Government Regulation No. 37 of 2021 The Implementation of the Job Loss Security Program

One of the government regulations which was issued as the implementing regulations to Law Number 11 of 2020 concerning the Job Creation Law (Specifically on social security program in Indonesia which was regulated under Government Regulation No. 37 of 2021 concerning The Implementation of the “Job Loss Security Program” (Jaminan Kehilangan Pekerjaan/”JKP”)) (“GR 37/2021”) came into effect as of February 2^nd 2021.

It mandates that:

In addition to the enrollment of employees into the Social Security Agency for Manpower (BPJS Ketenagakerjaan) and Healthcare (BPJS Kesehatan), the GR 37/2021 also states that employers are now required to enroll their Indonesian employees (for those under 54 years old) into the JKP program as fulfilment for said employee’s social insurance. Every other employee already enrolled within the Manpower BPJS program will automatically be eligible and registered accordingly into the JKP program.

The GR 37/2021 also laid out the formula to calculate the chargeable premium for the JKP program, which will be payable every month as a portion of the employee’s monthly salary along with legible contribution as provided by the Central Government.

In return, this JKP program offers employers these following benefits: (i) cash benefits; (ii) access to labor market information (including job vacancy data and/or career counselling); and (iii) online or offline job training.

That said, those benefits will be nullified should be the “employment relationship” be terminated due to one of the following reasons: (i) the employee resigns; (ii) the employee suffers from permanent disability; (iii) the employee retires; or (iv) the employee passes away.

Pursuant to Article 37 of GR 37/2021, employers that fail to fulfil their legal obligations in registering their employees into the JKP program shall then be required by law to provide the following benefits for their terminated employee: (i) cash benefit (capped to six months’ worth of salary); and (ii) job training benefits.

Please note however that micro-scale businesses are exempted from such provision.