Constitutional Court rejects review on bankruptcy law

The Constitutional Court on Thursday turned down a petition filed by labor unions to review articles covering bankruptcy law, which they said was in violation of workers' constitutional right to severance pay.

The court ruling says that the law does not undermine workers' right for severance pay despite it allows companies to prioritize on paying their debts during a financial crisis.

The plaintiffs, including 138 ex-employees of shoe factory PT Sindoll Pratama, argued that several articles in the law contradicted article 28D of the Constitution and article 95 of the 2003 law on manpower that guaranteed workers' right to fair treatment and pay.

Article 95 of the manpower law stipulates that severance pay for workers should be prioritized if a company goes bankrupt.

Judge Akil Mochtar said the article should be interpreted as "payments for workers come first, but only after the bankrupt companies settle their debts to separate creditors, such as banks, which are entitled to guarantees for providing loans to companies."

"Therefore, there is no contradiction between the two laws and between the law and the Constitution," Akil said while reading the verdict.