|

Understanding and Adhering to Indonesia’s Overtime Pay Provisions

Overtime Pay Provisions

Employees have the right to a healthy and comfortable working environment and to avoid work environments that have adverse impacts on their physical and mental health. To protect this right, employees are entitled to reasonable and humane working hours with adequate breaks and rest periods. If these working hours must be exceeded, the employer has an obligation to provide compensation in the form of overtime pay.

This article outlines the basic regulatory framework regarding employee rights to reasonable working hours and overtime pay in Indonesia and details the factors, formula, and exemptions to overtime pay provisions in Indonesia as regulated in Law Number 13 of 2003 concerning Employment, as partially amended by Government Regulation in Lieu of Law Number 2 of 2022 and subsequently ratified through Law Number 6 of 2023 (“Employment Law”) and Government Regulation Number 35 of 2021 on Temporary Employment Agreement, Outsourcing, Working Hours and Breaks, and Termination of Employment Relationships (“GR 35/2021”).

  1. Working Hours Provisions
    Pursuant to Article 21 GR 35/2021, employers are required to implement the following working hours for their employees:

    Working Days

    Working Hours

    6 (six) working days in a week

    7 (seven) hours in a day; and

     40 (forty) hours in a week

    5 (five) working days in a week

    8 (eight) hours in a day; and

    40 (forty) hours in a week

    Note: Please note that the aforementioned working hours are a general provision. There are certain business sectors and jobs that do not adhere to this provision as they have separate regulations governing their working hours.

    Pursuant to Article 21 GR 35/2021, employers are required to implement the following working hours for their employees

    Overtime Pay Provisions
    Read More: Social Security and Employee Welfare in Indonesian Employment Practices

  2. Overtime Pay Provisions
    Employers are permitted to require their employees to work beyond their specified working hours or overtime, provided they adhere to the provisions in Article 26-29 of GR 35/2021. In such cases, the employer is required to issue a written order and obtain a signed consent from the employees concerned, either through written or digital means. 

    In general, the implementation of overtime is limited to a maximum of 4 (four) hours in 1 (one) day and 18 (eighteen) hours in 1 (one) week, excluding overtime during weekly breaks and/or national holidays. Employers are also obligated to ensure that employees receive the necessary provisions, which include (i) overtime pay; (ii) adequate breaks or rest periods; and (iii) food and drink totaling at least 1,400 (one thousand four hundred) kilocalories if overtime is performed for 4 (four) hours or more.

  3. Overtime Pay Calculation
    Employers are obligated to provide overtime pay to employees working beyond their specified working hours. Pursuant to Article 31 GR 35/2021, the amount of overtime pay depends on (i) standard working hours of the employees (5 (five) working days or 6 (six) working days in one week); (ii) days on which the employees are required to work overtime (working days or weekly rest days and/or national holidays); and (iii) the employees’ hourly wage. This provision is further detailed in Article 32 GR 35/2021, which outlines a comprehensive formula to calculate the amount of overtime pay in relation to the aforementioned factors.Please note that while GR 35/2021 provides standard provisions for overtime pay, employers may use different names and values for overtime pay as long as they meet or exceed the standard provisions. The specifics of the alternative overtime pays should be outlined in the employment agreement, company regulations or collective employment agreement. Additionally, different business sectors or locations may have specific regulations related to overtime pay.

    Overtime Pay Provisions
    Read more: Fair Compensation

  4. Exemptions to Indonesia’s Overtime Pay Provisions
    Pursuant to Article 27 GR 35/2021, the provisions for overtime pay as detailed above do not apply to employees in certain location of business or certain positions in the office, namely positions that have responsibilities as thinkers, planners, executors, and/or controllers of company operations with working hours that cannot be limited and with higher wages. Wage arrangements for these positions shall be further regulated in the employment agreement, company regulations, or collective employment agreement

To gain comprehensive insights and expert guidance in navigating the provisions on employee rights in employment practices in Indonesia, ADCO Law stands ready to furnish the necessary assistance. Stay well-informed and maintain compliance to ensure equitable treatment and support for your workforce in Indonesia.

For further details regarding employee rights in relation to overtime pay in Indonesia’s employment landscape, feel free to reach out to our firm.

***

About ADCO Law:

ADCO Law is a firm that offers clients a wide range of integrated legal services, including in commercial transactions and corporate disputes in a variety of industry sectors. Over the course of more than a decade, we have grown to understand our client’s industry and business as well as the regulatory aspect. In dealing with business dynamics, we provide comprehensive solid legal advice and solutions to minimize legal and business risks.

ADCO Law is a Proud Member of the Alliott Global Alliance (AGA) in Indonesia. Founded in 1979, AGA is one of the largest and fastest-growing global multidisciplinary alliances, with 215 member firms in 95 countries.

As a law firm, we also believe in regeneration. To stay abreast of business changes and stay relevant, our formation of lawyers is comprised of the top graduates from Indonesian and international law schools.

Should you have more queries regarding this matter, please do not hesitate to contact us

ADCO Law

Setiabudi Building 2, 2nd Floor, Suite 205C

Jl. H.R. Rasuna Said Kav. 62, Setiabudi Karet

Jakarta Selatan, 12920, Indonesia.

Phone : +6221 520 3034

Fax : +6221 520 3035

Email : inquiry@adcolaw.com

 

Disclaimer: This article has been prepared for scientific reading and marketing purposes only from ADCO Law. Accordingly, all the writings contained herein do not constitute the formal legal opinion of ADCO Law. Therefore, ADCO Law should be held harmless of and/or cannot be held responsible for anything performed by entities who use this writing outside the purposes of ADCO Law.