What You Need to Know About Salary Withholding for Resigned Employees

In employment practice, understanding salary withholding laws is a crucial aspect for employers, especially in situations where an employee decides to resign.

The Manpower Law No. 13 of 2003 states that withholding the payment of a worker’s salary without a valid reason is considered a violation of the employee’s rights, thus subjecting the company to legal sanctions. For a more in-depth understanding of the law of withholding the salary of a resigned employee, read the following explanation.

Company Obligations and Employee Rights Under the Law

According to Article 94 (1) of Law No.13 of 2003, employers are obliged to pay wages to employees at least once a month. Although the employees have resigned, they still have the right to receive the entire salary according to their tenure at the company. 

Additionally, Article 156(1) of Law No. 13 of 2003 states that after the termination of employment, employers are obliged to provide all employee entitlements in full and on time.

At this point, you may wonder if a company is entitled to withhold the salary of a resigning employee and whether such an employee is entitled to severance pay.

The answer is, employers have no legal grounds to withhold the salary of an employee who wishes to resign. As for severance pay, the current Manpower Law does not specifically regulate severance for resigning employees, unless such a provision is included in the employment agreement.

Legal Consequences of Withholding Salary for Resigned Employees

According to Article 55 of Government Regulation No. 36 of 2021 on Amendments, employers must adhere to the following wage payment regulations:

• Employers must pay wages according to the time agreed upon by both parties.
• If the payment date falls on a holiday, a weekly rest day, or a public holiday, payment must still be made as per the agreement in the collective labor agreement.
• Wages can be paid daily, weekly, or monthly, but there must not be a payment gap exceeding one month.

Therefore, if an employer fails to meet these obligations and is found to withhold salary from an employee who has resigned, such action can be categorized as a legal violation.

Government Regulation No. 36 of 2021 also stipulates that any form of salary deduction or delay without valid reasons will result in legal penalties for the company.

The penalties related to unpaid salaries for resigning employees, as outlined in Government Regulation No. 36 of 2021, are as follows:

• If a company delays salary payments, a fine of 5% of the amount due will be imposed for each day of delay, starting from the fourth day to the eighth day after the salary payment date.
• If the salary remains unpaid after the eighth day, additional fines will be applied.
• If the delay extends beyond one month, the company will face higher fines and additional interest based on the highest interest rates applicable at government banks.

This explanation covers the laws regarding withholding resigned employees salaries that you need to know. In conclusion, withholding salaries can result in legal sanctions for the company. Therefore, it is essential for every company to comply with salary payment regulations to avoid legal issues and maintain tight-knit relationships with former employees.

Considering this, using outsourcing services from RecruitFirst Indonesia could be a solution to enhance your company’s administrative management, including payroll management for both active and resigning employees.

Furthermore, we are also ready to assist with human resource management, from recruiting replacement employees to finding candidates with specialized skills for executive positions.

By utilizing our outsourcing services, your company’s operational efficiency can be maximized while internal resources can focus more on core business activities that directly impact growth and profitability. Contact us now for more information.