Introduction
On September 21, 2018, the Ministry of Labor and Vocational Training (MLVT) issued a Prakas (Declaration) on Seniority Payment (“Prakas No. 443”) which amended the Article 89 of the Labor Law. Under the Prakas No. 443 which is effective as from 2019 onwards, all FDC employees are provided severance indemnity which at least equal to five percent of employees’ wages to be paid during the length of contract. UDC employees are entitled to receive a seniority indemnity equal to 15 days of their wages and other benefits per year starting from 2019 onwards. It is worth noting that these employees shall also receive the back-seniority indemnity before 2019, equal to 15 days of their total seniority as well. For UDC employees, working in the textile, garment, or the footwear sectors, the back seniority indemnity shall equal to 30 days of total seniority in every one year.
However, numerous regulations have supplemented, clarified and changed the regime laid out in the Prakas no. 443.
On March 22, 2019, the Ministry of Labor and Vocational Training issued the Instruction no. 042 to reduce the number of the payment of back pays of seniority who are not in garment, textile and footwear sector from 15 days to only 6 days per year. In addition, on June 10, 2019, the Ministry of Labor and Vocational Training issued the notification No. 057 regarding the calculation of back seniority indemnity before 2019 for garment, textile and footwear sectors. According to the notification No. 057, the payment of seniority indemnity is provided to employees only 15 days per year.
Regarding the payment of Seniority Indemnity before and from 2019 onwards, pursuant to the Instruction No. 042/19 regarding the delay payment of back seniority indemnity, from 2019 to the end of 2021, workers/employees shall be paid only the seniority indemnity on each current year which equals to 15 days per year. However, from 2022 onwards, workers/employees shall be paid both seniority indemnity before and from 2019 which equals 15 days + 6 days (7.5 days + 3 days shall be paid in June; and 7.5 days + 3 days shall be paid in December).
Important note: On April 7, 2020, due to the impact of Covid-19, the Ministry of Labor and Vocational Training postponed the back payment of seniority indemnity before 2019 and the payment of seniority indemnity for 2020 until 2021, in order to let the business be able to cope with the amount of money to provide.