Erman Soeparno Denies Severance Pay Bill Discrimination
Friday, 28 September, 2007 | 17:37 WIB

Tempo Interactive, Jakarta: Manpower and Transmigration Minister, Erman Soeparno, confirmed that the Government Bill on the Guarantee Against Termination of Work protects workers and is in line with the Manpower Decree No. 13/2003. “No discrimination. This is because those who have salary above Rp5.5 million also have the severance pay right,” he said in Jakarta yesterday (27/9).

Erman responded to the protest of 13 trade unions which threatened a demonstration two days ago. They considered that the Government Bill only protects the workers who have a salary less than Rp5.5 million.

Erman emphasized that the regulation will be the legal standing for the fund reservation system of dismissal guarantee. The funds are reserved by companies as the cost of dismissing labor. “The funds will be managed by a third party. So it’s not detrimental for both sides,” he said.

The Government Bill, he said, regulates the highest salary as the basis of the calculation of severance pay, work period reward and rights compensation in dismissal. The amount of the reserve is five times the non-taxed income or Rp5.5 million.

The dismissal guarantee, he said, is in line with the Manpower Decree. Erman denied that the bill will provoke dismissal. The reason is the Severance Pay Bill was formulated according to the Manpower Decree, Article 156.

Regarding entrepreneurs, he said, they will not necessarily pay the tax of the three percent reserve funds. The reserve funds will be the component considered as cost-free. “The concept is like old age pension,” he said.

The dismissal reserve funds, he said, will be held by PT Jamsostek, Dana Pensiun and Asuransi Jiwa. The reason for choosing multi-providers is the entrepreneurs’ freedom to choose based on service quality.

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