1-11-2024 (JAKARTA) Indonesia’s Constitutional Court delivered a significant ruling on Thursday that mandates substantial changes to the nation’s labour regulations, partially accepting a petition from workers’ unions challenging aspects of the controversial Job Creation law.
The landmark decision requires the establishment of sector-specific minimum wages and clarifies employment termination procedures, though it stopped short of granting all union demands, including increased severance benefits.
This ruling marks a crucial modification to former President Joko Widodo’s signature legislation, which was initially implemented in 2020 to enhance Indonesia’s business environment by reducing bureaucratic obstacles. The law’s original passage sparked widespread protests from workers, students, and activists who argued it undermined labour protections.
In a comprehensive 20-point judgment broadcast live, the court mandated local authorities to implement sectoral minimum wage structures while maintaining the existing formula for annual wage adjustments. The ruling also strengthened worker protections during dismissal disputes, stating that employees must retain their status while cases are pending in industrial courts.
Significantly, the court directed the manpower ministry to explicitly define which roles can be outsourced, addressing union concerns about unrestricted outsourcing practices. The judiciary has given lawmakers a two-year deadline to consolidate existing labour regulations into a single, comprehensive framework that incorporates these new changes.
