Legal Literacy - This article discusses the situation of Workers being terminated by the Company due to Efficiency reasons. This Efficiency reason is not a way to deceive and/or defraud Workers, but rather a good and solutive alternative (win-win solution) that the Company is trying to provide and will grant rights to Workers who have worked for a long time and/or contributed to the Company. Besides that, the practice of Termination of Employment (PHK) like this actually creates problems between the parties, namely the Company and/or the Workers. The problems that often arise concern the rights that the Company feels have been sufficiently given and also the rights that the Workers feel are not sufficiently received. Therefore, this article will clearly and concretely explain the Workers' Rights When the Company Conducts Termination of Employment (PHK) Due to Efficiency Reasons in accordance with the provisions of the Law and Regulations in force in Indonesia.
Rules of Termination of Employment for Efficiency Reasons According to the Job Creation Law
The regulation of Termination of Employment (PHK) for Efficiency reasons has been regulated in the provisions of Article 154 paragraph 1 letter b of the Job Creation Law, which states as follows:
Termination of employment can occur for the following reasons:
- The company carries out efficiency measures followed by the closure of the company or not followed by the closure of the company due to the company experiencing losses;
Rules of Termination of Employment for Efficiency Reasons According to PP 35/2021
In addition, the termination of employment as stated above has a different procedure, in which the further provisions regarding the Termination of Employment (PHK) are regulated in Government Regulation 35/2021 within the provisions of Article 43 paragraph (2) which states the following:
Article 43 paragraph 2:
The employer may terminate the employment of a worker/laborer due to the company's closure for reasons other than the company incurring losses, in which case the worker/laborer is entitled to:
- Severance pay of 1 (one) time the provisions of Article 40 paragraph (2);
- Long service pay of 1 (one) time the provisions of Article 40 paragraph (3); and
- Compensation pay in accordance with the provisions of Article 40 paragraph (4)
The Termination of Employment as stipulated in Article 43 paragraph (2) above must be proven by the existence of a true potential, namely by stating that a company has experienced a decrease in productivity or a decrease in profits that has an impact on the company's operations. Regarding the Termination of Employment (PHK) as mentioned in Article 43 paragraph (2), the intent and reasons for the Termination of Employment (PHK) must be notified by the Employer to the Employee in the form of a Notification Letter and conveyed legally and appropriately no later than 14 (fourteen) working days before the Termination of Employment (PHK) is carried out, as regulated in the provisions of Article 37 paragraph (2) and paragraph (3) of Government Regulation 35/2021.
In order for the issues that arise as explained above to be carefully digested, an example will be given as follows:
“Gerald is an employee at Company X domiciled in the City of Bekasi and has worked for 16 years holding the position of Admin Officer at Company X, and Gerald receives a monthly salary of Rp. 4,500,000.00.- (four million five hundred thousand rupiah). In short, Company X will terminate Gerald's employment (PHK) for reasons of Efficiency. So, what are the rights that Gerald should receive when Company X terminates Gerald's employment?”
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