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Uncertainty after Constitutional Court’s Decision on Job Creation Law?

By January 26, 2022 No Comments

The Constitutional  Court  declared on 25 November 2021 that  the Job Creation Law of 2020 is conditionally unconstitutional and instructed the government to revise the law in no later  than  two  years,  namely  by 25  November 2023.

The court declared that the Job Creation Law violated the Constitution of 1945 and does not have legal binding power conditionally if “no revision is made within two years after this decision is declared”. The court however stated that the Job Creation Law is still valid if the revision on its formation is made within that period. If no revision is made, the Job Creation Law will become permanently unconstitutional and previous laws or clauses or contents revoked or amended by the Job Creation Law will resume to prevail.  It also instructed the government to postpone all actions/policies that are strategic and have wide impact as well as not to enact any new implementing regulations in relation to the Job Creation Law.

This decision was not unanimous. The judges’ opinions were divided into three groups. The first five judges supported that the Job Creation Law is conditionally unconstitutional. The remaining four judges did not support it but their opinions are divided into two groups.

The first group (five judges) argued on the importance of the compliance with the Law on Formation of Laws (and regulations) of 2011 in a number of areas.  Firstly, the court viewed that the formation of the Job Creation Law violated the standard procedure regulated under the Law on Formation of Laws. Secondly, that the omnibus method is not recognized under the Law on Formation of Law. Thirdly, that the formation of Job Creation Law does not comply with the principle of clarity of purpose and clarity of content. Fourthly, that the formation of Job Creation Law does not provide optimal participation from the public. Accordingly, the court declared that the Job Creation Law is formally defected.

The second group (two judges) support the progressive law concept that is out of the box in nature and free from conventional tradition of law. They argue that the law is for the man, not the other way around. Hence, Job Creation law is justified as “rule breaking” as part of progressive paradigm. They further argued that the Law on Formation of Law does not explicitly prohibit the method of omnibus law and therefore should be justified so long as it does not violate the values of five principles (Pancasila) and principles contained in the Constitution of 1945. The third group (two judges) had seven reasons to support the Job Creation Law. Those reasons concluded that the court should have not closed its eyes that the existing regulations are obese and overlapped causing sectoral ego and legal uncertainty in their application.

What is next? It looks like we must wait for the government and House’s actions. The two year period is not long and it may not be enough to revise the formal defects. Even if the government has revised the defects, there is still a risk that a new application to formally review the revised Job Creation Law is lodged. What is worse, it is not very clear how the government will rectify the defect. The four arguments by the first group judges refer to the violation of procedure, violation of principles of formation of law, and insufficiency of public participation. Would this mean that the government must amend the existing Law on Formation of Law to include the omnibus law method, re-assess the Job Creation Law by giving wider public participation, and re-promulgate the Job Creation Law? That would be a tiring and costly process not only to the government but also to the public.

No implementing regulation can be issued. What if there are some provisions that need further regulation? How should businesses, affected by the Job Creation Law, be operated while waiting for the revision? The government has acted fast and enacted many implementing regulations. But the people are still adapting to those set of regulations. The local governments in Indonesia might not have considered those set of new regulations especially in its own local regulations. And now, while still adapting and learning, the people must wait and face uncertainty, whether the Job Creation Law will still be valid after two years or nullified.

The court’s decision is historic and important. The government should learn from it, the hard way. But the government should rectify it immediately. Why?  It causes legal uncertainty and hence, is bad for business.

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Eddy Leks

This article also Published on Forbes Indonesia