The Legal Status of Severance Pay as Statutory Compensation for Termination of Employment and Its Relationship with Civil Damages
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Abstract
This study aims to clarify the legal position of severance pay following the post-Job-Creation-Law reforms in Indonesia, specifically examining its relationship with civil damages. The central proposition is that severance pay constitutes statutory compensation arising ex lege under employment legislation, and is not, by itself, a form of damages for breach of contract. A lawful termination of employment may still trigger an obligation for statutory severance or other compensation depending on the legally specified grounds. Conversely, an unlawful or contractually wrongful termination may raise separate legal questions concerning the restoration of workers' rights or civil damages, provided that their specific legal elements are proven. This study employs a normative legal research methodology, utilizing statutory, conceptual, and case approaches to analyze the Indonesian Civil Code, employment legislation read alongside Law Number 6 of 2023, Government Regulation Number 35 of 2021, and selected industrial relations decisions. The analysis concludes that employment law fundamentally serves as the lex specialis starting point. Civil Code Articles 1243 and 1365 may operate only subsidiarily where a genuine normative gap or a separate civil wrong exists, and where loss, causation, legal basis, and jurisdiction are firmly established; they do not automatically enlarge the statutory severance formula.
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