The currently sluggish global economy is forcing companies to alter their strategies in order that they become more efficient. Such efficiency, however, is usually achieved at the cost of employee numbers. Entering 2016, Indonesia’s oil-and-gas, mining, automotive, and electronic sectors were facing one of their most challenging ever periods. In February of 2016 alone, the Confederation of All-Indonesia Workers Unions (Konfederasi Serikat Pekerja Indonesia/KSPI) noted that 12,680 workers across Indonesia had had their employment terminated.[1] More surprising data was released by the Confederation ofIndonesian Workers Welfare Unions (Konfederasi Serikat Buruh Sejahterah Indonesia/KSBSI), who claimed that at least 300,000 workers across the Indonesian mining sector would face the termination of their employment as a result of the global fall in oil prices.[2]
 
The termination of large numbers of employees becomes necessary when companies attempt to introduce efficiency measures. However, it is commonly accepted that the laying off of workers does not only involve the businesses in question. In the larger context, redundancies also relate to issues of social welfare and purchasing power. A significant decline in either of these two areas will surely lead to an increase in poverty and the crime rate, as well as have an impact upon the national economy.
 
With this domino effect in mind, the termination of employment is one of the most highly-regulated matters in Law No. 13 of 2003on Labor (“Labor Law”). Although it is legally permitted, the termination of employment can only be performed under strict conditions, as stipulated in the Labor Law. Employers are required to comply with a rigid procedural framework, as well as to fulfill various monetary obligations regarding their employees.
 
With these various issues in mind, this week’s Indonesian Law Digest (ILD) will analyze and discuss the topic of employment termination. Our analysis will focus upon the following topics: