Understanding Overtime Regulations and Its Wage Calculations for Employees

Overtime refers to situations where employees work beyond their predetermined working hours. This practice is often employed by companies to meet specific targets, whether in production or other areas. 

According to Government Regulation of the Republic of Indonesia No. 35 of 2021, overtime is permitted for a maximum of 4 hours per day and 18 hours per week. This provision aims to provide clear boundaries for companies, ensuring that employees are not exploited in fulfilling their duties. Overtime should ideally be performed only at specific times to safeguard the health and well-being of employees. Therefore, these limitations are intended to maintain employee productivity without compromising their health.

Furthermore, as stipulated in the regulation under the Decree of the Minister of Manpower and Transmigration of the Republic of Indonesia No. 102 of 2004, Article 1, Paragraph 1, overtime work is defined as follows:

• Working more than 8 hours per day and 40 hours per week over 5 working days.

• Working more than 7 hours per day and 40 hours per week over 6 working days.

• Working on weekly rest days (Saturday/Sunday) or national holidays.

Additionally, it is specified that employees cannot perform overtime work daily and without time limits.

Working Hours and Overtime Regulations

Before delving into the formulas and methods for calculating overtime wages on holidays, it is essential to understand the regulations concerning working hours set by the government. In Indonesia, the provisions regarding working hours for employees are regulated under Law No. 13 of 2003 on Manpower.

This law stipulates that employees are expected to work for 7 hours a day or 40 hours a week, distributed over six days a week. Alternatively, employees can work for 8 hours a day, totaling 40 hours a week for five working days. However, there are three specific sectors excluded from these working hour provisions: Energy and Mineral Resources (ESDM), General Mining, and Fisheries.

Furthermore, according to Article 78 of Law 13-2003, overtime is only allowed for a maximum of 3 hours per day and 14 hours per week. If employees work beyond the time limits set in Article 77 of the same law, employers are required to provide compensation in the form of overtime pay.

Types of Overtime and Wage Calculations

To calculate overtime wages, the formula used is:

• Overtime wage per hour = Monthly salary x 1/173

With this formula, employees can calculate how much overtime pay they will receive based on the overtime hours worked.

Generally, overtime is divided into two types: overtime on regular working days and overtime on rest days or public holidays. For clarity, here is a detailed explanation:

1. Overtime on Working Days

• For the first hour, employees are entitled to 1.5 times their hourly wage.

• For subsequent hours, they receive 2 times their hourly wage.

2. Overtime on Weekends or Official Holidays

5 Working Days:

• 2 times the hourly wage for the first 8 hours.

• 3 times the hourly wage for the 9th hour.

• 4 times the hourly wage for the 10th and 11th hours.

6 Working Days:

• 2 times the hourly wage for the first 7 hours.

• 3 times the hourly wage for the 8th hour.

• 4 times the hourly wage for the 9th and 10th hours.

Implementation of Overtime Policies in Companies

Typically, outsourcing companies will request the company regulations that specify the overtime wage rates. Some companies refer to Government Regulations (PP) but add meal and transportation allowances when employees work beyond 4 hours. This indicates that each company has unique and specific overtime policies.

Meanwhile, some companies do not fully adhere to government regulations but use their internal policies. These policies are usually documented in the company regulations and included in the employee’s employment contract.

Whichever policy a company chooses, its overtime regulations must be applied consistently and fairly. To focus on your core strategy, entrust your recruitment and employee management to RecruitFirst Indonesia. As an outsourcing company, we can ensure that overtime policy information is communicated clearly and transparently to employees from the start. Contact us today!