The Indonesian government officially enacted the Government Regulation in Lieu of Law (Peraturan Pemerintah Pengganti Undang-Undang) No. 2 of 2022 on Job Creation ("Perppu on Job Creation") on 31 December 2022. The Coordinating Minister for Economic Affairs has stated that the issuance of the new regulation is in the spirit of anticipating the various economic and geopolitical challenges posed by the current global dynamics.1

Additionally, the regulation is issued to revoke the Law No. 11 of 2020 on Job Creation ("Job Creation Law"). This is due to the mandate of the Constitutional Court Decision No. 91/PUU-XVIII/2020 ("Constitutional Court Decision") which declared the Job Creation Law as "conditionally unconstitutional" and shall be corrected and/or amended within the 2 years after the issuance of the Constitutional Court Decision. The Perppu on Job Creation in total contains a range of articles that encompasses similar matters under the Job Creation Law.

I. GENERAL OVERVIEW

As we have previously mentioned, the enactment of the Perppu on Job Creation revoked the Job Creation Law, which upon its implementation stipulates the following transitional consequences:

1. Any business licensing documents and/or certificates that were issued based on Job Creation Law will remain valid until their expiration dates; 2. Any approvals, sectoral licenses, certificates and/or other forms of licenses that were issued by the central government and regional governments prior to the enforcement of the Job Creation Law will remain valid until their expiration dates; 3. Any business entities that were established based on the Job Creation Law will remain legal until the end of their establishment periods; 4. Any legal actions that have been taken by the Indonesian Government and any agencies that have been established based on the Job Creation Law will remain valid, provided that they are still in accordance with general good governance principles; 5. Any ongoing business licensing applications will be processed in accordance with the provisions set under the Perppu on Job Creation; 6. The Indonesia Investment Authority, as established based on the Job Creation Law, will continue to operate in accordance with the provisions set under the Perppu on Job Creation; and 7. Any implementing regulations to laws that are amended by the Perppu on Job Creation, as well as any implementing regulations to Job Creation Law, will remain valid, provided that they do not contravene any of the provisions set under the Perppu on Job Creation.

II. ANALYSIS

In this Legal Alert, we will focus our discussion on the highly debated amendment to the laws in the manpower sector.

Similar to the Job Creation Law, Article 80 of Perppu on Job Creation provides that in order to strengthen the protection of workers/laborers and to increase their welfare as well as to support the investment ecosystem, the newly enacted law amends the following existing laws in manpower sector:

  1. Law No. 13 of 2003 on Manpower ("Manpower Law");
  2. Law No. 40 of 2004 on the National Security System ("National Security System Law");
  3. Law No. 24 of 2011 on the Social Security Agency ("Social Security Agency Law");
  4. Law No. 18 of 2017 on the Protection of Indonesian Migrant Workers ("Protection of Migrant Workers Law").

Kindly note that the amendments to the National Security System Law, Social Security Agency Law, and Protection of Migrant Workers Law are identical to the amendments made by Job Creation Law. However, the Perppu on Job Creation introduced a number of other amendments and new provisions that differs from the Job Creation Law.

OUTSOURCING

MANPOWER LAW

JOB CREATION LAW

PERPPU ON JOB CREATION

Article 64

A company may subcontract part of its work to another company under a written agreement of working contract or a written agreement for the provision of worker/labour.

Article 64

Job Creation Law removed this Article.

Article 64

1. A company may subcontract part of its work to another company under a written outsourcing agreement.

2. The government will determine the part of the work referred to in paragraph (1).

3. Further provisions on the determination of the part of work referred to in paragraph (2) will feature under a forthcoming Government Regulation.

Footnote

1 Cabinet Secretariate of the Republic of Indonesia, "Pemerintah Terbitkan Perpu Cipta Kerja", dated 30 December 2022, See: https://setkab.go.id/pemerintah-terbitkan-perppu-cipta-kerja/.

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