held after exceeding 30 (thirty) days grace period since the expiration of said employment agreement.
In connection with the issuance of Job Creation Law and Government Regulation of the Republic of Indonesia Number 35 of 2021 on Fixed Term Time Employment Agreements, Outsourcing, Working Hours and Breaks, and Employment Termination (PP 35/2021) the working period in a fixed term / definite period employment agreement is amended. Article 8 PP 35/2021 states that the working period can be made for a maximum of 5 (five) years, provided that the extension does not exceed 5 (five) years. The working period of a fixed term employment agreement starts when the employment is effective.
In addition to the duration change above, at the end of the employment employers are obliged to compensate workers with the calculations listed in PP 35/2021.
Author: Ine Nurhayati, S.H., M.H.
Duration of Indonesian Temporary or Fixed Term Employment Agreement was first published in Indonesia Global Law Firm.
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