How to Calculate Severance Pay Under PP No. 35 of 2021
A concise guide to Indonesia's severance components—UP, UPMK, UPH—with length-of-service tables and multipliers by termination reason under PP 35/2021.
When terminating employment (PHK), companies must pay statutory compensation under Government Regulation No. 35 of 2021—the implementing regulation for the Job Creation Law (Cipta Kerja). There are three main components: Severance Pay (UP), Long Service Award (UPMK), and Rights Compensation (UPH). This article summarizes the framework—always consult an employment lawyer for specific situations.
Severance Pay (UP) by length of service
- Less than 1 year: 1 month's wages
- 1 – less than 2 years: 2 months' wages
- 2 – less than 3 years: 3 months' wages
- 3 – less than 4 years: 4 months' wages
- 4 – less than 5 years: 5 months' wages
- 5 – less than 6 years: 6 months' wages
- 6 – less than 7 years: 7 months' wages
- 7 – less than 8 years: 8 months' wages
- 8 years or more: 9 months' wages (maximum)
Long Service Award (UPMK)
- 3 – less than 6 years: 2 months' wages
- 6 – less than 9 years: 3 months' wages
- 9 – less than 12 years: 4 months' wages
- 12 – less than 15 years: 5 months' wages
- 15 – less than 18 years: 6 months' wages
- 18 – less than 21 years: 7 months' wages
- 21 – less than 24 years: 8 months' wages
- 24 years or more: 10 months' wages
Multipliers by termination reason
Total compensation is calculated by multiplying UP and UPMK by the applicable factor:
- Death: UP 2×, UPMK 1×, UPH paid.
- Permanent disability or extended illness from work (≥12 months): UP 2×, UPMK 1×, UPH paid.
- Retirement at retirement age: UP 1.75×, UPMK 1×, UPH paid.
- Company closure not due to losses, or merger where worker declines to continue: UP 1×, UPMK 1×, UPH paid.
- Efficiency to prevent losses, or force majeure company closure: UP 0.5×, UPMK 1×, UPH paid.
- Resignation or prolonged absence: separation pay per employment agreement only—no UP or UPMK.
Rights Compensation (UPH)
- Unused, unexpired annual leave (paid out in cash).
- Return travel costs for the worker and family to their place of origin at time of hiring.
- Other rights stipulated in the Employment Agreement, Company Regulations, or Collective Labor Agreement.
Important: PP 35/2021 removed the previous housing, medical, and treatment allowance of 15% of UP+UPMK that existed under Law No. 13 of 2003. Ensure your HR and legal teams are working from current rules, not the old version.
Sigma Solusi Servis supports companies with workforce administration and BPO—including documentation needed for procedurally sound employment terminations. For specific legal decisions, engage an employment lawyer.