You are certainly no stranger to the term overtime. However, it turns out that there are still many who do not understand the correct calculation of overtime.
Both from the calculation of hours and wages. In fact, not a few employees also do not understand the nature of overtime itself, whether it is mandatory or not.
Not infrequently, companies take advantage of employee ignorance to issue wages with a minimum value and impose overtime beyond the provisions, even though the employee’s performance has the right to be compensated.
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So, to avoid fraud, let’s understand what overtime is and how overtime is calculated based on the Job Creation Law.
Definition of Overtime
When are working hours included in overtime? How much is the wage?
Maybe the above questions represent your curiosity. Therefore, we present a complete explanation.
Based on the Ministry of Manpower regulations regarding manpower, namely Law number 13/2003, article 77 paragraph 2 a&b, working hours are 7 hours per day and 40 hours a week in 6 working days.
So, when you work more than the agreed or specified working hours, that includes overtime.
That is, you are entitled to get overtime pay from the company.
However, the above working hour regulations are not fully compatible with all industries, companies or certain positions with high salaries.
Therefore, companies in certain business sectors can make their own policies regarding working hours.
With notes, adjusted for the salary given, written and agreed upon by the company and employees.
Regarding the calculation of overtime, the Ministry of Manpower and Transmigration has decided.
Where, in the decision said, that workers who are entitled to receive overtime pay are:
- Those who work more than seven hours a day and forty hours a week in six working days
- Workers who work more than eight hours a day and forty hours a week in five working days
- Those who still work on Sundays or public holidays
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Overtime Rules
Companies are allowed to apply overtime to employees. However, that does not mean there are no fixed regulations from the government for its implementation.
There is a change in the rules regarding employee overtime, namely in PP number 35/2021, article 26 paragraph 1 which is included in the Job Creation Law.
According to the Job Creation Law, overtime hours may not be more than three hours a day or fourteen hours a week.
As a form of policy for the company, a maximum limit of overtime hours is set at four hours a day and 18 hours a week.
The provisions of article 1 above do not apply to overtime on weekly holiday schedules or statutory holidays.
Regarding the company’s obligations to employees regarding overtime work, the Job Creation Law also regulates this clearly and in detail.
In article 29, it is stated that companies are required to pay overtime wages to employees according to the correct overtime calculation.
In addition, companies must also provide sufficient rest opportunities, and provide food and drinks equivalent to 1,400 Kcal.
Provision of food and drink when overtime exceeds four hours and this obligation must be fulfilled and cannot be replaced in the form of money.
Regarding the amount of overtime pay, Article 31 of Ciptaker’s overtime calculation states:
- The overtime pay for the first overtime hours is 1.5 times the hourly wage
- In subsequent hours of overtime work, it is increased to twice the hourly wage
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Calculation of Overtime
To make it easier to understand, you can use the overtime calculation formula as follows:
Overtime pay = number of overtime hours x multiplier according to the Ciptaker Law x 1/173 x wages or salary per month
From the formula above, you may be confused about the origin of the number 173. This number is the total hours you work in one month.
In one week, you work 40 hours and in a year you work 52 weeks.
So, to calculate the hours worked per month, divide 52 weeks by 12 (number of months in a year). The result is 4.33, then multiplied by 40 hours, the result is 173.2, rounded up to 173.
In the first hour of overtime, multiplied by 1.5 of the wages for 1 hour worked. So, for example, for the first 3 hours of overtime with a salary of 5 million per month, the overtime pay is:
3 x 1.5 x 1/173 x 5,000,000 = 130,057 rounded up to 130 thousand.
If there is still overtime on the second day and so on, then the multiplier increases from 1.5 to 2.
The calculation is different, if you have to work overtime on Sunday.
The way to calculate Sunday overtime is if you work five working days a week, overtime will be paid twice an hour out of 8 hours of work.
This overtime calculation applies to overtime in the first eight hours. At the ninth hour, it will be multiplied by three and at 10-11 o’clock it will be multiplied by four.
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But if you work six days a week, then the first seven hours of overtime are multiplied by 2, the eighth hours are multiplied by three, while the 9-10 hours are multiplied by four.
Regarding the monthly salary that is used as a multiplier, if you have a fixed allowance then the salary is written 100%.
However, if the benefits you get are not fixed, then the total salary per month to multiply is only 75%.
The obligations mentioned above must actually be carried out by the company. Companies can also use the attendance management application to help them calculate the working hours of each overtime employee.
If the company defaults on this responsibility, it will be subject to fines or criminal sanctions.
This refers to the Ciptaker Law number 11/2020, article 187 paragraph 1 & 2.
It is stated there, if the company does not pay overtime wages, it will be subject to imprisonment for a minimum of one month and a maximum of 12 months.
In addition, a minimum fine of 10 million rupiah and a maximum of 100 million rupiah can also be imposed. Of course this will be more detrimental to the company than paying overtime wages.
So that there are no misunderstandings between the company and employees, it is ideal to hold overtime accompanied by the following things.
- Written and official overtime certificate from the company and approved by the employee
- Include in detail the name of the employee who is overtime, the purpose, the length of overtime hours and the nominal wage
- Authorized with the signature of the company and employees in accordance with the provisions of the Ministry of Manpower and Transmigration
With the evidence or written agreement, neither the employee nor the company can walk away from their obligations.
In certain situations, such as the condition of a company that is almost bankrupt, the overtime calculation may be slightly different because it adjusts to the conditions of the company.
But everything can still be run, as long as there is an agreement. If there is no emergency situation, the calculation of overtime pay must be in accordance with the provisions.
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As an employee, you must understand everything about this overtime calculation. That way, the energy you expend, can get a commensurate award or reward.
Both you and the company benefit from having a clear overtime agreement that complies with government regulations. This of course can also prevent employee turnover