Implementing an overtime system requires careful consideration, particularly in terms of effectiveness and the company’s ability to cover additional costs. Additionally, businesses must establish clear policies that comply with government regulations to prevent potential disputes between employees and employers.

One key regulation governing overtime in Indonesia is Government Regulation (PP) No. 35 of 2021, which outlines provisions on employment agreements, working hours, rest periods, and termination of employment.

Overtime Working Hours Regulations

According to government rules, overtime applies when:

6-day workweek → More than 7 hours/day or 40 hours/week

5-day workweek → More than 8 hours/day or 40 hours/week

Public holidays or weekly rest days → Considered overtime

The company can only enforce a maximum overtime limit of:

✅ 4 hours/day

✅ 18 hours/week (excluding overtime on holidays)

Employers must provide overtime pay unless the employee holds a strategic position with a higher compensation package.

Legally Compliant Overtime Requirements

For overtime to be legally valid, it must meet these conditions:

✅ A written order from the company, either as a physical document or digital approval

✅ Employee consent, typically through a signed overtime agreement

✅ Recorded documentation of overtime implementation (employee name and overtime duration)

In addition to overtime wages, companies must also provide:

✅ Adequate rest periods

✅ Nutritious food and beverages providing at least 1,400 kcal if overtime ≥ 4 hours (cannot be replaced with cash)

How to Calculate Overtime Pay

Overtime wages are based on hourly pay, calculated as:

📌 Hourly wage = 1/173 × Monthly salary

Overtime pay is determined as follows:

First hour = 1.5 times the hourly wage

Subsequent hours = 2 times the hourly wage

For overtime on public holidays or weekly rest days, the calculation differs:

Optimize Overtime Management with Em-HR

Managing overtime manually is time-consuming and prone to errors. With Em-HR, companies can:

✅ Automatically record and calculate overtime based on regulations

✅ Digitally store overtime data for transparency

✅ Integrate overtime data with payroll for more accurate salary calculations

Want to learn more? Try the Em-HR app for free today!