Termination of Employment often time leads to some issue, employer often grants their employee an unreasonable entitlements and it is also very common for employee to request an entitlements that exceeds the provision under the law. This matter could be seen in the object of this research study, specifically in the Verdict Number: 90/PHI.G/2012/PN.JKT.PST between PT.Merck, TBK as the company who performed Termination of Employment towards Stephanus Kairupan who was their employee. Normative approach method will be used in writing this thesis, to the study of literature to read, interpret, study books, papers, legislation related to this title later in the analysis and set forth in writing. Termination of Employment occurs due to various reason, ranging from employee, employer, law, including courts. The procedures in performing the termination is regulated under the Law No. 13 Year 2003 on Manpower, while the dispute settlement regarding industrial relations such as Termination of Employment are regulated under the Law No. 2 Year 2004 on Industrial Settlement Distpute Settlement. Dispute settlement on Termination of Employment on the grounds of efficiency under the Verdict No: 90/PHI.G/2012/PN.JKT.PST arises due to the Judge’s application of law in his legal consideration on deciding this matter. Termination of Employment on the grounds of efficiency is stipulated under Article 164 point (3) Law No.13 Year 2003 on Manpower, however, it is not beed specifically regulated under the mentioned regulation. Therefore, parties often misinterpret Termination of Employment on the grounds of efficiency.