Arrangement of Bankruptcy Debt Repayment Toward Empleyees in Indonesia and Germany

Employees have specific rights in the settlement of bankrupt debts under Indonesian Bankruptcy Law, but they must compete with other privileged creditors, such as tax authorities, insurance holders, and those owed bankruptcy fees, which often affects their priority status. This study investigates the bankruptcy filing mechanisms for legal entities and the relative position of employees in debt repayment, comparing the Indonesian and German legal systems. Employing normative legal research methods and analyzing secondary data, the study outlines that both systems are structured into three stages: registration, trial, and implementation of the bankruptcy decision. In Indonesia, while employees receive priority for wage payments, other rights are not prioritized, making them non-preferential. Conversely, Germany’s system includes the “Insolvenzgeld” mechanism, which guarantees payment of three months' wages during the preliminary insolvency stage, and prioritizes employee claims under social plans over other creditors. Claims not covered by Insolvenzgeld are settled after higher-priority creditors have been fully compensated.