Working overtime has long been seen as common in businesses of any size. It may be voluntary if your employees still need to finish their work on time, but in other cases, it can be mandatory due to the company’s target.
If you are an HR or business owner who wants to implement overtime work at your company, it is essential to understand the regulations concerning overtime working hours set by the government.
The terms and conditions of overtime work are very important to consider because they relate to the fulfillment of employee rights, especially in calculating salary.
Read the explanation below to help you understand Indonesia overtime rate and its basic regulatory framework.
Regulatory Framework of Overtime in Indonesia
Overtime provisions are regulated in UU Number 6 of 2023 (“Job Creation Law”), the newest employment law in Indonesia.
For further implementation, it still refers to the derivative regulations of the old Job Creation Law, namely Government Regulation Number 35 of 2021 (“PP 35/2021”) concerning Working Hours and Overtime.
Based on Job Creation Law and its associated regulations, overtime refers to situations where employees work beyond their predetermined working hours. Companies often employ this practice to meet specific targets in production or other areas.
Also Read: Income Tax in Indonesia for Foreign Businesses
Regular Working Hours
The general provision of employee working hours in Indonesia is 40 (forty) hours a week. Here are the terms:
| Working Days | Working Hours |
| 5 (six) working days in a week | 8 (eight) hours in a day |
| 6 (six) working days in a week | 7 (eight) hours in a day |
If employees work beyond the specified working hours, for example, more than an hour, this is considered overtime. The employer is obliged to ensure that the employee receives the wages or overtime pay.
Certain business sectors and jobs do not adhere to this provision as they have separate regulations governing their working hours. For example, Energy and Mineral Resources (ESDM), General Mining and Fisheries.
Maximum Allowable Overtime Hours
According to Government Regulation 35/2021, the maximum allowable overtime hours depends on the type of overtime. Here are the types and key details :
- Overtime on Working Day
Regular overtime refers to work performed by employees beyond the standard working hours stipulated in their employment contracts or company policies. The maximum allowable overtime hours on a working day is 4 hours per day and 18 days per week.
- Overtime on Weekly Rest Day
It refers to employees who work overtime on weekends or non-working days. The maximum amount of overtime performed on a weekly rest day is 11 hours for 6 working days and 12 hours for 5 working days.
- Overtime on National Holidays
It refers to employees who work on national holidays. The maximum limit for overtime is 9 hours for 6 working days and 12 hours for 5 working days.
Requirement to Implementing Overtime Work
Overtime should ideally be performed only at specific times to maintain employee productivity without compromising health. Before implementing overtime work, employers should pay attention to the following requirements:
- There should be written instructions or through digital media from the employer regarding the overtime. This written order will be used as a basis for accountability to employees, for salary calculations, and for audit needs.
- The instructions contain the list of overtime implementation that contains the name of employees who work overtime, the length of overtime, and the amount of wages that they will receive.
- Approval should be obtained from the relevant worker/laborers who are willing to work overtime, as evidenced by signing the agreement letter. It indicates that the employee is working overtime legally, not forced by the employer.
Overtime Obligations for Employer
In instances where employees are engaged in overtime, employers are obligated to ensure their employee’s rights as written below :
- The employer must pay overtime wages to employee
- The employer must grant adequate rest period, at least 30 minutes after four hours of continuous work
- The employer provide food and drinks at least 1,400 (one thousand four hundred) kilocalories, which cannot be substituted with monetary compensation, in case employee work beyond 4 hours
The detail about overtime pay above do not apply to employee in certain position in your business, who get higher wages, responsible for thinking, planning, and controlling company operations, and whose time cannot be restricted by working hours as set by the company.
Also Read: Employment Types in Indonesia: Contracts and Regulations
The Provision of Indonesia Overtime Rate
The overtime rate in Indonesia depends on : (1) regular working hours of the employee, five or six working days in a week, (2) days on which the employees are required to work overtime, between working day, weekly rest day, or national holiday, and (3) the employee overtime hourly rate.
To make it easier for you to understand, here is a key detail of Indonesia overtime rate and the method to calculate them.
Overtime on Working Day
Here is the overtime pay calculation during weekday or working day :
| Overtime hours | The formula |
| For the first hour | 1,5 x 1/173 x monthly salary |
| For the subsequent hour | 2 x 1/173 x monthly salary |
In this overtime calculation, you need to pay attention to the payroll system that your company uses.
- If the total wages comprise solely the basic salary and fixed allowance, the overtime wage is calculated as: 1/173 X (100% of Monthly Salary).
- If the total wages encompass the basic salary, fixed allowance and non-fixed allowance, then the overtime wage is: 1/173 X (75% Monthly Salary).
For example, Nia has a basic salary and fixed allowances of Rp6,000,000 a month in a company that implements 5 working days. She works overtime for 2 hours per day for a week. How much overtime pay will she get?
| For the first hour | 1 hour x 5 days x 1,5 x (1/173) x Rp6.000.000 | Rp 260.116 |
| For the subsequent hour | 1 hour x 5 days x 2 x (1/173) x Rp6.000.000 | Rp 346.821 |
| Total overtime pay | Rp 606.937 | |
Overtime on Weekend and National Holiday
The calculation of overtime rate public holiday or/and weekly rest day is different, as follows :
| Working hour | Holiday Type | Overtime hour | The formula |
| 5 days a week | weekly rest day and national holiday | The first 8th hour | 2 x hourly wage |
| The 9th hour | 3 x hourly wage | ||
| The 10th – 12th hour | 4 x hourly wage | ||
| 6 days a week | weekly rest day | The first 7th hour | 2 x hourly wage |
| The 8th hour | 3 x hourly wage | ||
| The 9th – 11th hour | 4 x hourly wage | ||
| national holiday | The first 5th hour | 2 x hourly wage | |
| The 6th hour | 3 x hourly wage | ||
| The 7th – 9th hour | 4 x hourly wage |
For the illustration, Randi works in a company with 6 working days. He has a monthly salary of Rp7,000,000 (including fixed and non-fixed allowances). On his day off, which is Sunday, the company asks Randi to work for 9 hours. How much overtime pay will Randi receive?
Also Read: Indonesia Labor Law: Key Rules for Foreign Business
We can calculate the overtime pay as follows :
| For the first 7th hour | 7 hour x 2 x (1/173) x 75% x Rp7.000.000 | Rp 424.855 |
| For the first hour | 1 hour x 3 x (1/173) x 75% x Rp7.000.000 | Rp 91.040 |
| For the subsequent hour | 1 hour x 4 x (1/173) x 75% x Rp7.000.000 | Rp 121.387 |
| Total overtime pay | Rp 637.282 | |
The above calculation uses the formula of a 6 working day and an overtime multiplier of 75% of the total monthly wage because Randi has a non-fixed allowance.
Managing Overtime Calculation with Gadjian App
Overtime pay is one component of salary calculation. Having separate systems for scheduling overtime work, tracking overtime hours, and calculating overtime pay only makes it harder to keep track of how much overtime is costing your organization.
To simplify payroll administrative management, you need the Gadjian payroll software. Gadjian is the leading cloud-based payroll and HR software in Indonesia. This software’s main feature is calculation employee salary, including overtime pay.
HRIS Gadjian is user-friendly and accessible to all employees. Accurate overtime calculator helps prevent errors and ensure employees are paid correctly for their overtime hours.
In addition, Gadjian also provides the first payroll outsourcing service in Indonesia, Pegawe platform. This would be useful if you are still in the early stages of expanding your business. You can focus on growing your business and let Pegawe Apps handle your payroll system.
Experience the benefits of automation of Indonesia overtime rate calculation with Gadjian by signing up for a free 14-day trial. Elevate your overtime work management to the next level with Gadjian and Pegawe software.
