Termination of Employment and Sample Letter

Termination and Sample Letter – What does Sinaumed’s know about layoffs? For a worker the term layoffs may be an unpleasant thing, but in some conditions the company also needs to lay off employees to keep the company running stable. In the world of work, the relationship between employers and workers must run well, including when the employment relationship must be completed or ended. 

There are rules and ethics that every company needs to know, including workers also need to understand this. Please, Sinaumed’s, refer to this article to obtain information about Termination of Employment and examples of correct letters:  

Get to Know What Termination of Employment (PHK) Is

Termination of Employment (PHK) is a form of ending an employment relationship due to certain reasons that decide the rights and obligations between workers and the company or the owners and leaders of the company. In practice, companies that lay off workers must have reasons underlying the layoffs. Layoffs are an important matter in the world of work, so companies and workers who may be affected by it need to know.

Laws that govern layoffs

Due to the urgency, layoffs have statutory provisions that underlie them in labor regulations, including: Article 154A paragraph (1) of Law no. 13 of 2013 concerning Manpower (UU 13/2003), Law no. 11 of 2020 Concerning Job Creation (UU 12021), and its implementation is regulated in article 3 of Government Regulation No. 35 of 2021 Concerning Specific Time Work Agreements. Inside also discusses the rules for working hours, rest periods, and termination of employment (PP 35/2021). 

The principle of carrying out layoffs is that all parties in this case companies, workers, trade unions and the government try to prevent layoffs from occurring in accordance with Article 151 paragraph (1) Law 13/2003 jo. Article 37 paragraph (1) PP 35/2021). More about the PP 35/2021 Layoff Law Chapter V detailed as follows:

  1. Article 36 regulates various reasons that can underlie the occurrence of layoffs for workers. This reason for layoffs underlies the provisions for calculating the right to the impact that can be experienced by workers after being laid off.
  2. Articles 37 to 39 regulate the method of dismissal from the notification stage until the termination process is carried out within the company. If the dismissal does not reach an agreement between the employer and the worker, then the step that must be taken is through an industrial relations dispute settlement mechanism in accordance with the provisions of the law. 
  3. Articles 40 to 59 regulate matters resulting from layoffs, such as severance pay, gratuity pay during service, compensation for entitlements, and severance pay. The calculation is carried out based on the reason or basis for the dismissal of certain workers. 

International Labor Standards Regarding Layoffs

In addition to the laws above, international labor law instruments also recognize protection from the implementation of termination of employment which may occur arbitrarily, namely ILO Convention No. 158 of 1982 concerning Termination of Employment Relations which states important matters in the act of dismissal as follows:

  1. The basis for layoffs is that it must be done carefully because the decision to lay off workers can affect the family members they are responsible for. That is why the social effects of layoffs can have far-reaching consequences for the lives of workers and their families. That is why layoffs require caution. 
  2. An employee cannot be terminated unless there is a valid reason for such termination and has been regulated in the applicable laws and regulations in each country.
  3. Each country needs to regulate layoff actions which include the procedures for implementing them, the reasons for the layoffs, and the compensation that workers are entitled to get based on the type of reason for the layoffs. 

Causes of Employment Relations Ending

Upon imposing layoffs on a worker, the company must have a strong foundation to do so. Based on article 61 of Law 13/2003 jo. Law 11/2021 which regulates the causes for ending work agreements as follows:

  1. One worker has died
  2. The term of the work contract has ended according to what was agreed at the beginning of the work agreement
  3. Have completed a particular job or project
  4. There is a court decision or form of stipulation from an industrial relations dispute resolution institution that has permanent legal force
  5. There are certain conditions or events listed in the work agreement, company regulations, or cooperation agreements that can result in the end of an employment relationship
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Detailed explanations for the reasons for the layoffs are regulated in Article 15A paragraph (1) Law 13/2003 jo. Law 11/2021 and article 36 PP 35/2021 which also regulates reasons for layoffs can be allowed. 

Reasons Allowing Companies to Do Layoffs

Based on article 154A paragraph (1) Law no. 13 of 2003 concerning Manpower (UU 13/2003) jo. Law No. 11 of 2020 concerning Job Creation (UU 11/2021) and its derivative regulations, namely Government Regulation No. 35 of 2021 concerning Work Agreements for Specific Time, Outsourcing, Working Time and Rest Time, and Termination of Employment (PP 35/2021), in article 36 stipulates that layoffs are permitted for the following reasons:

  1. The company takes the form of a merger, consolidation, takeover, or separation of the company and the worker or laborer will not continue the employment relationship or an employer does not want to accept the worker or laborer
  2. The company implements a form of efficiency by closing the company or because the company suffers a loss
  3. The company closed because it suffered continuous losses within a period of 2 (two) years
  4. Company closed due to force majeure
  5. The company experienced a condition of delaying debt payment obligations
  6. The company went bankrupt
  7. There is a form of application for termination of employment submitted by workers or laborers because the employer has committed the following actions:
    • Harassing, abusing or threatening workers or labourers
    • Persuading or ordering workers or laborers to act contrary to statutory regulations
    • The company does not pay wages at the time specified in the work contract for 3 (three) consecutive months or more, even though the employer pays wages on time after that
    • Does not carry out obligations according to promises or contracts agreed by workers or laborers
    • Giving orders to workers or laborers to do work beyond what was agreed in the work contract
    • Giving work that is dangerous for the soul, safety, health and decency to workers or laborers, while the work is not stated in the work contract agreement
  8. There is a decision from the industrial relations dispute settlement institution so that the entrepreneur does not take action against the application submitted by the worker or laborer and decides to terminate the employment relationship
  9. Workers or laborers submit their resignation of their own volition, which must meet the following requirements:
    • Submit an application for resignation in writing no later than 30 (thirty) days prior to the commencement date of the resignation
    • Not bound by official ties
    • Continue to carry out its obligations until the date of resignation begins
  10. Workers or laborers are absent for 5 (five) working days or more consecutively without any written statement and accompanied by valid evidence with confirmation of summons from the employer 2 (two) times, either verbally or in writing
  11. Workers or laborers are proven to have violated the provisions stipulated in work agreements, company regulations, or collective bargaining agreements who have previously been given the first, second, and third warning letters consecutively for a maximum period of 6 (six) months, except for matters this has been stipulated otherwise in the employment agreement, company regulations, or collective bargaining agreement
  12. Workers or laborers cannot do work for 6 (six) months because they have been detained by the authorities on suspicion of committing a crime
  13. Workers or laborers experience prolonged illness or disability as a result of a work accident and are unable to carry out their work after exceeding the medical treatment limit for 12 (twelve) months
  14. Workers or laborers have entered retirement age
  15. Worker or laborer has died

Things That Make Companies Prohibited from Layoffs

Based on the provisions of article 153 paragraph (1) of the Job Creation Law No. 11/2020 regulates Employers who are prohibited from terminating workers or laborers for the following reasons:

  1. The worker is absent from work due to illness based on a doctor’s statement for a period not exceeding 12 consecutive months
  2. Workers are unable to carry out their work as a result of fulfilling state obligations in accordance with the provisions of the applicable laws and regulations
  3. Workers carry out worship according to the teachings of their religion
  4. Married workers
  5. Women workers who are pregnant, give birth, have an abortion, or are in the stage of breastfeeding their babies
  6. Employees have blood ties and/or marital ties with another worker in the same company
  7. Workers establish, become members or union officials, workers carry out union activities outside of working hours, or during working hours with the agreement of the company, or based on the provisions stipulated in work agreements, company regulations, or collective labor agreements
  8. Workers who report the company or parties to the authorities because of the company’s actions that have committed criminal acts
  9. There are differences in beliefs, religion, political beliefs, ethnicity, skin color, class, gender, physical condition, or marital status
  10. Workers experience permanent disability, are sick as a result of work accidents, or are sick because of work relations based on a doctor’s certificate whose recovery period is uncertain
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Furthermore, the more adab rules in paragraph (2) of this article which state that layoffs are carried out for the reasons above or in other words a violation of the layoff action still occurs, then the layoff process is null and void, then the employer is obliged to re-hire workers or laborers. concerned.

Compensation Entitled to Received by Workers Who Have Been Laid Off

If a worker is indeed laid off, then the employer is obliged to pay compensation in the amount according to the reason for the layoff. The types of compensation are severance pay, gratuity pay, compensation pay, and severance pay, with the detailed provisions as follows:

Severance pay

  1. Work period less than 1 year paid 1 month wages
  2. Work period of 1 year or more but less than 2 years paid 2 months wages
  3. Work period of 2 years or more but less than 3 years paid 3 months wages
  4. Work period of 3 years or more but less than 4 years paid 4 months wages
  5. Work period of 4 years or more but less than 5 years paid 5 months wages
  6. Work period of 5 years or more, but less than 6 years, paid 6 months wages
  7. Work period of 6 years or more but less than 7 years paid 7 months wages
  8. 7 years of service or more but less than 8 years paid 8 months wages
  9. 8 years of service or more paid 9 months wages

Service Time Award

  1. Work period of 3 years or more but less than 6 years paid 2 months wages
  2. Work period of 6 years or more but less than 9 years paid 3 months wages
  3. Working period of 9 years or more but less than 12 years paid 4 months wages
  4. Work period of 12 years or more but less than 15 years paid 5 months wages
  5. Service period of 15 years or more but less than 18 years are paid 6 months wages
  6. Service period of 18 years or more but less than 21 years are paid 7 months wages
  7. Work period of 21 years or more but less than 24 years paid 8 months wages
  8. Service period of 24 years or more is paid 10 months wages

Rights Compensation Money

  1. Annual leave that has not been taken and has not fallen into effect
  2. Expenses or return fees for workers and their families to the place where workers are accepted to work
  3. Other matters stipulated in the work agreement, company regulations, or the collective labor agreement of each company

Termination Letter Example

After understanding the explanation above, Sinaumed’s can understand the termination of employment and the following sample letter: 

LETTERHEAD

TERMINATION OF EMPLOYMENT RELATIONSHIP Number: 050/ PT. EX/PHK/AN/2022

Regarding: Letter of Termination of Employment or Letter of Termination of Work to the Honorable, Mr. Adam Bagyo On the spot

Yours faithfully,

Regarding the results of evaluating your performance over the past year, we assess that there has been no increase in performance or improvement in terms of effectiveness and discipline at work. Therefore we as the company decided not to continue the work contract or Termination of Employment (PHK) with Brother Adam.

Thus, starting from December 1, 2022, the working relationship between PT. EX with Brother Adam is declared finished or ended. On behalf of the company, we would like to thank you for the performance you have given to PT EX so far in any form.

Thus we convey this letter of termination of employment, thank you.

Medan, December 1, 2022 PT. EX

Roger HR Manager

 

LETTERHEAD

Number : 050/PT. EX/PHK/AN/2022

Hereby Notified Name : Adam Bagyo Position : Production Operator

PT. Ex decides to end the employment relationship with you as of December 1, 2021 which is in accordance with the end of the employment contract.

This decision was taken by considering several important matters in terms of the company’s unstable financial condition and the unequal number of employee quotas in terms of production effectiveness.

Thus we convey this Letter of Termination of Employment (PHK), for your attention and understanding, we thank you profusely.

Jakarta, December 1, 2022 Sincerely yours,

Roger HRD PT. Ex

So, that’s an explanation about Termination of Employment and an example of a letter that is correct and polite. Layoffs are bad news for workers, so companies need proper understanding to take care of this, especially severance pay, which must be given in accordance with applicable regulations. In addition, companies must also consider carefully if they want to lay off their employees.