Jan

13

Calculating the Overtime Wage: Key Provisions Your Company Should Know

The calculation of overtime wage is regulated in Article 26, Article 29, Article 31 Paragraph (1), Article 31 Paragraph (2), Article 31 Paragraph (3) and Article 32 of Government Regulation no. 35 of 2021 concerning Employment Agreements for Certain Time, Expert Power, Working Time and Rest Time, and Termination of Employment (“GR 35/2021”).

Company Obligation

Article 26 states that overtime can only be worked at most 4 (four) hours in 1 (one) day and 18 (eighteen) hours in 1 (one) week and Article 29 further explains when a company employs workers/labourers overtime, they are obliged to pay overtime wage, provide workers/labourers sufficient amount of rest period and provide food and beverages with a minimum of 1,400 (one thousand four hundred) kilo calories if overtime work is carried out for 4 (four) hours or more.

Further, Article 31 Paragraph (1) states that companies that employ workers/labourer’s overtime are obliged to pay overtime wage under the condition of the first overtime hour of 1.5 (one point five) times the hourly wage, and for each subsequent hour of overtime, 2 (two) times the hourly wage. Moreover, as stated in Article 31 Paragraph (2), companies that employ workers/labourers as referred to in paragraph (1) must pay overtime wage if the overtime work is done on weekly rest days and/or official holidays for 6 (six) working days and 40 (forty) hours a week using the following calculation: :

  1. The first hour to the seventh hour will be paid 2 (two) times the hourly wage;
  2. The eighth hour will be paid 3 (three) times the hourly wage; and
  3. The ninth hour, tenth hour, and eleventh hour will be paid 4 (four) times the hourly wage;

Furthermore, Article 31 Paragraph (3) states that companies that employ workers/labourers as referred to in paragraph (1) must pay overtime wage if the overtime work is done on weekly rest days and/or official holidays for 5 (Five) working days and 40 (forty) hours a week using the following overtime calculation:

  1. The first hour to the eighth hour will be paid 2 (two) times the hourly wage;
  2. The ninth hour will be paid 3 (three) times the hourly wage; and
  3. The tenth hour will be paid 4 (four) times the hourly wage;

Furthermore, as stated in Article 31 Paragraph (2) letter b, if a legal holiday falls on the shortest working day, then overtime wage calculation is carried out as follows:

  1. The first hour to the fifth hour will be paid 2 times the hourly wage;
  2. The sixth hour will be paid 3 times the wage per hour; and
  3. The seventh hour, the eighth hour and the ninth hour will be paid 4 times an hour’s wage

How to Calculate
Article 32 of GR 35/2021 sets that the calculation of overtime wages is based on monthly wage. The method of calculating an hourly wage is 1 / 173 (One Over One hundred and seventy-three), then multiplied by a month’s wage.

Calculating Overtime Wage:
Number of Overtime Hours x Multiplier According to Government Provisions x (1/173) x One Month’s worth of wage.

Sample:

Susan works 7 hours per day from Monday to Friday and 5 hours on Saturday, which is equivalent to 40 hours per week. Susan has one day of rest, which is on Sunday. However, recently, the company’s sales have increased and Susan was asked by the company to work overtime for 3 hours on Sundays for 4 weeks. The net salary and allowances that Susan receives every month is Rp. 6,000,000. Thus, a total of 12 hours of overtime pay (4 days x 3 hours) is expected from Susan. Here is the calculation of the overtime wage that Susan will obtain.

  • First 7 hours = 7 x 2 x 1/173 x Rp.6.000.000= Rp. 485,549
  • 8th hour = 1 x 3 x 1/173 x Rp.6.000.000= Rp. 104,046
  • Next 4 hours = 4 x 3 x 1/173 x Rp.6.000.000= Rp. 416,184
  • Overtime wages earned by Susan
    = Rp. 485,549 + Rp. 104,046 + Rp. 416,184 = Rp.1,005,779

How Schinder Can Help

Our team of lawyers has extensive experience assisting clients with employment legal matters. Should you need any advice or service related to the calculation of overtime wages, please feel free to contact us at info@schinderlawfirm.com.

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