Jakarta, Indonesia Sentinel — The Indonesian Constitutional Court (MK) has partially approved a judicial review filed by the Labor Party and others against Law Number 6 of 2023 concerning the Job Creation Law, focusing on the mechanism for Termination of Employment (PHK) as stipulated in Article 151 paragraph (4) within Article 81 point 40 of the Act’s annex. The MK ruled that specific phrasing within this article contradicts Indonesia’s 1945 Constitution, deeming the clause in conflict.
The phrasing in question, which the court found unconstitutional, states that “termination of employment is carried out through the next stages according to the mechanisms for resolving industrial relations disputes.” The court’s judgment, announced on Monday (November 4, 2024), nullifies this phrasing as currently worded in the legislation.
Article 151 paragraph (4) of the Job Creation Law specifies procedures for when employees contest termination decisions. In cases where negotiations between the company and the employee or their labor union reach a stalemate, the law previously required the termination process to go through industrial dispute resolution channels.
The MK, in its ruling, mandates a clarification in the article to outline that termination can only occur following a binding resolution from an industrial dispute resolution body. This change emphasizes that employment termination requires a final decision from the designated dispute settlement institution.
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To ensure legal protection for affected employees, the MK states the amended language as follows: “In the event that bipartite negotiations as referred to in paragraph (3) do not reach an agreement, the Termination of Employment can only be carried out after obtaining a binding decision from an industrial relations dispute resolution institution.”
This decision reinforces the requirement for formal, binding dispute resolution before employment termination, offering stronger legal safeguards for employees facing layoffs under the Job Creation Act.
(Becky)
