Payroll Rules in Indonesia – Every employee who works in the company is entitled to a salary. Salary is given in accordance with the duties and responsibilities that have been done. Each company usually has its own method and calculation in terms of employee payroll. This is what causes the difference imposed by the company.

Below we inform you about the payroll procedures and rules that employers must comply with.

What is payroll?

Payroll is a flow, procedure or payroll system from a company to employees for a certain period of time with a predetermined disbursement date. This system greatly facilitates the company in the process of paying employees. Payroll calculations are done automatically and accurately.

What is salary?

According to Article 1 number 30 of Law Number 13 of 2003 concerning Manpower (UU 13/2003), wages are workers’ rights that are received and expressed in the form of money as compensation from employers or employers to workers which are determined and paid according to a work agreement, agreements, or laws and regulations, including benefits for workers and their families for a job and/or service that has been or will be performed.

Wage regulations in Indonesia

Based on Perppu Article 81 Number 28 regarding the addition of Article 88A in the Manpower Law.

1. The worker’s right to wages arises when the employment relationship occurs and ends when the employment relationship is terminated.
2. Every worker has the right to equal pay for work of equal value.
3. Employers are obliged to pay wages to workers according to the agreement.
4. The wages set by agreement may not be lower than the wage provisions stipulated in laws and regulations.
5. In the event that the wage agreement is lower or contrary to laws and regulations, the agreement is null and void by law.
6. Delay in payment of wages caused by intention or negligence by the employer, is subject to a fine according to a certain percentage of wages.
7. Workers who commit violations on purpose or by negligence may be fined.
8. The government regulates the imposition of fines on employers and/or workers in payment of wages.

What are the government’s wage policies?

Based on article 88 paragraph (3) Law 13/2003 jo. Law Number 11 of 2020 concerning Job Creation (UU 11/2020) and Government Regulation Number 36 of 2021 (PP 36/2021), the Wages Policy includes:

1. Minimum wage;
2. Wage structure and scale;
3. Overtime pay;
4. Wages not coming to work and/or not doing work for certain reasons;
5. Form and method of payment of wages;
6. Things that can be calculated with wages; and
7. Wages as the basis for calculation or payment of other rights and obligations.

Employee payroll system based on laws and regulations

1. Nominal and components of payroll;
2. Payroll date;
3. Method of payment of salary;
4. Salary calculation;
5. Salary calculation data;
6. Payroll procedures;
7. Payroll method;

Basic components of employee wages

1. Basic Salary;
2. Fixed Allowances;
3. Unstable Allowances;
4. Deductions; > Income tax, BPJS participation in both health and employment, late fines, debt repayments to companies, or sanctions for violation of regulations.
5. Overtime pay;

Non-wage income components

1. Holiday Allowance (THR);
2. Incentives or Bonuses;
3. Work Facility Compensation Money;
4. Service Fee;

Wages do not need to be Paid if the worker does not work, except in certain situations. In which situations are entrepreneurs obligated to give wages?

1. Unable to include:

a. Workers are sick so they cannot do work
b. Women workers who are sick on the first and second day of their menstrual period so they cannot do work
c. Workers are absent from work because:

>  Marry
>  Marry his son
>  Circumcised her son
>  Baptize his son
>  Wife giving birth or miscarriage
>  Husband, wife, parents, in-laws, children and/or in-laws die, or
>  Family members other than those referred to in number 6 who live in 1 (one) house pass away.

2. Carry out other activities outside of work, including:

a. Fulfilling obligations to the state
b. Carrying out the obligations of worship ordered by his religion
c. Carry out the duties of a trade union/labor union with the approval of the employer and can be proven by written notification, or
d. Carry out educational and/or training duties from the company.

3. Execute the right to rest or leave, if the worker carries out:

a. Weekly rest entitlement
b. Annual leave
c. Long rest
d. Rest before and after childbirth, or
e. Rest due to miscarriage

4. Willing to do the work that has been promised but the Employer does not hire him because of the Employer’s own mistakes or obstacles that the Employer should have avoided.

Closing

The payroll process can be done in various ways, either manually or using an application. Both controls are carried out by HR & Finance. If all employee salaries have been calculated and have been checked and are correct, then the payroll process is carried out to employees. Keep in mind, the provisions for payday dates will be adjusted to the policies of each company. Because every company is different, it’s not the same.

Indoservice offers payroll outsourcing services centered on businesses in Indonesia. At Indoservice, we have a dedicated team of professionals who will work with the needs of a good payroll system for your business.

You can count on us to provide the quality of service that best suits your needs. You can contact us at admin@indoservice.co.id or Call/Whatsapp +62877-1449-8500 for further details.