Depan » Dasar-dasar Ilmu HRD » Indonesian Labor Law » A Complete Guide to Calculate Overtime Pay in Indonesia

A Complete Guide to Calculate Overtime Pay in Indonesia

Calculate Overtime Pay in Indonesia with HRIS Software and HR Application | Gadjian

To create a balance between employees’ rights and obligations, it is necessary that a company ascertain overtime pay policy. The government has issued several rules to protect both the employees and employers in regards to this matter; to ensure that both parties obtain their rights. These rules include:

  1. Law No.13 of 2003 on Labor Affairs (Undang-Undang No. 13 tahun 2003 tentang Ketenagakerjaan);
  2. Decree of the Minister of Labor and Transmigration of the Republic of Indonesia No.102 MEN/VI/2004 on Overtime and Overtime Pay (Keputusan Menteri Tenaga Kerja dan Transmigrasi Republik Indonesia Nomor KEP.102/MEN/VI/2004 tentang Waktu Kerja Lembur dan Upah Kerja Lembur)
  3. Government Regulation No.78 of 2015 on Wage Payment (Peraturan Pemerintah No.78 tahun 2015 tentang Pengupahan)

In general, overtime pay is a compensation that must be paid by employers who ask employees to work overtime, on weekends, or national holidays. According to the Decree of the Minister of Labor and Transmigration of the Republic of Indonesia No.102 MEN/VI/2004 Article 1, a company shall pay overtime wage for employees who:

  • Work more than 7 hours a day and 40 hours a week for 6 working days
  • Work more than 8 hours a day and 40 hours a week for 5 working days
  • Work on weekends and national holidays

However, as evidence of their extra hours of work, employees must submit a signed SPL (Surat Penugasan Lembur/Letter of Assignment to Work Overtime). Keep in mind, although the company intends to pay the overtime, they must also obtain the employees’ approval to work the extra hours.

Also Read: How to Calculate Social Security Administration for Employment in Indonesia (BPJS Ketenagakerjaan)

The implementation of overtime work should be made in details, including a list of workers, time, purpose, and so forth. In addition, employees are only allowed to work overtime for 3 hours in a day and 14 hours a week at most (excluding overtime during weekends or national holidays).

There are 2 (two) methods to calculate the overtime pay:

  1. For overtime on weekdays, the rate is 1.5x the hourly wage for the first hour and 2x hourly wage for the next hours.
  2. For overtime on weekly holidays and national holidays:

a. For companies with 5 working days, the rate is 2x the hourly wage for the first 8 hours, 3x hourly wage for the 9th hour, and 4x hourly wage for the 10th and 11th hours

b. For companies with 6 working days, the rate is 2x the hourly wage for the first 7 hours, 3x hourly wage for the 8th hour, and 4x hourly wage for the 9th and 10th hours

c. For holidays that fall on the shortest working day (e.g., Friday), the rate is 2x the hourly wage for the first 5 hours, 3x hourly wage at the 6th hour, and 4x hourly wage at the 7th and 8th hours

Note: the hourly wage is calculated using the following formula: 1/173 x monthly wage, which is a 100% monthly main salary and a fixed allowance or 75% of main salary if you receive a fixed allowance and non-fixed allowance (Regulation of the Minister of Labor and Transmigration No. KEP 102/MEN/VI/2004 Article 8 Paragraph (2)). 

Also Read: Infographic of Indonesia Minimum Wage 2018 (Provincial Minimum Wage/UMR)

The calculation of overtime pay is specified in the Law of the Republic of Indonesia No.13 the Year 2003 concerning Labor Affairs, which states that one-hour overtime pay is 1/173 times the monthly wage.

Overtime pay = (1/173) x One-month wage
(Note: wages are main salary + fixed allowance)

Example of Overtime Pay Calculation

1. Overtime on Weekdays

Rifki works in a company that implements the system of 8-hours work/day and 40-hours work a week. Rifki’s earns Rp 1.500.000/month, which includes the main salary and fixed allowance. He has worked overtime for 3 consecutive days with estimated overtime as follows:

Monday: 3 Hours | Tuesday: 2 Hours | Wednesday: 1 Hour

Day

Total working hours Normal working hoursOvertime

Overtime pay

    

1st hour

2nd hour

3rd hour

Monday

11 hours8 hours3 hours1.5x2x2x

Tuesday

10 hours8 hours2 hours1.5x2x

Wednesday

9 hours8 hours1 hour1.5x

   Total4.5x4x

2x

The calculation is as follows:

Monthly wage: Rp 1.500.000
Overtime pay/hour: 1/173 x Rp 1.500.000 = Rp 8.671
Overtime pay/week: 10.5 x Rp 8.671 = Rp 91.000

2. Overtime on National Holidays

Mr. Doni had to work overtime on Friday, which was the national public holiday. Currently, Mr. Doni earns Rp 2.000.000/month. Since Friday was a short working day, he worked for 5 hours plus 3 extra hours starting at 7 PM. So, Mr. Doni’s overtime pay would be:

First 5 hours: 5 hours x 2 x 1/173 x Rp 2.000.000 = Rp 115.607
The 6th hour: 1 hour x 3 x 1/173 x Rp 2.000.000 = Rp 34.682
The 7th to 8th hour: 1 hour x 4 x 1/173 x Rp 2.000.000 = Rp 46.243

Therefore, the amount of overtime pay that Mr. Doni earned is:

Total overtime pay = Rp 115.607 + Rp 34.682 + Rp 46.243 = Rp 196.532

Calculating the employee overtime pay may seem quite complicated. Still, it is not an excuse not to provide overtime pay properly. Thankfully, there is a lot of easier ways to calculate overtime pay. Gadjian and Hadirr are HR applications which offer an integrated technology to calculate the amount of overtime pay according to the total days and hours of work, as well as employee attendance records. Using these apps, employers can ensure that employees obtain their rights as workers, and the productivity of the company is well maintained.

Payroll Software Indonesia Untuk Mengelola Keuangan & Karyawan Perusahaan, termasuk perhitungan PPh 21, perhitungan BPJS, dan perhitungan lembur | Gadjian

Share

No Thoughts on A Complete Guide to Calculate Overtime Pay in Indonesia

Leave A Comment