Impacts Of Constitutional Court’s Ruling On UU Cipta Kerja, From Contract To Work Termination

Monday, 04 Nov 2024

By ferry@insightinnews.com The Constitutional Court (MK) accepted several lawsuits regarding the Job Creation Law filed by labor groups on Thursday (October 31, 2024). The Labor Party submitted this lawsuit against the Omnibus Law of the Job Creation Law (UU Ciptaker) to the Constitutional Court, focusing on seven points that are seen as harmful to workers and violating social justice principles for labor in Indonesia. Key points in the MK's decision regarding the Job Creation Law include the separation of the Labor Law, prioritizing Indonesian workers, clarifying contract duration for employees, limiting outsourcing jobs, regulations on work breaks, wage components and wage councils, wage scales, the non-application of sectoral minimum wages, the role of labor unions, rules on termination of employment, and minimum severance pay. In its ruling, the MK urged lawmakers to create a new labor law separate from the Job Creation Law. The court highlighted the "normative pressure" regarding labor issues that is difficult for the public to understand, leading to legal uncertainty and prolonged injustice. The MK annulled ambiguous regulations that did not clearly limit the entry of foreign workers (TKA) "only in specific job positions and for a limited time, with competencies matching the positions." The judges added a clause stating "with attention to prioritizing the use of Indonesian workers" in Article 81, point 4 of the Job Creation Law. The Constitutional Court (MK) has reiterated the rules regarding the duration of fixed-term employment agreements (PKWT). Previously, under the Job Creation Law, this was returned to the terms of the employment contract. The earlier Labor Law required that the duration be based on a timeframe set by law. In this ruling, to protect workers' rights to decent jobs and livelihoods, the MK stated that the maximum duration for PKWT is 5 years, including any extensions. The judges also requested that future laws specify that the minister should define the types and fields of outsourcing work to ensure fair legal protection for workers. According to the MK, companies, outsourcing service providers, and workers need clear standards regarding the types of jobs that can be outsourced. This way, workers will only engage in outsourcing as agreed in their contracts. This limitation is expected to clarify what is permissible and what is not in outsourcing practices, which often lead to disputes between workers and companies. The MK also reinstated the option for workers to have either 2 days off or a 5-day workweek. Previously, the Job Creation Law only allowed for 1 day off per week without the alternative of 2 days. However, the Labor Law has always provided for the option of 2 days off per week for employees, depending on the productivity of each company. The UU Ciptaker removed the explanation about the components of a decent living in the article concerning income/wages that was previously covered by the Labor Law. "Regarding this new norm, the Court believes that an explanation of 'a decent living for humanity' is still necessary, as it is an important part of wage determination," said Chief Justice Suhartoyo. Therefore, the Court requests that the wage article must "adequately meet the living needs of workers and their families, including food and drink, clothing, housing, education, health, recreation, and retirement security." The Court also reinstated the role of the wage council, which was eliminated in the Cipta Kerja Law, ensuring that future wage policies are not solely decided by the central government. The Court emphasized that wage policies must "involve the regional wage council, which includes local government representatives," to inform the central government in setting wage policies. The rules regarding the wage council in the Cipta Kerja Law were also enhanced by the Court with a clause stating that the council must "actively participate." The judges felt it was necessary to add the phrase "that is proportional" to complement the phrase "wage structure and scale." The Court clarified the phrase "certain index" in terms of wages as "a variable representing the contribution of labor to the economic growth of provinces or districts/cities, considering the interests of companies and workers, as well as the principle of proportionality to meet the decent living needs (KHL) of workers." The Cipta Kerja Law had previously eliminated the minimum sectoral wage (UMS) provision. The Court found that this policy effectively means the state does not provide adequate protection for workers. The Court asserted that UMS must be implemented because workers in certain sectors have different characteristics and work risks, depending on the demands of heavier jobs or required specializations. Thus, the removal of UMS is seen as a threat to labor standards.

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