Termination of Employment (PHK) refers to the cessation of the employment relationship on specific grounds that result in the termination of rights and obligations between the Employee/Worker and the Employer. Termination may occur for various reasons as provided under Article 36 of Government Regulation No. 35 of 2021 on Fixed Term Employment Contract, Outsourcing, Working Hour and Rest Period, and Termination of Employment (“PP 35/2021”). A common basis for termination arises where an Employee/Worker breaches the provisions of the Employment Agreement, Company Regulations, or Collective Labor Agreement, following the prior issuance of the first, second, and third consecutive written warnings.
Essentially, Employers, Employees/Workers, Labor Unions, and the Government are required to make every reasonable effort to prevent termination. Nevertheless, where termination is unavoidable, the Employer shall duly notify the Employee/Worker of the intention to terminate and the grounds therefor.
Pursuant to Article 37 (3) of PP 35/2021, any notice of termination must be issued in the form of a notification letter and duly submitted by the Employer upon the Employee/Worker and/or the Labor Union no later than 14 (fourteen) business days prior to the effective date of termination. Paragraph (4) further stipulates that, where termination is made during the probationary period, such notice must be submitted no later than seven (7) business days prior to the termination.
If the Employee/Worker has received the notification letter and does not object to the termination, the Employer shall be obliged to report the implementation of such termination to the ministry administering the government affairs in the field of manpower and/or the provincial or regency/municipal manpower office.
Article 39 of PP 35/2021 stipulates that, if an Employee/Worker rejects a termination, he or she must submit a written objection, stating the grounds thereof, within 7 (seven) business days of receiving the termination notice. In the event of a disagreement concerning the termination, the matter shall first be resolved through bipartite negotiations between the Employer and the Employee/Worker and/or the Labor Union. If such negotiations fail to achieve a settlement, the dispute shall be referred to the industrial relations dispute resolution mechanism in accordance with the prevailing laws and regulations.
Accordingly, the notification procedures and objection mechanisms governing Termination of Employment under PP 35/2021 reinforce the principles of transparency, legal certainty, and protection for both Employees/Workers and Employers. By setting out clear procedures from notification and the opportunity to submit objections to the resolution of disputes termination processes are intended to be conducted fairly, proportionately, and in full compliance with the applicable laws and regulations.
