Indonesia’s Bank Commonwealth to cut 1,146 jobs after OCBC acquisition

[JAKARTA] Indonesia’s PT Bank Commonwealth (PTBC) is set to lay off 1,146 employees following its acquisition by Singapore’s OCBC, two months after the 2.2 trillion rupiah (S$182 million) deal was completed.

According to an internal management letter seen by The Business Times, employees were notified that the terminations would be effective Sep 1. Compensation will be given in the form of severance pay, service pay, separation pay and additional benefits, based on tenure.

BT understands that PTBC is offering the affected staff an opportunity to join OCBC NISP, the Singapore bank’s Indonesian subsidiary that carried out the acquisition, before the effective termination date.

In a statement on Tuesday (Jul 23), the Indonesian Workers Organisation said the retrenchment exercise raises some legal concerns, mainly in relation to the pension funds of affected employees.

Timboel Siregar, secretary-general of the labour advocacy group, criticised the lack of transparency in the initial acquisition process, specifically the exclusion of the PTBC employees’ union, which is affiliated with the national union confederation.

“This caused shock and unrest among employees. Moreover, there was no clarity or explanation regarding the continuity of work and the fate of employees’ futures,” he said in a statement.

PTBC’s total workforce stood at 1,209 last year, according to the bank’s latest annual report.

A key contention is the lender’s move to merge pension payments with severance pay packages, which Siregar claimed violates legal regulations.

He also criticised the formula used to calculate the severance pay based solely on employee wages, without including a fixed benefit component.

The labour union has appealed to Indonesia’s Ministry of Manpower to resolve the dispute.

In response to queries from BT, PTBC said it will ensure that the employees who will be laid off will receive their rights in accordance with the provisions of applicable law.

“OCBC actively provides opportunities for Bank Commonwealth employees to join OCBC based on their individual competencies and capabilities,” it said.

An OCBC spokesperson said: “OCBC Indonesia is actively engaging PTBC employees for employment opportunities, by aligning OCBC’s requirements and needs with their career aspirations and capabilities.”

OCBC NISP said it will assist affected PTBC employees who want to join the company.

Under Indonesia’s labour laws, employees of an acquired company do not automatically move to the acquiring company. Their status depends on mutual agreement between the employee and the new employer.

If both agree to continue employment, the employee remains with the original company. However, an unwillingness from either party to continue the employment can lead to termination.