Indonesia Employment Law Update: Constitutional Court Affirms Statute of Limitation for Filing Employment Termination Lawsuits

On 29 February 2024, through its Decision No. 94/PUU-XXI/2023, Indonesia’s Constitutional Court affirmed that an employment termination lawsuit can only be filed within one year of the date of notification of employment termination.

In the decision, the Constitutional Court said Article 82 of Law No. 2 of 2004 concerning Industrial Dispute Settlement (“Law No. 2 Year 2004”) is contrary to the Indonesian Constitution and has no binding legal force if not interpreted as follows:

"A lawsuit by an employee for termination of employment can only be filed within a period of 1 (one) year from the receipt or notification of the decision from the employer.”

This Constitutional Court decision sheds light on the differences in interpretation that occur in the practice of Indonesian employment law.

Previously, there were two types of statute of limitation in employment termination disputes, namely:

• General statute of limitation in Article 96 of the Employment Law (2 years); and
• Specific statute of limitation in Article 82 of Law No. 2 Year 2004 and Article 171 of the Employment Law (1 year).

In 2013, the Constitutional Court declared Article 96 of the Employment Law unconstitutional. So, in practice, there was no statute of limitation for filing a lawsuit for employment termination other than due to resignation or termination for serious violations, as regulated by Article 171 of the Employment Law.

Note: Article 171 of the old Employment Law regulates that employees who resign or are terminated due to serious violations only have one year to file a lawsuit in court.

Further, Article 82 of Law No. 2 Year 2004 stipulates as follows:

“A lawsuit by an employee for termination of employment as referred to in Article 159 and Article 171 of Law Number 13 of 2003 concerning Employment, may only be filed within a period of 1 (one) year from the receipt or notification of the decision from the employer.”

With the enactment of the Job Creation Law in 2020, Articles 96, 159 and 171 were forever revoked from the Employment Law.

According to the interpretation of several expert witnesses, Article 82 of Law No. 2 Year 2004 should read as follows:

A lawsuit by an employee for termination of employment can only be filed within a period of 1 (one) year from the receipt or notification of the decision from the employer.

With Decision No. 94/PUU-XXI/2023, the Constitutional Court united all opinions and affirmed that the statute of limitation for filing a termination of employment lawsuit is one year from the date of notification of termination.

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