When news of termination arrives, most employees immediately focus on one question: how much severance will I receive? That amount matters. But beyond severance, there are other rights that are equally important and often overlooked, sometimes without employees even realizing what they have missed.
It is not only about whether the termination has followed the proper procedure. What is often overlooked is a more fundamental question: what other rights still belong to me after this?
Under Government Regulation Number 35 of 2021, termination of employment is not merely the end of a working relationship. It is also the point where the rights and obligations of both parties must be settled clearly. This means that after an employee receives notice of termination, the employer must still calculate and settle any remaining rights, including financial entitlements, employment documents, and access to social security benefits where the applicable requirements are met.
Financial Entitlements Beyond Severance
Severance pay is not the only financial obligation a company carries when terminating an employee. Indonesian employment law requires employers to account for several additional components, each of which must be calculated and paid in full.
Under Government Regulation Number 35 of 2021, when termination occurs, the employer is required to pay severance pay and or long service pay, as well as compensation for outstanding entitlements. The amount of each component may differ depending on the reason for termination, length of service, and the applicable legal provisions. For that reason, employees should not only look at the final amount offered, but also the basis of the calculation.
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Outstanding wages.If there are salaries, overtime payments, fixed allowances, current month allowances, or other payments that have already become the employee’s right but remain unpaid at the time of termination, those amounts must still be paid. Wages that have already accrued do not disappear simply because the employment relationship has ended. If there is unpaid overtime, the calculation should also refer to the provisions on overtime working hours and overtime pay under Government Regulation Number 35 of 2021. - ›
Long service recognition payment.Employees who have reached a qualifying period of service may be entitled to long service pay. This payment recognizes the employee’s length of service and contribution to the company. Under Government Regulation Number 35 of 2021, long service pay is calculated based on certain periods of service and increases in accordance with the length of employment. This component is separate from severance pay and should not be merged into a single figure without a clear breakdown. - ›
Compensation for outstanding entitlements.This component covers rights that have already arisen but have not yet been enjoyed by the employee. Under Government Regulation Number 35 of 2021, compensation for outstanding entitlements may include unused annual leave that has not expired, transportation costs for the employee and their family to return to the place where the employee was accepted to work, and other entitlements stipulated in the employment agreement, company regulation, or collective labor agreement. Benefits such as housing, medical support, or other facilities should therefore be checked against the applicable employment documents or company policies. - ›
Unused annual leave.Any remaining annual leave that has not been used may be converted into monetary value, as long as the leave has not expired under the applicable rules. Employees should request their final leave balance in writing and compare it with attendance records or the company’s internal system.
These components should not be treated as substitutes for one another. Where the requirements are met, each component must be calculated separately and transparently. Employees should also ensure that the wage basis used in the calculation is correct, particularly whether the calculation is based on basic salary and fixed allowances as regulated under Government Regulation Number 35 of 2021.
Fixed-Term Contract Employees: Rights That Are Often Misunderstood
A common misconception among fixed-term contract (“PKWT”) employees is that the end of a contract means the end of all entitlements. That is not the case under Indonesian law.
Under Government Regulation Number 35 of 2021, particularly Articles 15 to 17, PKWT employees remain entitled to compensation when their employment relationship ends, provided that they have worked for at least 1 continuous month. This compensation is paid when the PKWT ends. If the contract is extended, compensation is first paid when the initial PKWT period ends, and then paid again when the extended period ends.
The amount of PKWT compensation is calculated based on length of service. For a PKWT of 12 continuous months, the employee is entitled to compensation equal to 1 month of wages. If the period of service is less than or more than 12 months, the calculation is made proportionally. The wage basis used is basic salary and fixed allowances. If the company uses a different wage structure, the calculation must follow the applicable provisions under Government Regulation Number 35 of 2021.
A common source of misunderstanding is the failure to distinguish between PKWT compensation and termination related entitlements. PKWT compensation is a specific right for fixed term employees. Meanwhile, Article 40 of Government Regulation Number 35 of 2021 regulates the components of rights in the event of termination, namely severance pay, long service pay, and compensation for outstanding entitlements. Compensation for outstanding entitlements may include unused annual leave that has not expired, transportation costs for the employee and their family to return to the place where the employee was accepted to work, and other rights stipulated in the employment agreement, company regulation, or collective labor agreement.
The provisions under Articles 40 to 43 become relevant when the employment status or the reason for the end of employment needs to be examined more carefully. For example, an employee may be labelled as a PKWT employee, but the work performed may actually be permanent in nature. Another example is when the contract does not end merely because the agreed period has expired, but because of changes in the company’s condition. In such situations, employees should confirm whether their rights are limited to PKWT compensation, or whether other components must also be calculated.
For certain circumstances, Government Regulation Number 35 of 2021 differentiates employee entitlements based on the reason for termination. In the event of a merger, consolidation, or separation of a company, employees may be entitled to severance pay, long service pay, and compensation for outstanding entitlements under Article 41. In the case of a company acquisition, the calculation refers to Article 42, including where the acquisition results in changes to working conditions that are detrimental to the employee. For efficiency measures, Article 43 distinguishes between efficiency due to company losses and efficiency intended to prevent losses, which may affect the amount of severance pay received.
For PKWT employees, several points are often overlooked:
- ›A minimum of 1 full month of continuous work may already give rise to the right to PKWT compensation.
- ›PKWT compensation is separate from unpaid wages, overtime, allowances, or other outstanding financial rights.
- ›If the contract is ended before the agreed period expires, the employee should request a written explanation of the reason and the basis of the calculation.
- ›If the end of employment is connected to a merger, consolidation, separation, acquisition, or efficiency measure, the employee should check whether the termination provisions under Government Regulation Number 35 of 2021 are also relevant.
- ›If PKWT is used for work that is actually permanent in nature, the employee’s employment status may need to be reviewed before accepting the company’s final calculation.
Understanding whether the employment relationship is genuinely based on PKWT or should instead be treated as indefinite term employment, or PKWTT, is a crucial first step before reviewing what rights may be claimed. For fixed term employees, what matters is not only when the contract ends, but also why the employment relationship ends, whether the compensation has been calculated correctly, and whether there are other rights that the company must still pay.
Employment Documents and BPJS Ketenagakerjaan Benefits
Rights after termination are not limited to money. There are also non financial rights that are equally important, but often not requested by employees simply because they do not know these rights exist.
An employment certificate (surat keterangan kerja) is a document the company is legally obligated to provide. This document may be needed when applying for a new job, applying for credit, proving work experience, or fulfilling other administrative requirements. Employees should also request copies of documents related to the termination, including the termination notice, breakdown of entitlements, proof of payment, and any termination settlement document where applicable.
Government Regulation Number 35 of 2021 provides that if termination cannot be avoided, the intention and reason for termination must be notified by the employer to the employee and or labor union in the form of a written notice. In principle, the notice must be delivered no later than 14 working days before the termination. If the termination occurs during the probationary period, the notice must be delivered no later than 7 working days before the termination. If the employee does not object to the termination, the employer must also report the termination to the relevant manpower authority.
Regarding BPJS Ketenagakerjaan, employees who are terminated and meet the applicable requirements may claim certain benefits, such as Old Age Security (“JHT”). For Job Loss Security (“JKP”), the benefit does not automatically apply to every form of employment termination. JKP has its own eligibility requirements and may not apply in certain circumstances, including resignation, retirement, death, total permanent disability, or the expiry of a PKWT contract due to the end of the agreed term.
Before submitting any claim, employees should confirm that their membership status is active, the employer’s data is correct, the reported wage is accurate, and the required termination documents are available. For JKP, employees should also pay attention to the minimum participation period and contribution requirements under the applicable regulations.
What to Review Before Signing Any Termination Document
Pressure to sign documents immediately after termination is one of the most common situations employees face. However, signing too quickly may result in missing the opportunity to review rights that could still be protected or claimed.
Before signing any document, employees should ensure that the reason for termination is clearly written and consistent with the applicable legal provisions. Under Government Regulation Number 35 of 2021, the reason for termination directly affects the components and amount of rights received by the employee. For example, termination due to efficiency, company closure, company merger, employee misconduct, prolonged illness, retirement, or other reasons may lead to different calculations.
Employees should also pay attention to the date on which the termination notice is received. If the employee objects to the termination, Government Regulation Number 35 of 2021 gives the employee the opportunity to submit a written objection with reasons within 7 working days after receiving the notice. If there is a disagreement, the matter should first be resolved through bipartite negotiation. If no agreement is reached, the dispute may proceed through the industrial relations dispute settlement mechanism.
Pre-Signature Checklist
- ✓Is the reason for termination clearly stated and consistent with the applicable legal basis?
- ✓Has your employment status been correctly identified as PKWT or PKWTT?
- ✓Does the termination notice comply with the notice period required under Government Regulation Number 35 of 2021?
- ✓Have all entitlement components been itemized one by one, including severance pay, long service pay, compensation for outstanding entitlements, unpaid wages, overtime, and unused leave?
- ✓Is the wage basis used in the calculation correct, particularly in relation to basic salary and fixed allowances?
- ✓Does the reason for termination match the amount of entitlements offered by the company?
- ✓Does the document contain any clause requiring the employee to release all future claims?
- ✓Have all documents to be signed been provided in advance as copies?
- ✓Are proof of payment and a detailed calculation of entitlements provided in writing?
- ✓Have BPJS Ketenagakerjaan status, JHT, and possible JKP eligibility been checked before the termination settlement is considered final?
If there is any uncertainty about the content of the document, employees should request time to review it or seek advice first. There is no reason for an employee to sign a document without understanding its content, consequences, and calculation of rights. A termination document is not merely an administrative formality. It is an important basis for ensuring that all rights have been properly calculated and settled.
Termination is a stressful moment. It is natural for employees to focus first on severance pay. But after that, it is important to examine whether all rights have been calculated, whether the documents received are complete, and whether every clause in the document is truly understood. Employee rights after termination extend well beyond a single severance figure. Understanding the full scope of what you are entitled to is the first step toward ensuring those rights are actually fulfilled.
