The Ministry of Labor and Vocational Training recently issued instruction No. 042/019 dated 22 March 2019 on the Payment of Retroactive Seniority Payment which is accrued before 2019 for Enterprise/Establishment other than those in the Textile, Garment and Footwear Industries.

Following the amendment of the Labor Law promulgated on 26 June 2018 and the issuance of Prakas No. 443 dated 21 September 2018 on Seniority Payment, the new instruction gives further details on the scope of its enforcement, effective implementation date and the calculation of the retroactive payment for all enterprise/establishment under the scope of Labor Law except textile, garment and footwear industries.

The retroactive seniority payment which is accrued before 2019 is now to be implemented from December 2021. In addition, the calculation of retroactive seniority before 2019 shall be on the basis of 6 days per year (3 days in June and another 3 days in December).

During the postponement, any termination of an employment contract due to other reasons beside serious misconduct or retirement or death, the employer shall pay to the employee/beneficiary a lump sum of retroactive seniority that accrued before 2019. It is important to note that there is no seniority payment should an employee voluntary resign or be terminated due to serious misconduct.

The seniority payment accrued from 2019 will remain enforceable following the Prakas 443. The calculation of this current seniority shall be based on 15 days per year (to be paid 7.5 days in June and 7.5 days in December) and the first payment will be in June 2019.