Garment: Work & Wages

01/13 Garment Work & Wages

Garment Minimum Wages

What is minimum wage?

Minimum wage is the lowest wage value determined by the government for each region, and functions as the lowest value limit. It is usually given to a single worker with no working experience. The minimum wage consists of just the basic wage or the sum of basic wage and reguler benefit.

How much is the minimum wage?

The value of minimum wage is different in every region, where the specific Provincial minimum wage and/or the Regency minimum wage is used.

Jakarta Province only applies the Provincial minimum wage which is determinded by the Governor of Jakarta and applicable to all Regencies in Jakarta. In other provinces the Governor determines the minimum wage as the lowest limit for the Province, whereas for Regency minimum wage the values are different for every Regency, but must not be lower than the Provincial minimum wage.

How is the minimum wage determined, and who validates it?

The Governor sets the minimum wage for a Province, based on recommendations from the Provincial wage council and from Regents/mayors to determine Regency minimum wage.

Does it also apply to the garment sector?

The garment sector usually applies the sectoral minimum wage. The sectoral minimum wage is also validated by the Governor and applicable in all Regencies and cities within the Province. The rate is determined by sectoral negotiation involving garment employer(s) and garment trade unions in the region.

Which wage is applicable to the garment sector?

The sectoral minimum wage if any exists in the region; if not, then the general minimum wage is applicable.

Why is the garment’s wage usually higher than the minimum wage?

In the garment sector usually there are some benefits included in the calculation, such as transport benefit, attendance benefit, regular overtime, etc. Those benefits add up and usually result in a higher wage than the minimum. But the minimum wage is assumed to be equal to the basic wage or the sum of basic wage and reguler benefit(s). Irreguler benefit(s) are not supposed to be included in the calculation of minimum wage.

Can a garment employer pay a lower wage than the minimum wage?

The employer cannot pay less than the minimum wage. Lower pay than the minimum regulation may be categorized as a criminal act.

Why are some garment companies allowed to pay below the minimum wage?

A garment company may allowed to pay below the minimum wage if the company submitted a deferment request at the proper time. Such a request may be granted for a specific period if the company fulfills some requirements.

Regular wage in Garment

What is a regular wage?

Regular wage is a payment of wage by the employer to the employee on a regular basis according to the working hours agreed in the contract/agreement.

Does it apply also in the garment industry?

Yes, it also applies in the garment industry.

What are fixed and non-fixed allowances?

Fixed allowances do not depend on attendance, specified targets or achievements. Examples of fixed allowances are the family benefit, position benefit, etc. Non-fixed allowance is based on attendance, specified targets or achievements. Example of non-fixed allowances are attendance benefit, transport beneft, overtime, etc.

What is a payslip?

Basically a payslip is a proof that the company has been paying its workers. It provides evidence in writing. No payslip means that workers can prove they have not been paid.

Are garment factories/companies required to provide payslips to their employees?

The Government Regulation on wages states that employers are required to provide proof of wages payment and that it should contain details of wage components received by workers.

In the garment industry some work on a daily basis. Does the regular wage also apply to them?

Regular wage is applicable to each type of worker, daily or monthly, permanent or on contract of limited duration.

Some wages in garment are paid daily, some weekly or monthly. Is this legal?

Payment of wage is laid down in the working agreement between the employer and employee. Regulations allow for wage’s payment on a daily, weekly, fortnightly, or monthly basis, depending on the arrangement between employer and employee. But once settled, payment must be done according to the date/time as arranged.

What if a garment company cannot pay the wage regularly?

According to article 18 of the Wages regulation, the company is obliged to pay wages at the specific date agreed between the company and its workers. Wages must be paid on the date of payment specified. Wages may be paid directly or through the bank.

The determination of when the wages paid is usually arranged in employment contracts, company regulations, or the collective bargaining agreement (if there’s a union present). The company cannot unilaterally change the time of wage payment.

If the company does not pay its workers’ salaries on time in accordance with the agreed date because of deliberate action or negligence, the company can be fined. These fines do not eliminate the company's obligation to continue paying wages to its workers.

How much is the fine if the company is late in paying?

Employers who pay late and/or didn’t pay their workers will be fined. The percentage of the fines is regulated in article 55 of the Wage regulation:

a) starting from the fourth to the eighth day from the payment date, a penalty of 5% (five percent) for each day of delay;

b) after the eighth day, when wages are still unpaid, in addition to fine referred in paragraph a) 1% (one percent) for each day of delay with the condition that 1 (one) month must not exceed 50% (fifty percent) of the wage payment; and

c) after a month, if still unpaid, the fines referred to in a) and b) will be augmented with the prevailing interest rates of the Government bank.

What can be done by a worker whose company is violating the Regulation on wage?

If a company is violating the Regulation on wage, a worker can take action as follows:

  • negotiate with the company. If no agreement can be reached the worker can take the matter to tripartite level, involving a mediator from the local manpower office.
  • report the problem directly to the labor inspector who is available at the manpower office at the Provincial level.