Constitutional Court Decision No. 96/PUU-XXII/2024: Workers No Longer Required to Participate in Tapera

Constitutional Court Decision No. 96/PUU-XXII/2024 marks a significant shift in Indonesia’s employment and social security framework by declaring the mandatory participation in the Public Housing Savings Program (Tabungan Perumahan Rakyat, “Tapera”) unconstitutional. The decision removes the legal basis for employers to register workers or deduct contributions, while allowing a two-year transition period for regulatory restructuring. As the government revises the Tapera framework, employers are advised to reassess payroll policies, maintain transparent communication with employees, and stay alert to forthcoming regulatory adjustments.

Since its establishment, Tapera has been at the center of public discussion, praised as an initiative to improve housing accessibility yet criticized for placing additional financial burdens on both employees and employers. For quite some time, concerns have been raised about whether a savings program could rightfully be made compulsory.

This debate has recently reached its conclusion. On 29 September 2025, the Constitutional Court, through Decision No. 96/PUU-XXII/2024, ruled that the mandatory participation requirement under the Tapera framework is inconsistent with the 1945 Constitution, marking a significant development that reshapes Indonesia’s employment and social security landscape.

An Overview of Tapera

Law No. 4 of 2016 on the Public Housing Savings Program (“Tapera Law”) was introduced to address Indonesia’s long-standing challenge of providing sustainable and affordable housing finance. The program was established as a collective savings mechanism in which participants make regular contributions that are pooled, managed, and later distributed to support housing ownership, construction, or improvement, particularly for low-income communities.

Under this scheme, every employee earning at least the minimum wage was required to become a participant, while employers were obligated to register their employees and contribute together through payroll deductions. Over time, this arrangement became one of the most debated aspects of the Tapera Law, as it was seen as adding financial and administrative burdens to both employees and employers. These concerns ultimately led to a constitutional review before the Constitutional Court.

Key Changes in the Court’s Decision

Through its recent Decision No. 96/PUU-XXII/2024, delivered on 29 September 2025, the Constitutional Court granted the petition in its entirety and declared that the Tapera Law is inconsistent with the 1945 Constitution. The Court held that the Tapera Law no longer has binding legal force unless it is restructured in accordance with the mandate of Article 124 of Law No. 1 of 2011 on Housing and Settlement Areas.

In the same decision, the Court determined that the Tapera Law shall remain temporarily in force and must be restructured within a maximum period of two years from the date of the decision. The Court also instructed that this decision be officially published in the State Gazette of the Republic of Indonesia. To ensure stability during the transition period, the Court emphasized that the government must maintain the continuity of Tapera services while preparing a revised and constitutionally compliant framework within the two-year transition period provided.

Implications for Employers and Employees

Constitutional Court Decision No. 96/PUU-XXII/2024 carries significant practical implications for both employers and employees. For employers, the annulment of the obligation to register employees and deduct Tapera contributions means that these administrative practices no longer have a valid legal basis. For employees, the requirement to participate in Tapera is also removed, although those previously registered should remain attentive to their entitlements under the existing scheme.

Following the decision, several steps are advisable for companies. Employers may consider temporarily suspending Tapera-related deductions, reviewing internal policies or employment handbooks that refer to Tapera participation, and ensuring clear and transparent communication with their workforce. It is also important to closely monitor forthcoming regulatory adjustments during the two-year transition period provided by the Constitutional Court.

This transition period presents both compliance challenges and opportunities to re-evaluate existing employee benefit structures. By anticipating future policy adjustments and seeking informed guidance, companies can maintain regulatory readiness, protect their employees’ interests, and ensure their business operations remain aligned with evolving legal requirements.

Conclusion

The Constitutional Court’s recent decision on Tapera marks a pivotal moment in Indonesia’s employment and social security framework. While constitutional court decision No. 96/PUU-XXII/2024 removes the immediate obligation for both employers and employees to contribute, the constitutional court decision also signals a period of regulatory transition that demands careful attention. As the government works toward restructuring the Tapera scheme, companies are encouraged to stay alert to policy changes and adjust their internal practices accordingly.

In navigating this evolving landscape, obtaining professional legal advice can help ensure that compliance strategies remain sound and that business operations continue to align with the latest constitutional and regulatory developments.

***

About ADCO Law:

ADCO Law is a law firm that offers clients a wide range of integrated legal services, including commercial transactions and corporate disputes in a variety of industry sectors. Over the course of more than a decade, we have grown to understand our clients’ industries and businesses as well as the regulatory aspects. In dealing with business dynamics, we provide comprehensive, solid legal advice and solutions to minimize legal and business risks.

From Upstream to Downstream, We Understand Your Industry. In complex transactions and certain cases, we actively engage with financial, tax, and environmental specialists, accountants, and law firms from various jurisdictions to add value to our clients. Our strong relationships with Government agencies, regulators, associations, and industry stakeholders ensure that our firm has a holistic view of legal matters.

ADCO Law is a Proud Member of the Alliott Global Alliance (AGA) in Indonesia. Founded in 1979, AGA is one of the largest and fastest-growing global multidisciplinary alliances, with 215 member firms in 95 countries. As a law firm, we also believe in regeneration. To stay abreast of business changes and stay relevant, our formation of lawyers is comprised of the top graduates from Indonesian and international law schools.