JAKARTA, KOMPAS — The 2026 Labor Protection Law strengthens workers' positions in the face of layoffs. The practice of terminating employment must now adhere to stricter procedures. However, the presence of vague provisions and implementation issues poses a risk of complications.
The provisions regarding layoffs in Law Number 27 of 2026 on Employment Protection indicate several changes compared to Law Number 6 of 2023, which established the Government Regulation in Lieu of Law Number 2 of 2022 on Job Creation as the Job Creation Law, and Law Number 13 of 2003 on Manpower.
The changes primarily concern the procedures for layoffs, the grounds for termination, compensation amounts, and the company's obligation to ensure severance payments to employees.
From a procedural standpoint, the three laws essentially stipulate that employers and employees must make efforts to prevent layoffs. However, the mechanisms differ. Law No. 13/2003 requires the establishment of an industrial relations dispute resolution body for layoffs that do not reach an agreement, with certain exceptions.
The Job Creation Law stipulates that layoffs can be carried out through notification from the employer to the employee. If the employee refuses, both parties must resolve the dispute through bipartite negotiations and industrial relations dispute resolution mechanisms.
Meanwhile, the latest regulation under Article 228 states that employers are required to first take various measures to prevent layoffs....
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