Indonesia Severance Pay Calculator
Calculate severance pay (pesangon), long service pay (UPMK), and leave compensation under Indonesia's Job Creation Law and PP 35/2021. Select from 19 termination reasons with accurate multipliers.
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Indonesian Severance Pay Explained
Indonesian labor law provides robust severance protections for permanent (PKWTT) employees. Under the Job Creation Law (UU Cipta Kerja No. 11/2020) and its implementing regulation PP 35/2021, terminated employees may be entitled to three types of payments: Uang Pesangon (UP) based on length of service, Uang Penghargaan Masa Kerja (UPMK) as long-service recognition, and Uang Penggantian Hak (UPH) covering unused leave and other contractual rights.
The amount of severance depends on the reason for termination. PP 35/2021 defines specific multipliers for each termination scenario — ranging from 0x (no entitlement) for gross misconduct to 2x UP for prolonged illness, disability, or death of the employee. Employers must follow the correct procedure and apply the right multiplier to avoid legal disputes at the Industrial Relations Court.
Monthly salary definition: For severance purposes, monthly salary includes basic wage plus all fixed allowances. Variable components (overtime, bonuses, commissions) are excluded. If wages are piece-rate or commission-based, the monthly salary is the average of the last 12 months.
UP and UPMK Tables
These tables determine the base number of months used in the severance calculation before applying the reason-specific multiplier.
Uang Pesangon (UP)
| Service Period | Months |
|---|---|
| Less than 1 year | 1 |
| 1 – < 2 years | 2 |
| 2 – < 3 years | 3 |
| 3 – < 4 years | 4 |
| 4 – < 5 years | 5 |
| 5 – < 6 years | 6 |
| 6 – < 7 years | 7 |
| 7 – < 8 years | 8 |
| 8 years or more | 9 |
Long Service Pay (UPMK)
| Service Period | Months |
|---|---|
| Less than 3 years | 0 |
| 3 – < 6 years | 2 |
| 6 – < 9 years | 3 |
| 9 – < 12 years | 4 |
| 12 – < 15 years | 5 |
| 15 – < 18 years | 6 |
| 18 – < 21 years | 7 |
| 21 – < 24 years | 8 |
| 24 years or more | 10 |
Severance Multipliers by Reason
The termination reason determines the multiplier applied to UP and UPMK base amounts. Below are all 19 termination scenarios under PP 35/2021.
| Termination Reason | UP Mult. | UPMK Mult. | Article |
|---|---|---|---|
| Merger / Consolidation / Takeover | 1x | 1x | Art. 41 |
| Efficiency due to Losses | 0.5x | 1x | Art. 43(1) |
| Company Closure due to Losses | 0.5x | 1x | Art. 43(2) |
| Company Closure (Not Losses) | 1x | 1x | Art. 44 |
| Force Majeure | 0.75x | 1x | Art. 45 |
| Moratorium on Debt Payment | 0.75x | 1x | Art. 46(1) |
| Bankruptcy | 0.5x | 1x | Art. 46(2) |
| Employer Absent (6+ months) | 1x | 1x | Art. 47 |
| Worker Violates Employment Agreement | 0.5x | 1x | Art. 52(1) |
| Employer Violates Employment Agreement | 1x | 1x | Art. 52(2) |
| Prolonged Illness (12+ months) | 2x | 1x | Art. 54(1) |
| Work Accident / Permanent Disability | 2x | 1x | Art. 54(2) |
| Retirement | 1.75x | 1x | Art. 56 |
| Death of Employee | 2x | 1x | Art. 57 |
| Voluntary Resignation | 0x | 1x | Art. 50 |
| Worker Absent (5+ days without notice) | 0x | 1x | Art. 51 |
| Criminal Detention (6+ months) | 0x | 1x | Art. 53 |
| Gross Misconduct (Urgent Reason) | 0x | 0x | Art. 52(2) |
| PKWT Early Termination | 0x | 0x | Art. 62 UUK |
Frequently Asked Questions
Common questions about Indonesian severance pay and compliance.
The maximum UP (Uang Pesangon) is 9 months of salary for employees with 8+ years of service. When combined with the UPMK (long service pay) of up to 10 months for 24+ years, and the applicable multiplier (e.g., 2x UP for prolonged illness, disability, or death), the theoretical maximum base payout can reach 28 months of salary before adding leave compensation and other entitlements.
No. PKWT employees are not entitled to severance pay (pesangon) or UPMK. Instead, when a PKWT contract ends or is terminated early, the employee is entitled to compensation money (uang kompensasi) calculated based on the length of the contract period. Early termination by the employer requires paying out the remaining contract value. This is governed by separate provisions under the Job Creation Law.
Monthly salary for severance purposes includes the basic wage plus all fixed allowances paid to the employee and their family. This includes fixed transport allowances, meal allowances, and other regular fixed payments. Variable components such as overtime, bonuses, commissions, and non-fixed allowances are generally excluded. If wages are set on a piece-rate or commission basis, the monthly salary is calculated as the average income over the last 12 months.
The Job Creation Law (UU Cipta Kerja) and its implementing regulation PP 35/2021 introduced several key changes: (1) Reduced some UP multipliers compared to the previous UU 13/2003; (2) Introduced the government-funded Job Loss Guarantee program (JKP) to supplement reduced severance; (3) Changed termination procedures to no longer require Industrial Relations Court approval in all cases; (4) Added new termination reason categories with specific multipliers. The net effect is that employer-paid severance is somewhat lower, but workers receive additional JKP benefits.
Yes. Under Indonesian labor law, employers must first engage in bipartite negotiations (direct negotiation between employer and employee) before proceeding with termination. If bipartite negotiations fail within 30 days, the parties may proceed to mediation, conciliation, or arbitration through the local Manpower Office (Disnaker). Only after these processes are exhausted can the matter be brought to the Industrial Relations Court. Termination without following proper procedure can be declared void.
Uang Pisah is a separate payment from UP and UPMK, applicable in cases where the employee resigns voluntarily or is terminated for certain reasons where UP does not apply (such as gross misconduct or absence without notice). The amount of Uang Pisah is not fixed by law but is determined by the company's regulations, employment agreement, or collective labor agreement. It serves as a goodwill payment and is distinct from the statutory severance entitlements.
Yes, severance pay in Indonesia is subject to income tax (PPh 21) but at preferential progressive rates that are lower than regular income tax rates. Under Government Regulation PP 68/2009, the tax brackets for severance are: 0% on the first IDR 50 million, 5% on IDR 50-100 million, 15% on IDR 100-500 million, and 25% on amounts above IDR 500 million. These rates apply when severance is paid as a lump sum. If paid in installments over more than 2 years, regular income tax rates apply.
