Amendment of Indonesia National Social Security System Act (Act No. 40/2004 and Act No. 11/2020)

The Job Creation Act No. 11 of 2020 adds a new national social security program in the Employment Social Security (BPJS Ketenagakerjaan), namely Job Loss Security (Jaminan Kehilangan Pekerjaan/JKP), which serves as a ‘replacement’ for a portion of the severance pay – the Act has removed 14 severance pay-related Articles stipulated by Labour Act No. 13 of 2003 which perceived as reducing employee’s legal benefits of up to two times the amount of severance payment for certain termination rationales.

The new program ensures that employee who lost their job due to redundancy (termination of employment) can get the JKP benefits in the form of cash, access to labour market information and job training. The benefits given shall not be more than 6 (six) month wage.

Differ from the other five programs of the employment social securities which source of funding comes from participant and/or employer contributions, the new job loss security program is going to be funded by:

a) government initial capital;

b) re-composition of social security programs; and / or

c) BPJS Ketenagakerjaan operational funds.

According to Article 83 No. 3 Act No. 11 of 2020, the Government pledges at the very minimum 6 (six) trillion Rupiahs as the initial capital for the said program that is originating from the State Revenue and Expenditure Budget.

When this post is published, the Government is in the process of establishing the required Government Regulations that would govern specifics, related processes and other requirements as stipulated by Act No. 11 of 2020.  

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