Govt to revise ministerial decree on compensation

JAKARTA (JP): The government will revise controversial Ministerial Decree No. 150/2000 on Compensation for dismissed or resigning employees and make it more investor-friendly, Minister of Manpower and Transmigration Al Hilal Hamdi said on Monday.

Speaking to journalists after a meeting with Vice President Megawati Soekarnoputri, Al Hilal said the Vice President agreed with the revision as long as it could accommodate the complaints from investors.

"We are going to revise some three of four articles of the decree...the revisions would resolve certain problems that occurred in the past because of the decree," Al Hilal told a media conference.

The revision will modify Article 26 of the decree on severance pay and merit or service payments for employees resigning from a company.

"In the revised decree, the company will only have to make a severance payment to employees who resign from a company. We will also clarify the definition of 'resigning'," Al Hilal said.

Severance pay ranges from 100 percent of gross monthly wage to 600 percent, depending on how long an employee has been in service.

Gross monthly wages consist of basic salary, along with housing, health and meal allowances.

Service or merit payments vary. The decree states that those who have worked between three and six years should get 200 percent of their gross monthly salary.

The scale increases for those who have worked for 24 years or more who would receive 1,000 percent of their gross monthly salary.

"We also would like to consider whether it would be better for those resigning or retiring to have a severance payment or to have a sum paid into their pension fund. If the pension fund sum is larger than the severance payment, we would give them the former," he said.

The minister also said that in the revised decree, workers who are dismissed for incompetence would only be entitled to severance payment but not service or merit payments.

"The Vice President agreed with the three changes. The details went through a series of discussions in Cabinet meetings in the last couple of months," Al Hilal said.

The decree was issued by former manpower minister Bomer Pasaribu to replace a 1996 decree on severance pay, in a bid to prevent the dismissal of more workers due to economic hardship in the country.

The decree stipulates that companies, after gaining permission from the Committee for Settlement of Labor Disputes (P4), can dismiss an employee but must provide severance payment and a merit or service payment to the dismissed worker.(dja)