Dear valued clients, partners and friends,
We are pleased to provide our update on the recent and controversial Constitutional Court Decision No. 91/PUU-XVIII/2020 (“CC Decision 91/2020”).
Background
On 25 November 2021, the Constitutional Court of the Republic of Indonesia issued CC Decision 91/2020 with salient rulings affecting the constitutionality and validity of Law No. 11 of 2020 on Job Creation (the “Job Creation Law”). Based on CC Decision 91/2020, the Job Creation Law, which was declared as “conditionally unconstitutional”, will remain in full force and effect during the period of two years from its issuance (the “Corrective Period“). However, the Job Creation Law must be corrected and amended within the Corrective Period, failing which, it will be deemed as “permanently unconstitutional” on and from the expiry of the Corrective Period. If this happens, all laws that were amended, repealed and/or superseded by the Job Creation Law shall be deemed to be automatically reinstated and will again have full force and effect.
It is worth noting that CC Decision 91/2020 was based on a judicial review of the formal aspect only and not the substantive aspect of the Job Creation Law. While there are other challenges made by other petitioners on the substantive aspects of the Job Creation Law under other petitions for judicial review, currently no decision has ever been issued by the Constitutional Court (including CC Decision 91/2020) that affects the substance of the provisions of the Job Creation Law. In addition, it is also noted that CC Decision 91/2020 and the Corrective Period conferred therein may cause a “suspension” of judicial review on the Job Creation Law, which means that any new judicial review on the same law will likely be declared as not accepted since petitioners would not have sufficient legal standing to contest a “conditionally unconstitutional” law.
Based on the above, the provisions stipulated under the Job Creation Law and its implementing regulations should remain in full force and effect during the Corrective Period, including but not limited to the controversial provisions regarding Manpower. Consistent with the CC Decision 91/2020, President Joko Widodo, in a press conference held on 29 November 2021, stated that the Job Creation Law still prevails and will continue to be implemented during the Corrective Period. He also assured the public that the government will abide by the Constitutional Court’s ruling and will act swiftly to make the necessary corrective amendments to the Job Creation Law.
Notwithstanding the above, there can be no certainty that the government and parliament would be able to correct and amend the Job Creation Law within the Corrective Period, or that the government or parliament would have the same understanding with the Constitutional Court on the relevant provisions of the Job Creation Law that must be amended or corrected, or that this decision would not affect the investments made or to be made under the Job Creation Law. In light of all the above, it would be advisable for business actors to closely monitor and follow the policies that may be issued by the government and/or the relevant institution in the transition period.
For more details, please read the document below
Best regards,
Makes Team