The Constitutional Court on October 31, 2024, issued an important verdict number 168/PUU-XXI/2023 regarding the judicial review of several provisions in Law Number 6 of 2023 concerning the Stipulation of Government Regulation in Lieu of Law Number 2 of 2022 concerning Job Creation into Law (“Job Creation Law”). The judicial review was filed by various elements of society represented by the Labor Party along with several Indonesian trade union federations who felt that several articles in the Job Creation Law were contrary to the 1945 Constitution of the Republic of Indonesia (“UUD 1945”), especially in relation to labor protection.
The Constitutional Court's verdict is not only responds to the petition filed by the Labor Party, but also affirms the importance of safeguarding workers rights within Indonesia's legal and constitutional framework. By partially granting the petition, the Constitutional Court demonstrates its commitment to balancing investment interests with the protection of labor rights.
In its verdict, the Constitutional Court stated that 20 articles in the Job Creation Law are conditionally unconstitutional, meaning that the articles remain in effect with the condition that improvements must be made within a certain period of time. If the corrections are not made, then the provisions will lose their permanent legal force.
Some of the key points that will be discussed in this article include the following:
- Prioritizing Indonesian Labor
Previously, the term “Central Government” in Article 42 paragraph (1) of Law No. 13 Year 2003 on Manpower (“Manpower Law”), amended by Article 81 of the Job Creation Law, was not explained in Article 1 of the General Provisions of the Manpower Law. This causes legal uncertainty. Therefore, through the Verdict of the Constitutional Court, it was decided that the term “Central Government” should be interpreted as the authority of the Indonesian Minister of Manpower to approve the Plan for the Use of Foreign Workers/Rencana Penggunaan Tenaga Kerja Asing (RPTKA).
In addition, Article 42 paragraph (4) of the Manpower Law, which is also amended in Article 81 number 4 of the Job Creation Law, previously only stated that “Foreign Workers can be employed in Indonesia only in working relationships for certain positions and certain times and have competence in accordance with the position to be occupied.” However, this regulation has not firmly and clearly determined the criteria for the use of foreign workers. To avoid potential irregularities, the Constitutional Court added an explanatory sentence at the end of the article so that it reads: “Foreign workers / Tenaga Kerja Asing (TKA) may only work in Indonesia in an employment relationship for a certain position and period of time, and must have competence in accordance with the position, while continuing to prioritize Indonesian workers.” Thus, this affirmation ensures that the use of foreign workers must be based on clear and measurable needs, and must not reduce employment opportunities for Indonesian workers.
- Provisions related to Definite Period Employment Agreements / Perjanjian Kerja Waktu Tertentu (“PKWT”)
Previously, Article 59 paragraph (4) of the Manpower Law stipulated that a PKWT based on a certain period of time can be valid for a maximum of 2 (two) years and can only be extended 1 (one) time with a maximum duration of 1 (one) year. Thus, the total duration of PKWT according to the Manpower Law cannot exceed 3 (three) years. However, Article 56 paragraph (3) of the Manpower Law, which has been amended through Article 81 number 12 of the Job Creation Law, states that the period or completion of certain work is determined through a work agreement. According to the judges' consideration, since the position of workers in employment agreements is often unequal to employers, this provision potentially provides an opportunity for employers to unilaterally change the term of PKWT, which risks harming workers and contradicts the principle of justice.
In response, the Constitutional Court stipulated that “The term of a non-permanent contract or the completion of certain work shall not exceed 5 (five) years, including extensions.” Thus, the maximum duration of PKWT is now 5 (five) years, including extensions.
In addition, Article 57 paragraph (1) of the Manpower Law, which is amended in Article 81 number 13 of the Job Creation Law, was previously considered to be less strict in formulating the use of the word “must” in PKWT that is prepared in writing because the word “must” only refers to the phrase “using Indonesian language and Latin letters.” Therefore, the Constitutional Court in its verdict underlined the importance of reformulating this norm to: “A fixed-term employment agreement must be made in writing using the Indonesian language and Latin letters.”
- Outsourcing
The amendment to Article 64 paragraph (2) of the Manpower Law, which is amended through Article 81 number 18 of the Job Creation Law, previously only gave the “government” the authority to determine part of the work implementation. However, the term “partial implementation of work” does not yet have a clear and specific legal basis regarding the types of work that can be transferred through outsourcing mechanisms. To avoid problems in its application, the term “government” in this context is interpreted as the Indonesian Minister of Manpower, who has the authority to determine the types and fields of work that can be transferred to other companies based on a written outsourcing agreement. With this arrangement, the types of outsourcing work become more detailed, so as to reduce the potential for errors in the transfer of work and prevent legal disputes arising between companies and workers.
- Rest and Leave Rights for Workers
- Weekly Rest
Previously, Article 81 number 25 of the Job Creation Law that amends Article 79 paragraph (2) letter b of the Manpower Law only regulates the right to weekly rest for 1 (one) day for workers who work 6 (six) days a week, but does not accommodate the right to rest for workers in companies with a 5 (five) day work week, who should get 2 (two) days of rest. However, Article 22 of Government Regulation Number 35 of 2021 (“GR 35/2021”) on Definite Period Work Agreements, Outsourcing, Working Time and Rest, and Termination of Employment, which is the implementing regulation of Article 79 of the Manpower Law as amended by Article 81 number 25 of the Job Creation Law, regulates a 2 (two) day weekly rest for workers with a 5 (five) day work system. This creates legal uncertainty, because the PP should only function to implement the provisions of the law without expanding the norms that have been regulated.
In response to this, the Constitutional Court Verdict confirms a new provision to provide clarity and legal certainty that weekly rest, which consists of 2 (two) types, namely:
- 1 (one) day for 6 (six) working days in 1 (one) week; or
- 2 (two) days for 5 (five) working days in 1 (one) week.
- Long Rest
Article 79 paragraph (5) of the Manpower Law, as amended through Article 81 number 25 of the Job Creation Law, previously stated that “In addition to rest and leave as referred to in paragraph (1), paragraph (2), and paragraph (3), certain companies may provide long breaks regulated in Work Agreements, Company Regulations, or Collective Labor Agreements.” According to the judges, the use of the word “may” creates uncertainty regarding the obligation of certain companies to provide long breaks, as well as allowing for differences in policies between companies regarding this right. To resolve this uncertainty, the Constitutional Court decided to delete the word “may,” so that certain companies are obliged to provide long breaks as stipulated in Work Agreements, Company Regulations, or Collective Labor Agreements.
In regards to the above, the Constitutional Court asked the government to form a new Manpower Law within two years and separate the manpower sector from the Job Creation Law. This shows that manpower regulations must be clarified and improved because so far they are considered multi-interpretive and not in accordance with the principles of justice and protection of workers' rights. The Constitutional Court also reminded that the making of the law shall involve the active participation of workers and trade unions. It is hoped that this verdict will serve as a basis for the improvement of manpower regulations and help balance investment interests with the protection of workers' rights.
