Discover Remuneration and Its 4 Components Here

Some people, especially those new to the professional world, may not be very familiar with remuneration. However, many are already acquainted with the basic concept behind the term. Simply put, remuneration refers to the compensation that employees receive as a reward for their contributions to a company.

In Indonesia, remuneration encompasses not only the base salary but also various types of allowances and additional benefits aimed at maximizing employee welfare and loyalty. To gain a deeper understanding of what remuneration is and the different types of remuneration, dive into the details here!

Components of Employee Remuneration in Indonesia

A detailed explanation of the types of remuneration includes base salary, cash allowances, holiday bonuses, and non-cash allowances:

1. Base Salary

The primary component of a remuneration package is the base salary. The base salary is a fixed amount of money paid to employees on a consistent monthly basis. It is typically determined based on the employee’s position, responsibilities, and experience and does not include allowances, bonuses, or other forms of compensation.

Conversely, the base salary often serves as the basis for calculating allowances, such as meal allowances, transportation allowances, or annual bonuses. For example, holiday allowances or pension allowances are usually calculated as a certain percentage of the base salary.

2. Cash Allowances

The second component of a remuneration package is cash allowances. Cash allowances include several types of additional compensation provided to employees in cash, including:

• Position Allowance

The position allowance is compensation given based on the employee’s position or role within the company. This allowance is fixed and its amount depends on the company’s policy. Generally, position allowances are given to employees with specific responsibilities or those in positions requiring particular skills.

• Meal Allowance

This allowance is provided to employees as compensation for their meal expenses during working hours. However, meal allowances are typically only given to employees who are present at the office. The amount varies between companies but is generally around IDR 25,000 per day in Indonesia.

• Transportation Allowance

The transportation allowance compensates employees for their commuting expenses to the workplace. Similar to meal allowances, transportation allowances are usually provided only to employees who are present at the office, with an average amount of IDR 50,000 per day.

• Housing Allowance

Housing allowances are given to employees assigned to work outside their home city. The amount varies depending on the location and living standards in that area. Additionally, housing allowances are usually provided in cash, allowing employees the flexibility to rent accommodation according to their needs and the amount of the allowance.

• Phone Credit Allowance

Phone credit allowances are often provided in cash specifically allocated for employees’ communication needs. The amount typically ranges from IDR 300,000 to IDR 500,000 per month, depending on the company’s policy, job level, work location, and communication needs. For instance, positions requiring intensive communication may receive higher allowances.

3. Holiday Bonus

The third component of the remuneration package is the holiday bonus. This is an annual bonus, which can be equivalent to the employee’s base salary, and is generally paid two weeks before the holiday period.

4. Non-Cash Allowances

The final component of the remuneration package is non-cash allowances. In Indonesia, there are two types of non-cash allowances that companies are required to provide to employees: BPJS Employment and BPJS Health.

Companies must register their employees in both programs and pay contributions, usually calculated as a percentage of the employee’s salary. Here are the details:

• BPJS Employment

BPJS Employment is a social security program designed to protect employees from work-related risks. The program includes several types of insurance and guarantees, such as:

1. Work Accident Insurance (JKK): Provides financial protection for employees who suffer work-related accidents, including medical expenses and compensation for disability.
2. Death Insurance: Offers financial protection to the heirs or family of employees who die due to a work-related accident.
3. Old Age Guarantee (JHT): This program saves a portion of the employee’s salary in a savings account to be provided upon retirement.

• BPJS Health

BPJS Health is a health insurance program aimed at ensuring employees and their families have access to adequate healthcare services. The benefits of this program include:

1. Healthcare Services: BPJS Health provides access to various medical services, including routine check-ups, treatment, hospitalization, and other medical procedures.
2. Hospitalization Classes: BPJS Health offers inpatient facilities according to the BPJS class designated for employees.

In summary, remuneration is a crucial aspect of the employment relationship that both parties, especially companies, should understand and adhere to. Remuneration systems can enhance employee loyalty and motivation, which in turn positively impacts the company’s progress and success.

However, managing remuneration can be quite time-consuming, potentially diverting your company’s focus from important business development activities. Therefore, instead of handling all the complexities internally, you should consider using Outsourcing services from professional providers, such as RecruitFirst Indonesia.

We have a skilled and experienced team capable of managing payroll and employee benefits accurately. By using our outsourcing services, you can ensure your employees are well-compensated while your company remains focused on strategic business development.

Additionally, we can assist with human resource management, including recruitment processes, finding candidates with specific skills, and more. Interested in partnering with us? Contact us now and let’s discuss how we can help manage your payroll, benefits, and human resource management!