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Wage Regulation

There are several new rules regulated in Government Regulation no. 36 of 2021 regarding wages

Wage is the right of the Worker that is received and expressed in the form of money as a reward from the Employer to the Worker which is determined and paid according to a Work Agreement  or statutory regulations, including allowances for the Worker and his/her family for a job and/or service that has been or will be performed.

Government Regulation 36 of 2021 concerning Wages discusses policies in wage policy; Wages based on unit of time, Minimum Wages, and Wages Council.

 

WAGE POLICY

OLD RuLE

NEw RUle

Wage policies that protect workers/labor include:

  1. minimum wage;
  2. overtime pay;
  3. wages do not come to work due to absence;
  4. wages are absent from work due to other activities outside of their work;
  5. wages for exercising their right to rest time;
  6. form and method of payment of wages;
  7. fines and deductions from wages;
  8. things that can be calculated with wages;
  9. the structure and scale of remuneration proportional;
  10. wages for severance pay; and
  11. wages for income tax calculations.

Wage policies include:

  1. Minimum wage;
  2. Wage structure and scale;
  3. Overtime wages;
  4. Wages do not come to work and/or do not do work for certain reasons;
  5. Form and method of payment of Wages;
  6. Things that can be calculated with Wages; and
  7. Wages as a basis for calculating or paying other rights and obligations.

 

WAGES BASED ON UNIT OF TIME

OLD RuLE

NEw RUle

Wages are determined based on units of time and units of results. Wages are determined in units of time consisting of daily, weekly, or monthly wages

The wages determined in time units consist of hourly, daily, or monthly wages. Hourly wages only apply to part-time workers. Hourly wages are paid based on an agreement between the Employer and Worker provided that the agreement cannot be lower than the calculation result of the hourly Wage formula is as follows:


Hourly wages = Monthly wages/126

Explanation: The number 126 is the denominator obtained by multiplying 29 hours 1 (one) week with 52 weeks (the number of weeks in 1 year) then divided by 12 months.
29 hours is the highest median working hours for part-time workers/laborers from all provinces.

 

 

MINIMUM WAGE

Minimum Wage explanation can be read in the Minimum Wage article

 

CALCULATE THE MINIMUM WAGE

Formula of Minimum Wage Calculation based on GR 36/2021 can be read here

 

WAGE COUNCIL

Government Regulation No. 36 of 2021 concerning Wages in Chapter V concerning the Minimum Wage still mentions the function of the National, Provincial and Regency/City Wage Councils to provide advice and considerations to the Central Government/governors/regents/mayors in the context of: formulation of wage policies and development the wage system, as well as suggestions and considerations for determining the Provincial Minimum Wage and The Regency/City Minimum Wage.

Article 28 (1)

  1. The calculation of the adjustment of the provincial minimum Wage value as referred to in Article 26 paragraph (2) is carried out by the provincial Wage Council.
  2. The result of the calculation of the adjustment of the provincial minimum Wage value as referred to in paragraph (1) is recommended to the governor through the service that carries out government affairs in the provincial manpower sector.

Article 33

  1. The calculation of the regency/city minimum Wage value is carried out by the regency/city wage council.
  2. The results of the calculation of the regency/city minimum Wage as referred to in paragraph (1) shall be submitted to the regent/mayor to be recommended to the governor through the office that administers government affairs in the provincial manpower sector.
  3. In the event that the result of the calculation of the regency/city minimum Wage is lower than the provincial minimum Wage value, the regent/mayor cannot recommend the regency/city minimum Wage value to the governor.


Regarding the composition, there is no difference in the membership of the Wage Council, except for the existence of a Regency/City Wage Council based on need. This is in line with the rules of the certain requirements that must be met if the governor will set the minimum wage Regency / City. The averaged economic growth of the regency/ city that is higher than the provincial or the value of economic growth in the regency/ city that is higher than the province for the last three (3 ) years.

Article 69

  1. The Wage Council consists of: a. national wage council; and b. provincial wage council.
  2. If necessary, a regency/city wage council may be formed.

 

 

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Source:

  • Indonesia. Government Regulation No. 36 of 2021 concerning Wages
  • Indonesia. Manpower Law No. 13 of 2003

 

 

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