Vitorio Mantalean, Ardito Ramadhan, Jakarta – The Constitutional Court granted of a number of points in a legal challenge submitted by labour groups related to the Omnibus Law on Job Creation (UU Cipta Kerja) on Thursday October 21.
The judicial review was filed by a number of trade unions including the Indonesian Metal Trade Workers Federation (FSPMI), the Confederation of the All-Indonesian Workers Union (KSPSI), the Confederation of United Indonesian Workers (KPBI), the Confederation of Indonesian Trade Unions (KSPI) and the Labour Party, as well as two individual workers.
Labour Party President Said Iqbal also took to the streets with the mass of workers who held a demonstration on Thursday to oversee the reading out of the Constitutional Court's ruling number 168/PUU-XXI/2023, which was 687 pages long.
The panel of judges divided the ruling into a number of clusters. Kompas.com summarises them here in 12 key points:
1. A separate labour law
In its ruling, the Constitutional Court requested that legislators immediately draft a new labour law, separate from the Jobs Law.
The Court highlighted the “closeness of norms" on employment that were considered difficult to understand lay people and have caused prolonged legal uncertainty and injustice.
2. Indonesian workers must be prioritised over foreign workers
The court cancelled the policies that are open to multiple interpretations which do not set strict restrictions on the entry of foreign workers (TKA) which should "only apply for employment in certain positions and for certain times and where their competence is in accordance with the position to be occupied".
The panel of judges added the clause "by paying attention to prioritising of the use of Indonesian workers" to Article 81 Number 4 of the Jobs Law.
3. Duration of contract labour clarified
The Constitutional Court also reaffirmed that the regulations on the duration of Fixed-Term Employment Agreements (PKWT, temporary work contracts, contract labour) which previously were in the Jobs Law, be returned to previous employment agreements/contracts.
This is because the earlier 2003 Labour Law stipulated that the duration of such contracts be based on a time set by the law.
Through this ruling, in order to protect the right to work and a decent livelihood for employees/workers, the Constitutional Court asserted that the maximum duration of a PKWT shall be five years – including if there was an extension of the PKWT.
4. Types of outsourcing restricted
The judges also asked the next labour law state that the minister set the types and fields allowed for outsourcing for the sake of fair legal protections for workers.
According to the Constitutional Court, companies, outsourcing service providers and workers need to have clear standards regarding the types of work that can be outsourced, so that workers will only be employed as outsourced labour in accordance with what has been agreed upon in the contract.
These restrictions are also hoped to reinforce what is permissible and what is not allowed to be done in outsourcing practices that often trigger conflicts and disputes between workers and companies.
5. Two days off a week
The Constitutional Court also restored the alternative that workers have the option of two days off and five working days a week.
Previously, the rules in the Jobs Law only gave workers one day off a week without the alternative option of two days off.
Yet from the beginning Labour Law provided a two-day holiday option for employees who are released based on the productivity of each company.
6. Wages must contain a decent living component
The Jobs Law must complement the explanation on a decent living component in the articles on income and wages that were previously regulated by the Labour Law.
"With regard to these new norms, according to the court, it is still necessary to have an explanation of the purpose of a “decent livelihood for humanity” because such an explanation is an important part of wages", said Chief Justice Suhartoyo in reading out the verdict.
Therefore, the Constitutional Court requested that the articles on wages must be "able to meet the genuine living needs of employees/workers and their families which include food and beverages, clothing, housing, education, healthcare, recreation and old age insurance".
7. Reviving the wage council
The Court also revived the role of wage councils which were abolished in the Jobs Law, so that the future determination of wage policies will no longer be one-sided and in the hands of the central government.
The Constitutional Court asserted that wage policies must "involve the regional wage councils in which there are elements of the regional government" as a basis for the central government to determine wage policies.
The regulations on wage councils in the Jobs Law were also appended by the Constitutional Court with the clause that wage councils "participate actively".
8. Wage scales must be proportional
The panel of judges also felt the need to add a "proportional" phrase to complement the phrase on "structure and wage scales".
The Constitutional Court also clarified the phrase "certain indexes" in terms of wages as "variables that represent the contribution of labour to the economic growth of the province and regency/municipality by taking into account the interests of companies, employees/workers as well as the principle of proportionality to meet the reasonable living cost index (KHL) for employees/workers".
9. Sectoral minimum wage back in force
The Jobs Law previously abolished the provisions on sectoral minimum wages (UMS). The Constitutional Court believes that in practice the policy is the same as the state not providing adequate protection for workers.
The Constitutional Court asserted that the UMS must be re-implemented because workers in certain sectors have different characteristics and work risks, depending on the demands of more onerous work or the specialisation needed.
So, the elimination of the UMS is considered to have threatened the standards of protection for workers.
10. Trade unions shall play a role in wages which must consider the period of employment
The Court also re-included the phrase "trade/labour union" in the rules on wages above the minimum wage. Previously, under the Jobs Law, such agreements were limited to companies and individual employees.
In addition, the Constitutional Court also added that the structure and wage scale in a company not just pay attention to the company’s capacity and productivity, but also to "groups, positions, tenure, education and competence".
11. Dismissals only allowed after negotiations
The Constitutional Court asserted that bipartite negotiations related to the termination of employment (PHK) must be carried out by consensus.
If negotiations are deadlocked, the Constitutional Court asserted that layoffs can only be carried out after obtaining a determination from the an industrial dispute settlement body whose decisions have permanent legal force "in accordance with the provisions in the Law on the Settlement of Industrial Disputes.
12. Length of service recognition payment lower limit
The Court also stated that the regulation on length of service recognition payments (UPMK) as calculated under the Jobs Law is now the nominal lower limit.
The Constitutional Court asserted that Article 156 Paragraph (2) and Article 81 Number 47 in the Jobs Law is contrary to the 1945 Constitution and does not have binding legal force as long as it not interpreted as "the minimum".
[Translated by James Balowski. The original title of the article was "Poin-poin Penting Putusan MK atas UU Cipta Kerja, dari soal Upah hingga PHK".]
