New Regulation Requires Companies to Pay Laid-Off Employees 60% of Wages in Cash for Six Months

JAKARTA, investortrust.id – President Prabowo Subianto has signed a new labor regulation aimed at providing financial support to employees who lose their jobs. The new policy, outlined in Government Regulation (PP) No. 6 of 2025 on the Implementation of the Job Loss Security Program (JKP), introduces a significant change to severance benefits. A key provision, Article 21, stipulates that laid-off workers are entitled to receive monthly cash payments equal to 60% of their wages for up to six months.

However, the regulation sets a wage cap of Rp 5 million ($320) for this calculation. This means that employees will receive a maximum of Rp 3 million ($192) per month for six months.

This provision marks an improvement over the previous regulation, PP No. 37 of 2021, which provided a tiered structure: 45% of wages for the first three months and 25% for the following three months, also with a wage cap of Rp 5 million.

Under PP 6/2025, the JKP benefits apply to employees with both permanent and fixed-term contracts. Eligibility requires a minimum contribution period of 12 months to BPJS Ketenagakerjaan, Indonesia’s social security agency for workers, within the 24 months preceding job termination.

Employees seeking JKP benefits must provide proof of termination, including a layoff notification and an acknowledgment receipt from the Ministry of Manpower, provincial labor offices, or local labor agencies at the city or district level. Additionally, applicants must submit a mutually agreed termination settlement registered with the industrial relations court, along with a receipt of termination report from the labor authority.

This new regulation aims to provide stronger financial security for laid-off workers, ensuring they have a steady income while seeking new employment opportunities.