Compensation and Benefits of Indonesian Employees - Probation Period & Employment Termination
A probation period is a trial period that allows employers to evaluate a new hireās performance, attitude, and suitability before making them a permanent employee. Itās also a chance for employees to assess if the job and work environment meet their expectations.
Probation Period Law
Newly hired employees are placed on a probation period of no longer than three months, and employees must not be paid less than the minimum wage.
Article 60 of Law No. 13 of 2003 (Pasal 60 UU No.13 Tahun 2003) concerning Manpower explains that during a probationary period, an employment agreement for an indefinite period may require a probationary period of no more than 3 months, and employers are prohibited from paying wages below the applicable minimum wage.
This means that employees who are on probation have the right to receive wages in accordance with the UMK where the company operates.
Termination of employment (Pemutusan Hubungan Kerja / PHK) is the official end of a working relationship, initiated by either the employer or employee.
Employment Termination Law
The law prohibits unilateral layoffs. If layoffs are unavoidable, the law requires employers to provide severance pay.
Based on the provisions of Article 81 number 16 (Pasal 81 angka 16 UU Cipta Kerja) the Job Creation Law which contains the new Article 61 of Law No. 13 of 2003 (Pasal 61 UU No.13 Tahun 2003) or known as the Employment Law, an employment agreement can end if:
1. Worker dies
2. The term of the employment contract has ended
3. Completion of a certain job
4. There is a court decision or determination of an industrial relations dispute resolution institution that has permanent legal force
5. There are certain circumstances or events stated in the employment agreement, company regulations, or collective work agreement that can cause the employment relationship to end
Severance Pay for Unilateral Termination of Employment in the Job Creation Law (UU Cipta Kerja)
| Work Period | Monthās of Wages |
| Work period of less than 1 (one) year | 1 (one) month's wages |
| Work period of 1 (one) year or more but less than 2 (two) years | 2 (two) month's wages |
| Work period of 2 (two) years or more but less than 3 (three) years | 3 (three) month's wages |
| Work period of 3 (three) years or more but less than 4 (four) years, | 4 (four) month's wages |
| Work period of 4 (four) years or more but less than 5 (five) years | 5 (five) month's wages |
| Work period of 5 (five) years or more, but less than 6 (six) years | 6 (six) month's wages |
| Work period of 6 (six) years or more but less than 7 (seven) years | 7 (seven) month's wages |
| Work period of 7 (seven) years or more but less than 8 (eight) years | 8 (eight) month's wages |
| Work period of 8 (eight) years or more | 9 (nine) month's wages |
Note : The method of calculating severance pay is influenced by the reason for the layoff. For example, the method of calculating severance pay received by workers who are laid off due to a merger is different from the calculation of severance pay for layoffs because the company is closed and making losses, and so on.
