Overview

Normatively speaking, Law No. 13 of 2003 on Manpower, as amended by Regulation of Government in Lieu of Law (Peraturan Pemerintah Pengganti Undang-Undang – “Perppu”) No. 2 of 2022 on Job Creation (“Perppu CK”) (collectively referred to as “Law 13/2003”) mandates that employment terminations (Pemutusan Hubungan Kerja - “PHK”) should be avoided at all costs by employers, employees, relevant labor unions (“Unions”) and the government.^[1] However, in reality, some employers have no choice but to terminate their employees for various reasons, including in situations in which their companies sustain serious economic losses or for reasons of efficiency.^[2]