At the verdict hearing on Law No. 11 of 2020 on Job Creation last week, the Constitutional Court stated that the Job Creation Law was considered formally flawed because it was not made based on the Law on the Formation of Legislation, did not fulfill the principles of the formation of laws and regulations, did not involve broad public participation, and norms that had been jointly determined by the DPR and the Government underwent changes and substitutions when going through the legislative stage. In its ruling, the Constitutional Court also stated that the Job Creation Law is conditionally unconstitutional and must be revised within 2 years. If the DPR and the Government do not amend it within 2 years, the Job Creation Law will no longer be valid. In practice, the Job Creation Law itself has issued more than 40 implementing regulations governing the risk-based business licensing sector, ease of doing business, especially for MSMEs, taxation regulations that also support ease of doing business, environment and forestry, and labor. Not only that, this law has also issued a new business entity known as an individual company. Then, what is the fate of the implementing regulations under the Job Creation Law? Is it true that business licenses that have been issued from the Job Creation Law become invalid? And does the individual company business entity have to be dissolved? To find out the answer, Kontrak Hukum will discuss it below. Check out the answer until the end!
About the Job Creation Law
For information, the Job Creation Law or also known as the omnibus law is a law that regulates many things in one regulation. In the Job Creation Law there are several different regulations, where the regulations are changed and simplified and then combined to become one regulation / one legal umbrella. The regulation in question consists of 82 laws but in essence the Ciptaker Law regulates:
- Business and investment licensing.
- Employment.
- Trade.
- Halal product assurance.
- Marine, plantation, fishery.
- Forestry, environment and natural resources.
- Ease of doing business for MSMEs.
- Trademarks and Patents.
- Government administration.
- Taxation.
- Special Economic Zones.
After it was passed, the Job Creation Law was debated until several parties then filed a judicial review to the Constitutional Court. On November 25, one of the judicial review requests was partially granted by the Constitutional Court. In its decision, the Constitutional Court declared Law. No. 11 of 2020 on Job Creation is conditionally unconstitutional. According to the Constitutional Court, the making of the Job Creation Law does not fulfill the formal requirements for the formation of laws. However, the Court gave an opportunity to the government and the DPR to make improvements within 2 years. If there is no improvement within 2 years, the Job Creation Law will be declared unconstitutional. As a result of the Constitutional Court’s decision, the government is no longer allowed to issue derivative regulations from the Ciptaker Law. Although it is not allowed to issue any PP, the Constitutional Court stated that the Ciptaker Law is still valid until improvements are made. This was also confirmed by President Jokowi, who stated that all articles in the Ciptaker Law remain in effect for the next two years. This means that all implementing regulations under the Ciptaker Law are still valid. Business licenses can also still be used and business actors who are just about to apply for a business license do not need to worry because they can still apply for a risk-based business license. MSE actors who have just established an individual company also do not need to dissolve their legal entity because PP No. 8 of 2021 which regulates individual companies is still valid.
KH Contact
Well Friend KH, that’s an explanation of the fate of the implementing rules of the Ciptaker Law, business licensing, and individual companies after the Constitutional Court Decision which states that the Ciptaker Law is conditionally unconstitutional. For KH Pals who have questions about business licensing and individual companies, want to do business consulting, or need help to fulfill business legality, KH Pals can contact Kontrak Hukum at the following link Tanya KH or through our Instagram social media @kontrakhukum. For more information, KH pals can also directly visit the page https://kontrakhukum.com/memulai-usaha.
