Client Newsflash

Minister of Manpower Clarifies Statute of Limitation for Employee Claims

The Minister of Manpower (MOM) has finally issued a directive on the statute of limitations for employees to file claims for payments allegedly owed by employers, which was revoked in September 2013, when the Indonesian Constitutional Court granted judicial review of Article 96 of the Manpower Law (Law No. 13 of 2003).

On January 17, 2015, the MOM issued Circular Letter No. 1/MEN/I/2015, which interprets the Constitutional Court’s decision to mean that there is no statute of limitations whatsoever for employees to claim against their employers in respect of the employment relationship.

For purposes of implementation, the Circular Letter sets an absolute bar on claims for events prior to September 19, 2011, which is two years before the date of the Constitutional Court decision, because before Article 96 was stricken, the statute of limitations on employee claims was two years after the right to payment arose.

Although the unlimited time for employees to file claims poses a serious challenge for employers going forward, at least for now, they will not be vulnerable to an onslaught of claims relating to the distant past. In addition, the Indonesian Civil Code (ICC) and other manpower laws and regulation may provide specific statutes of limitation which remain in force, for example ICC Article 1603t, which provides a one year statute of limitation for claims of wrongful termination.

To reduce the risk of unexpected litigation, we recommend obtaining a full waiver of claims from outgoing employees whenever employment is discontinued, whether by mutual agreement, resignation, or termination in the Industrial Relations Court.

The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.

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