MK Decision on Statutory Limitations to Claims for Severance Payments May Lead to Confusion

Ady TD Achmad, Robert Sidauruk

Workers and employers will need to keep in mind how the recent decision of the Constitutional Court in its judicial review of Law No. 13 of 2003on Labor (“Labor Law”) which abolished statutory limitations on certain claims by ex-employees is interpreted. In addition, the consequences of the decisionwill also need to be considered.

The Decision, registered as No. 100/PUU-X/2013, annulled Article 69 of the Labor Law, which provided for a statutory time limit for workers to demand severance package entitlements from former employers.

Juanda Pangaribuan, ad hoc judge at the Industrial Relations Court in Jakarta, explained that the main idea of the Decision is to provide workers an unlimited timeframe in which they can demand severance package entitlements.

Therefore, employers must be sure to have a solid understanding of the Indonesian Labor Law especially in regard to calculating salaries, severances, bonuses and other entitlements to avoid lawsuits that can now be lodged at anytime by former workers.

Juanda also suggested that employers strengthen their bookkeeping management of salaries and severance payments. Moreover, he also suggested that once an employer fulfills their obligations to pay salary and severance to workers, such payments should be recorded at the Industrial Court.

“Payment of worker entitlements that have not been recorded at the Industrial Court can potentially end with further disputes,” Juanda said during a Hukumonline-organized seminar in Jakarta on Wednesday.

From an ex-employee’s perspective, Juanda also raised the further implication of the Decision that it cannot be used to demand severance package payments related to terminations that had already passed the statutory time limit for a claim before 19 September 2013, the date when the Decision was rendered.

“The Constitutional Court did not express that the decision can be applied retroactively,” added Juanda.

On the same occasion, Kemalsjah Siregar, a lawyer from Kemalsjah & Associates, made the observation that the Decision will create confusion among concerned parties in industrial relations actions because the Court did not specify how the Decision should be implemented.

“The Constitutional Court merely decided whether or not Article 96 conflicted with the 1945 Constitution without going deeper into how it should be implemented post the decision,” argues Kemalsjah.

For instance, the Court says that salary and other entitlements must be protected provided that a worker does not commit acts that aggravate their employer.

Similar to Juanda, Kemalsjah suggests precise bookkeeping when making payments is the most effective measure that can be taken by an employer to avoid future disputes.

The Head of the Industrial Dispute Prevention Division at Ministry of Manpower and Transmigration, Reytaman Aruan, commented that the Government is yet to consider a new regulation in response to the Decision.

(hot/kc)

Ady TD Achmad, Robert Sidauruk

Workers and employers will need to keep in mind how the recent decision of the Constitutional Court in its judicial review of Law No. 13 of 2003on Labor (“Labor Law”) which abolished statutory limitations on certain claims by ex-employees is interpreted. In addition, the consequences of the decisionwill also need to be considered.

The Decision, registered as No. 100/PUU-X/2013, annulled Article 69 of the Labor Law, which provided for a statutory time limit for workers to demand severance package entitlements from former employers.

Juanda Pangaribuan, ad hoc judge at the Industrial Relations Court in Jakarta, explained that the main idea of the Decision is to provide workers an unlimited timeframe in which they can demand severance package entitlements.

Therefore, employers must be sure to have a solid understanding of the Indonesian Labor Law especially in regard to calculating salaries, severances, bonuses and other entitlements to avoid lawsuits that can now be lodged at anytime by former workers.

Juanda also suggested that employers strengthen their bookkeeping management of salaries and severance payments. Moreover, he also suggested that once an employer fulfills their obligations to pay salary and severance to workers, such payments should be recorded at the Industrial Court.

“Payment of worker entitlements that have not been recorded at the Industrial Court can potentially end with further disputes,” Juanda said during a Hukumonline-organized seminar in Jakarta on Wednesday.

From an ex-employee’s perspective, Juanda also raised the further implication of the Decision that it cannot be used to demand severance package payments related to terminations that had already passed the statutory time limit for a claim before 19 September 2013, the date when the Decision was rendered.

“The Constitutional Court did not express that the decision can be applied retroactively,” added Juanda.

On the same occasion, Kemalsjah Siregar, a lawyer from Kemalsjah & Associates, made the observation that the Decision will create confusion among concerned parties in industrial relations actions because the Court did not specify how the Decision should be implemented.

“The Constitutional Court merely decided whether or not Article 96 conflicted with the 1945 Constitution without going deeper into how it should be implemented post the decision,” argues Kemalsjah.

For instance, the Court says that salary and other entitlements must be protected provided that a worker does not commit acts that aggravate their employer.

Similar to Juanda, Kemalsjah suggests precise bookkeeping when making payments is the most effective measure that can be taken by an employer to avoid future disputes.

The Head of the Industrial Dispute Prevention Division at Ministry of Manpower and Transmigration, Reytaman Aruan, commented that the Government is yet to consider a new regulation in response to the Decision.

(hot/kc)

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