pesangon

Pesangon is severance pay required by Indonesian labor law to be paid by an employer to an employee when the employment is terminated by the employer for reasons not attributable to the employee, such as downsizing, restructuring, business closure, or other non-disciplinary terminations. It is part of a three-component compensation package commonly referenced in Indonesian regulations, which also includes uang penggantian hak (compensation for rights) and uang penghargaan masa kerja (long-service award). Pesangon serves to cushion the employee against abrupt loss of employment, while the other components address accrued rights and loyalty for the period of service.

Eligibility and scope: The entitlement generally applies to employees who have been terminated by the employer for reasons beyond the employee’s control, and who meet the service requirements set out in the law or applicable regulations. It does not apply in situations such as employee resignation or dismissal for disciplinary reasons due to fault. The precise applicability can depend on the type of termination and the terms of employment, including whether a contract is permanent or fixed-term and any relevant collective agreements.

Calculation and amounts: The law provides formulas and minimum standards for the three components, with pesangon typically tied to tenure and wages. The exact amounts can be complex and are often specified or supplemented by implementing regulations or collective bargaining agreements. In practice, employers may calculate pesangon based on years of service and last drawn wages, while uang penggantian hak and uang penghargaan masa kerja are calculated according to tenure and earned rights.

Enforcement and settlement: Payments are usually settled through a formal agreement or settlement document between the employer and employee, and noncompliance can lead to disputes or legal action before labor authorities.