Garment: Compensation

OVERTIME PAY FOR GARMENT WORKERS

OVERTIME COMPENSATION

1. What is overtime work?
2. Do I get paid for doing overtime work?
3. Is there a maximum limit of overtime hours for garment workers?
4. Can garment company force its workers to work overtime because of the large number of target order from buyer?
5. Does the garment sector fall under the types of works that must be performed continuously as regulated by ministerial decree?
6. How to calculate overtime pay?
7. Does employer have to provide meal for the workers who work overtime?

NIGHT WORK COMPENSATION IN GARMENT SECTOR 

1. What is night work compensation?
2. Are garment workers entitled to night work compensation?
3. Is the company also required to provide night work compensation in the form of money?

COMPENSATION TO WORK ON WEEKLY REST DAY AND NATIONAL HOLIDAY IN GARMENT SECTOR

1. Are garment workers entitled to day off on weekly rest day and national holiday?
2. Can garment company employ its workers during weekly rest day/national holiday?
3. Can garment company replace its workers’ holiday/day off? 
4. How to calculate overtime pay on weekly rest day/official holiday?
5. What can be done by workers whose garment company commits violation on overtime pay?

OVERTIME WORK COMPENSATION 

The working hour stipulated by statutory regulation is 7 hours per day for 6 working days and 40 hours per week or 8 hours per day for 5 working days and 40 hours per week. Employer who employs workers exceeding the said working hour is obliged to pay Overtime Wage. With provision that overtime work can only be performed for a maximum of 4 hours in 1 day and 18 hours in 1 week. 

Overtime work carried out must be subject to the employer’s instruction and the relevant worker’s consent in writing and/or through digital media.

Furthermore, employer is obliged to provide overtime pay, with provisions:

1. For the first overtime hour, of 1.5 times the hourly wage
2. For every subsequent overtime hours, of 2 times the hourly wage
3. The calculation of overtime pay as mentioned above is different if overtime work is carried out on weekly rest day and/or official holiday.

WHAT IS OVERTIME WORK?

Overtime hour is working hour that exceeds 7 hours per day for 6 working days and 40 hours per week or 8 hours per day for 5 working days and 40 hours per week or working hour on weekly rest day and or on official holiday determined by the Government (Article 1 paragraph 1 of Ministerial Decree of Manpower No. 102/MEN/VI/2004 concerning Overtime and Overtime Pay).

DO I GET PAID FOR DOING OVERTIME WORK?

Yes. Employer who employs workers beyond working hours MUST pay overtime pay. However, this overtime provision does not apply to certain business sectors or types of works. Article 27 of Government Regulation Number 35 of 2021 concerning Specific Time Work Agreement, Outsourcing, Working Time and Rest Time, and Termination of Employment (Government Regulation 35/2021) regulates the exclusion to the obligation to pay overtime pay, namely for workers in certain positions, who have responsibilities as thinker, planner, implementer, and/or controller of the company operation with unlimited working hours and higher wages. Furthermore, Article 27 of Government Regulation 35/2021 authorizes each company to regulate such certain positions in Work Agreement, Company Regulation, or Collective Labor Agreement applicable in the company.

IS THERE A MAXIMUM LIMIT OF OVERTIME HOURS FOR GARMENT WORKERS?

In Article 78 paragraph (1) of Law Number 13 of 2003 concerning Manpower (Law 13/2003) jo. Law Number 11 of 2020 concerning Job Creation (Law 11/2020) as well as Article 28 of Government Regulation 35/2021 confirms that overtime work can only be performed for a maximum of 4 (four) hours in 1 (one) day and 18 (eighteen) hours in 1 (one) week. However, this provision does not apply to certain business sectors or works to be regulated in Government Regulation.

CAN GARMENT COMPANY FORCE ITS WORKERS TO WORK OVERTIME BECAUSE OF THE LARGE NUMBER OF TARGET ORDER FROM BUYER?

The worker’s consent to work overtime is a mandatory requirement as referred to in Article 78 paragraph (1) of Law 13/2003 jo. Law 11/2020, and Article 28 of Government Regulation 35/2021. Furthermore, Article 188 of Law 13/2003 jo. Law 11/2020 states that violation to the provision of obtaining consent from workers to work overtime can be subject to criminal sanction of a minimum fine of Rp. 5,000,000.00 (five million rupiah) and a maximum of Rp. 50,000,000.00 (fifty million rupiah).

Based on the set of rules mentioned above, it means that company cannot force workers who refuse to work overtime, even employer can be punished if it forces workers to work overtime.

DOES THE GARMENT SECTOR FALL UNDER THE TYPES OF WORKS THAT MUST BE PERFORMED CONTINUOUSLY AS REGULATED BY MINISTERIAL DECREE?

No, the garment sector does not fall under the types of works that must be performed continuously. The types of works performed continuously according to Ministerial Decree of Manpower and Transmigration No. Kep-233/Men/2003 concerning Types and Nature of Works Performed Continuously. Article 3 paragraph (1) states that the relevant works are:

1. On health service sector
2. On transportation service sector
3. On transportation repair service sector
4. On tourism business 
5. On postal service sector
6. On electricity supply, clean water service network (PAM) and supply of fuel oil and natural gas sector
7. On supermarket, shopping center and the like
8. On mass media sector
9. On security sector
10. On conservation institution
11. Types of works of which any cessation will disrupt the production process, damage material, and including maintenance/repair of production equipment

HOW TO CALCULATE OVERTIME PAY?

Referring to the provisions of Article 31 of Government Regulation 35/2021, the overtime pay calculation is as follows: 

1. For the first overtime hour, of 1.5 (one point five) times the hourly Wage; and for each subsequent overtime hours, of 2 (two) times the hourly Wage.

2. If overtime work is carried out on weekly rest days and/or official holidays for the working time of 6 (six) working days and 40 (forty) hours per week, then:

• Calculation of overtime pay for the first hour to the seventh hour shall be of 2 (two) times the hourly Wage; the eighth hour of 3 (three) times the hourly Wage; and the ninth hour, tenth hour, and eleventh hour, of 4 (four) times the hourly Wage
• If the official holiday falls on the shortest working day, the calculation of Overtime Pay is carried out as follows: the first hour to the fifth hour of 2 (two) times the hourly Wage; the sixth hour of 3 (three) times the hourly Wage; and the seventh hour, the eighth hour, and the ninth hour of 4 (four) times the hourly Wage.

3. If overtime work is carried out on weekly rest days and/or official holidays for the working time of 5 (five) working days and 40 (forty) hours per week, then: calculation of Overtime Pay for the first hour to the eighth hour shall be of 2 (two) times the hourly Wage; the ninth hour of 3 (three) times the hourly Wage; and the tenth hour, the eleventh hour, and the twelfth hour of 4 (four) times the hourly Wage.

Note: Calculation of Overtime Pay based on monthly wage is by calculating the hourly wage of 1/173 x monthly wage. 

DOES EMPLOYER HAVE TO PROVIDE MEAL FOR THE WORKERS WHO WORK OVERTIME?

Yes. Employer who employs workers to work overtime MUST pay Overtime Pay, provide opportunity for adequate rest, and provide meal and drinks for at least 1,400 (one thousand four hundred) kilo calories, if overtime work is carried out for 4 (four) hours or more. The provision of meal and drink cannot be replaced in the form of money.  

NIGHT WORK COMPENSATION IN GARMENT SECTOR 

WHAT IS NIGHT WORK COMPENSATION?

Compensation means anything that workers receive as financial reward or remuneration for the works they have performed. Night work compensation means the financial reward received by workers who perform night work.

ARE GARMENT WORKERS ENTITLED TO NIGHT WORK COMPENSATION?

Law 13/2003 concerning manpower recognizes night work compensation only for female workers working at night (between 23.00 – 07.00). They MUST be provided with nutritious meal and drinks, and must be guaranteed safety and decency at workplace. And, employer MUST provide shuttle transportation for female workers working between 23.00 - 05.00.

IS THE COMPANY ALSO REQUIRED TO PROVIDE NIGHT WORK COMPENSATION IN THE FORM OF MONEY?

There is no rule governing night work compensation in the form of money. Therefore, the company can regulate this matter specifically in work agreement, company regulation, or collective labor agreement, insofar as it shall not violate Manpower regulation and harm the workers' rights.

COMPENSATION TO WORK ON WEEKLY REST DAY AND NATIONAL HOLIDAY IN GARMENT SECTOR

ARE GARMENT WORKERS ENTITLED TO DAY OFF ON WEEKLY REST DAY AND NATIONAL HOLIDAY?

Yes. Garment workers are entitled to day off after one week of work, both for those who work 5 days per week and 6 days per week. In addition, garment workers are also entitled to day off on national holidays.

CAN GARMENT COMPANY EMPLOY ITS WORKERS DURING WEEKLY REST DAY/NATIONAL HOLIDAY?

Yes. In special situation, workers/laborers may work on holiday/day off, i.e. if the type and nature of the work must be carried out or performed continuously or in any other circumstances upon the agreement between worker and employer. This provision addresses several works which due to their nature and type do not allow the work to be stopped (Article 85 of Law 13/2003)

CAN GARMENT COMPANY REPLACE ITS WORKERS’ HOLIDAY/DAY OFF?

However, the Manpower Law does not stipulate the replacement of holiday/day off used for the working hour. Therefore, the company can also regulate this matter specifically in work agreement, company regulation, or collective labor agreement, insofar as it shall not violate Manpower regulation and harm the workers' rights.

HOW TO CALCULATE OVERTIME PAY ON WEEKLY REST DAY/OFFICIAL HOLIDAY?

Overtime Pay Calculation based on monthly wage by calculating hourly wage is 1/173 of monthly wage. Based on the provisions contained in Article 31 paragraphs (2) and (3) of Government Regulation 35/2021, the Formula for calculating overtime pay on weekly rest day and national holiday is as follows:

Example :

Andi usually works for 8 hours/day or 40 hours/week. Saturday and Sunday are Andi's days off. However, Andi's company asked him to work on Saturday for 6 hours of work. Andi's salary is Rp. 2,800,000/month consisting of basic salary, fixed allowances and non-fixed allowances. Then, how much overtime pay should Andi receive for working for 6 hours on his days off?

Andi worked overtime on his days off for a total of 6 hours. Andi's take-home pay in the form of basic salary, fixed allowances and non-fixed allowances means Monthly wage = 75% monthly wage = 75% x Rp. 2,800,000 = Rp. 2,100,000.

If the overtime work falls on holiday/day off, the overtime pay is calculated at 2 times the hourly wage for the first 8 hours of work.

According to the formula, Andi's Overtime Pay:

6 hours of work x 2 x 1/173 x Rp. 2,100,000 = Rp. 145. 665,-

WHAT CAN BE DONE BY WORKERS WHOSE GARMENT COMPANY COMMITS VIOLATION ON OVERTIME PAY?

Workers whose garment company commits violation on overtime pay can take the following steps:

1. Workers can negotiate this matter with the company.
2. If negotiations fail, workers can proceed to the mediation level by involving a mediator from the local manpower office.
3. Or workers/labor unions can directly report the violation on overtime pay to the Labor Supervision section at the local Provincial/City/Regency Office.