Job Creation Law Scraps 5 Articles on Severance Pay in Manpower Law

TEMPO.CO, Jakarta - The House of Representatives (DPR) has enacted the omnibus bill on Job Creation into Law through a plenary session on Monday, October 5, 2020. This omnibus law removed many articles in several laws, including the Manpower Law and the Spatial Planning Law.

For Law No. 13 of 2003 concerning Manpower, the Omnibus Law has at least removed five articles related to severance pay. First, it was Article 162 regarding severance pay for workers who submit resignation.

Second, the law abolished Article 163 in the Manpower Law which talked about the provision of severance pay, reward pay, and compensation money if there is a change in status, merger, consolidation, or ownership changes in the company.

The law also diminished Article 164 and 165 of the Manpower Law which regulated the company's obligation to grant severance pay if they terminate employees or conduct layoffs.

In Article 164, a company was allowed to terminate the work agreement if it closed due to continuous losses for two years or a force majeure. In this article, layoffs could also be carried out for efficiency reasons. Meanwhile, Article 165 highlighted layoffs if the company went bankrupt.

The last article that was removed in Job Creation Omnibus Law was Article 166 of the Manpower Law concerning the provision of severance pay to the heirs or family if an employee dies.

Read also: Job Creation Law Will Spark More Agrarian Conflicts, Observer Says 

SYAILENDRA PERSADA