A recent Constitutional Court development has introduced a significant clarification in Indonesia’s industrial relations dispute framework. While the statutory one-year limitation period for filing termination (PHK) claims before the Industrial Relations Court (Pengadilan Hubungan Industrial – PHI) remains unchanged, the point at which this period begins has been reinterpreted. This shift has important implications for employers, HR teams, and dispute management strategies.

The Practical Problem

Historically, many practitioners and courts calculated the one-year deadline for PHK claims from the date of termination, often based on when a termination letter was issued or received.

However, Indonesian labor law does not allow parties to immediately file a claim before the PHI. The dispute resolution process must first pass through:

• Bipartite negotiations, followed by
• Mediation or conciliation conducted by the manpower authorities.

These mandatory pre-litigation steps frequently take several months. As a result, the limitation period often continued to run before workers were legally entitled to access the PHI, raising concerns regarding fairness and access to justice.

The Constitutional Court’s Correction (2025)

In its 2025 correction, the Constitutional Court clarified the interpretation of Article 82 of Law No. 2 of 2004 on Industrial Relations Dispute Settlement:

• Article 82 remains constitutional.
• It is conditionally unconstitutional if the one-year period is calculated from the termination date.
• The correct interpretation is that the one-year limitation period begins from the date mediation or conciliation is formally declared unsuccessful.

The Court rejected proposals to extend the limitation period to three years, emphasizing that legal certainty must be preserved while ensuring meaningful access to justice.

Why This Matters for Employers

This clarification shifts the focus from rigid deadline calculations toward procedural fairness. Employers can now complete mandatory dispute resolution stages without the risk that limitation periods expire prematurely. At the same time, litigation timelines become more predictable and constitutionally aligned.

Critically, the date on which mediation or conciliation is declared unsuccessful now serves as the legal trigger for the limitation period.

Practical Checklist for Employers & HR Teams

1. Document Mediation Outcomes

• Clearly record the exact date mediation or conciliation is formally declared unsuccessful.
• Treat this date as the starting point of the one-year limitation period.

2. Update HR Policies

• Revise internal dispute resolution procedures to reflect the Constitutional Court’s interpretation.
• Ensure HR teams are trained and aware of the revised timeline.

3. Train Managers and Supervisors

• Reinforce understanding of mandatory bipartite and mediation requirements.
• Ensure consistent documentation of all negotiation steps.

4. Strengthen Legal Coordination

• Coordinate closely with in-house counsel or external advisors to monitor dispute timelines.
• Align litigation and settlement strategies with the new interpretation.

5. Risk Management

• Anticipate potentially longer exposure periods for termination claims.
• Adjust compliance, documentation, and settlement strategies accordingly.

The Bigger Picture

This development does not weaken legal certainty. Instead, it ensures that limitation periods regulate rights rather than quietly defeating them. In industrial relations, access to justice must be both timely and realistically attainable. Employers who adapt early are better positioned to manage risk while fostering trust and transparency in workplace relations.