GOV’T ISSUES EMERGENCY REGULATION ON JOBS LAW: What does it mean to the Employment Sector?

Illustration (AGUNG WAHYUDI/IO)

Jakarta, IO – As 2022 has come to an end, the Government gave the Indonesian legal sector a surprise “end of year gift” in the form of the polemical Government Regulation in Lieu of Law (Perppu) 2/2022 dated December 30, 2022 pertaining to Law 11/2020 on Job Creation. The Government claimed its issuance has met the “compelling emergencies” criteria. 

The Perppu in effect nullified the “conditionally unconstitutional” status of the Job Creation Law as per the Constitutional Court’s (MK) ruling. Coordinating Political, Legal and Security Affairs Minister Mahfud MD elaborated that the compelling emergencies concerned the Russia-Ukraine conflict, as well as the threat of high inflation and looming specter of stagflation in 2023. 

After the Job Creation Law was ratified and signed by President Joko Widodo on November 2, 2020, several civil groups fled a judicial review of the law to MK. It then underwent a formal review by the Court and on November 25, 2021, MK issued Decision 91/ PUU-XVIII/2020 ruling that the Job Creation Law was “conditionally unconstitutional” and ordered the Government and the House of Representatives (DPR) to rectify the law within two years following the verdict; otherwise, it would be deemed “permanently unconstitutional” and all prior legislation it replaced would be reinstated. 

But most importantly, MK also ordered the Government to postpone any strategic policy or measures with broad implications and barred it from issuing new implementing regulations that run counter to the law. 

However, it should be noted that the MK decision did not automatically invalidate the law. It basically means that the law would remain in effect pending revisions to be made within the specified deadline. 

In its legal considerations, read by Constitutional Court Justice Suhartoyo, MK took issue with the procedure for making the law which used the omnibus law format, as well as changes in the phrasing of several articles, after the joint approval by the House and the President. 

In connection with the principle of transparency, MK also highlighted the lack of meaningful public consultation prior to the law’s passage. Even though various meetings had been held with various community groups, said meetings had yet to discuss the academic papers and material changes found in the law. Furthermore, the academic manuscripts and bill could not be easily accessed by the public, whereas based on Article 96(4) of Law 12/2011 on the drafting of laws and regulations, the public needs to be able to access the bill in order to provide recommendations, verbally or in written form. 

The Constitutional Court sought to avoid legal uncertainty and an ensuing, potentially bigger, impact. It considered that it had to balance the formal requirements for drafting a law in order to produce a law that fulfilled aspects of legal certainty, benefit and justice, and had to take the strategic objectives behind the creation of the Job Creation Law into account. 

In a word, despite MK rulings, the entire contents of the Job Creation Law and its implementing regulations, whether in the form of government regulation (PP), presidential regulation (Perpres) or ministerial regulation issued prior to the court’s ruling, remain valid, superseding the old regulations. For example, new provisions in the employment cluster, one of the 11 clusters in the law with its implementing regulations – PP 34/2021 on foreign workers; PP 35/2021 on outsourcing, contract workers, working hours, layoffs and severance pay; PP 36/2021 on wages; and PP 37/2021 on unemployment benefit govern the implementation of industrial relations (replacing Law 13/2003 on manpower). 

The contents of the MK decision on the Job Creation Law only focus on the procedural issues and have not yet touched material ones. However, the Government was of the view that the ruling has resulted in a lack of legal certainty for the implementation of the law and its implementing regulations, so it chose to overlook the decision and refuse to improve the law by involving the public in a fresh discussion of its contents.