Employee Termination & Severance Indonesia 2026
Terminating employees in Indonesia (PHK - Pemutusan Hubungan Kerja) requires following specific legal procedures and paying proper severance.
Termination Types
Termination Categories
Different types of employment termination
| Feature | Employer-Initiated Company decision | Employee Resignation Voluntary | End of Contract PKWT expiry | Serious Misconduct Immediate dismissal |
|---|---|---|---|---|
| Examples | Redundancy, poor performance | Employee choice | Contract term ends | Theft, violence, fraud |
| Severance | Full or partial | Compensation only | Compensation payment | None (usually) |
| Notice | Required | 30 days typically | Per contract | Not required |
| Process | Formal procedure | Resignation letter | Automatic unless renewed | Investigation required |
Severance Components
Severance in Indonesia typically has three components:
- Uang Pesangon (UP) - Base severance pay
- Uang Penghargaan Masa Kerja (UPMK) - Long service pay
- Uang Penggantian Hak (UPH) - Compensation for unused benefits
The amount depends on reason for termination and years of service.
Severance Calculator
Severance Estimate
Calculate potential severance payment
Default Inputs
- Monthly Salary (IDR)
- 15,000,000 IDR
- Years of Service
- 5 years
- Termination Reason
- Redundancy/Efficiency
- Unused Annual Leave (days)
- 5 days
Estimated Result
Estimated total
UP: 5 months × 1, UPMK: 2 months
Rp 123.250.000
Severance Tables
Uang Pesangon (UP) - Base Severance
| Service Period | Months |
|---|---|
| < 1 year | 1 month |
| 1 to < 2 years | 2 months |
| 2 to < 3 years | 3 months |
| 3 to < 4 years | 4 months |
| 4 to < 5 years | 5 months |
| 5 to < 6 years | 6 months |
| 6 to < 7 years | 7 months |
| 7 to < 8 years | 8 months |
| 8+ years | 9 months |
UPMK - Long Service
| Service Period | Months |
|---|---|
| 3 to < 6 years | 2 months |
| 6 to < 9 years | 3 months |
| 9 to < 12 years | 4 months |
| 12 to < 15 years | 5 months |
| 15 to < 18 years | 6 months |
| 18 to < 21 years | 7 months |
| 21 to < 24 years | 8 months |
| 24+ years | 10 months |
Severance by Reason
Severance Entitlements
Based on termination reason
| Feature | Company Closure | Redundancy | Company Loss (2 years) | Force Majeure | Retirement | Serious Misconduct | Resignation |
|---|---|---|---|---|---|---|---|
| UP | 1× full | 1× full | 0.5× | 0.5× | 1.75× | None | None |
| UPMK | 1× full | 1× full | 1× full | 1× full | 1× full | None | Compensation only |
| UPH | Yes | Yes | Yes | Yes | Yes | Only unused leave | Unused leave |
Termination Process
Termination Procedure
Steps for legal termination
Warning System
For performance/conduct issues, use progressive discipline:
- First Warning (SP1) - Written, valid 6 months
- Second Warning (SP2) - Written, valid 6 months
- Third Warning (SP3) - Final warning
After SP3, termination is possible with reduced severance.
Note: For serious misconduct, immediate termination possible without warnings.
Serious Misconduct
What Qualifies?
Serious Misconduct Examples
Grounds for immediate dismissal
criminal
breach
policy
attendance
PKWT Compensation
For fixed-term contracts (PKWT), upon expiry:
Compensation Formula
| Contract Length | Compensation |
|---|---|
| Each month of service | 1 day's wages |
| Example: 12 months | 12 days' wages |
| Example: 24 months | 24 days' wages |
If PKWT terminated early by employer: - Must pay remaining contract value - Plus compensation for service period - Unless for serious misconduct
Documentation
Required Documents
| Document | Purpose |
|---|---|
| Termination letter | Official notice |
| Severance calculation | Detailed breakdown |
| Bipartite minutes | Meeting records |
| Agreement | Mutual consent |
| Receipt | Proof of payment |
| Reference letter | For employee (optional) |
Common Mistakes
| Mistake | Impact |
|---|---|
| No written warnings | Can't prove cause |
| Skipping bipartite | Process invalid |
| Underpaying severance | Legal claims |
| Immediate termination without grounds | Must reinstate or pay full |
| Not documenting | Weak legal position |
Common Questions
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