Answer ... The enactment of the Job Creation Law in November 2020 – which amended the Labour Law and its subsequent implementing regulations, among others – has reshaped Indonesia’s employment law regime. The changes it introduced relate to issues such as:

• expatriate employment;
• employee entitlements; and
• the termination process.

However, in late 2021, the Constitutional Court declared that the Job Creation Law is conditionally unconstitutional and must be amended within two years of the court’s decision. This decision has raised legal concerns and left employers wondering what to expect next and how they should proceed. The Constitutional Court also prohibited the issuance of any new implementing regulations for the Job Creation Law pending its amendment.

The amendments made by the Job Creation Law to various laws, including the Labour Law, and the already enacted implementing regulations for the Job Creation Law remain valid and in effect during the two-year time frame. However, if the government fails to implement the amendment as ordered by the Constitutional Court, the Job Creation Law (including the Labour Law, as amended by the Job Creation Law) will become permanently unconstitutional and all previous laws and regulations amended or replaced by or due to the Job Creation Law will become valid again.

Given that the Job Creation Law has introduced significant changes to the employment law regime, its being scrapped would have a significant impact on the employment sector. We will have to wait and see whether the court’s rectification order is enforced, and if the legislature does amend the Job Creation Law, what provisions they might revise, remove or add during the amendment process.