In Legal Updates, Uncategorized

The public understanding of the Employment Termination (PHK), as of termination taken unilaterally by the company is the wrong thing. Referring to the Labor Law,  a layoff is a termination of employment for a particular issue that resulted in termination of rights and obligations between employees and companies. Thus, layoffs may occur because of the initiative of the company or the employees concerned.

Either done by the employee or carried out by the company, layoffs must comply with the provisions stipulated in Law No. 13 of 2003 on Manpower (Labor Law) and the existing regulations in a Company. In the case of layoffs, it is begun with the resignation of the employee. it should also consider the provisions contained in the Employment Law and the regulations applied in the company.

However, if the layoff is an initiative of the company, the reasons for the layoff  should be clarified.. Are there violations carried out by the employees or are they laid off because of other reasons, such as the employee reaches retirement age, the efficiency, corporate action, and the company declared bankruptcy or closure of the company as well as other allowed reasons.

A layoff process is not always able to run smoothly and fully accepted by the parties. In such a case can layoffs be done?
Layoffs can still occur as long as they have been through a mechanism as stipulated in in Law No. 2 of 2004 concerning Industrial Relations Dispute Settlement ( PHI/ IRDS Law). Layoffs conducted in the absence of an agreement or stipulation of PHI institutions are null and void.

As long as there is no agreement on layoffs, the occupational relationship between the company and employees still  exists, so that the parties  should fulfil all of their obligations  respectively. Consequently, it’s not accurate to say that the layoffs are done unilaterally, as it is for those who feel aggrieved are still able to retain the right to file a legal action as stipulated in the PHI Law. Throughout the lack of determination or decision of PHI, occupational relationship between the company and its employees remain existed

However, PHI Decision/Determination is not always needed. There are some circumstances where layoffs could still occur even if there is no agreement or determination of PHI institutions. The circumstances are as follows:

  1. Employees are still on probation, previously stipulated in writing ;
  2. The employees filed a resignation request, in writing, of their own accord without any indication of the pressure / intimidation from employers; the termination of employment is in accordance with the employment agreement in specified time previously;
  3. The employee reaches retirement age in accordance with the provisions in employment contracts, company regulations, collective labor agreements, or legislation; or
  4. The employee dies.

BP Lawyers can help you
We can assist you in providing the best solution in the process of drafting the agreement in order to minimize the possibilities of disputes related to the agreement. You can contact us at or +62821-1234-1235

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