Overtime pertains to the laborious dedication of employees beyond their regular working hours. An employee is deemed to be engaged in overtime if they surpass 7 (seven) hours of work in a day and 40 (forty) hours in a single week, encompassing 6 (six) working days, or 8 (eight) hours per day and 40 (forty) hours in a week, comprising 5 (five) working days. Additionally, this includes work carried out during the working hours of weekly rest days and/or official holidays as designated by the government.

According to the laws in Indonesia, the government has established a maximum limit for overtime, set at 4 (four) hours in a single day and 18 (eighteen) hours in a week. However, this provision does not encompass overtime work performed on weekly rest periods and/or official holidays.

In instances where employees are engaged in overtime, the company bears the obligation to remunerate them with overtime wages, grant sufficient rest periods, and provide sustenance comprising at least 1,400 (one thousand four hundred) kilocalories, which cannot be substituted with monetary compensation, if the overtime work extends for 4 (four) hours or more.

The provision of overtime pay to employees is classified into 2 (two) categories, based on the number of days they work per week, as elucidated below:

1. Employees with 5 (five) working days a week:
   1. Overtime on working days:
      • For the first overtime hour, remuneration is set at 1.5 (one point five) times the hourly wage.
      • From the second to the eighth hour, the rate is increased to 2 (two) times the hourly wage.
   2. Overtime on weekly rest days and/or official holidays:
      • Subsequent overtime hours beyond the eighth hour are compensated at 2 (two) times the hourly wage.
      • For the ninth hour, the rate escalates to 3 (three) times the hourly wage.
      • The tenth, eleventh, and twelfth hours command 4 (four) times the hourly wage.
2. Employees with 6 (six) working days a week:
   1. Overtime on working days:
      • For the initial overtime hour, remuneration amounts to 1.5 (one point five) times the hourly wage.
      • From the second to the seventh hour, the rate stands at 2 (two) times the hourly wage.
   2. Overtime on weekly rest days and/or official holidays:
      • For the initial overtime hour, remuneration amounts to 1.5 (one point five) times the hourly wage.
      • From the eighth hour, compensation increases to 3 (three) times the hourly wage.
      • From ninth, tenth, and the eleventh hours compensation draw 4 (four) times the hourly wage.
   3. Official holidays on the shortest working day:
      • For the initial overtime hour, remuneration amounts to 2 (two) times the hourly wage.
      • For the sixth hour, compensation increases to 3 (three) times the hourly wage.
      • The seventh, eighth, and ninth hours draw 4 (four) times the hourly wage.

The method for calculating overtime wages:

The calculation of overtime wages is based on the monthly salary, using the following formula: (1/173 of the monthly salary).

1. Total Wage Calculation method:
   1. If the total wage comprises solely the basic salary and fixed allowance, the overtime wage is calculated as 1/173 X (100% Monthly Salary).
   2. If the total wage encompasses the basic salary, fixed allowance, and variable allowance, and the sum of the basic salary and fixed allowance is less than 75% (seventy-five percent) of the total wage, then the basis for calculating the overtime wage is equal to 1/173 X (75% Monthly Salary).
2. The calculation of overtime wages for daily workers:
   When the worker is paid on a daily basis, the calculation of the monthly wage is executed as follows:
   1. 6 Working Days The daily wage is multiplied by 25 (twenty-five).
   2. 5 Working Days Output Based the daily wage is multiplied by 21 (twenty-one).
   3. Output Based The monthly wage is determined as the average income over the last 12 (twelve) months.
   4. If the average wage is lower than the minimum wage, the monthly wage utilized for calculating Overtime Wage corresponds to the prevailing minimum wage in the area where the worker is employed.

If the company has already disbursed overtime wages or equivalent compensation under a different denomination, using a calculation method that yields the same or more advantageous outcomes than this method, then the company is deemed to be compliant with Indonesian government regulations.

The implementation of overtime wage payment is governed by the Employment Agreement, Company Regulations, or Collective Labor Agreement.

Should you, as a prospective client, seek further information on the aforementioned subject, Schinder Law Firm stands among the numerous corporate law firms in Indonesia that have handled numerous similar cases, boasting a team of experienced and professional corporate and civil lawyers, rendering it one of the premier consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.

Author: Budhi Satya Makmur