Compensation and Benefits of Indonesian Employees – Overtime Wage Calculation in Indonesia (Upah Lembur)

Uncategorized

Under Government Regulation PP No. 35/2021, employees working more than the standard 7–8 hours/day or 40 hours/week are entitled to overtime pay, calculated based on two common methods:

 

Overtime on Weekdays; 

  1. Hourly Rate Method (Most Common)              

1.5 times the hourly wage for the first hour and  two times hourly way for the following hours.                                     

Formula : Overtime Pay = 1.5x hourly wage for the first hour + 2x hourly wage for each additional hour

      2. Daily Rate Conversion (For Piece-rate Workers or Shifts)

Used if employees are paid on a daily or shift-based basis, not fixed monthly.
In this case, overtime is calculated as a percentage of the daily wage, adjusted to hours worked.

 

Overtime on weekly holidays or public holidays:              

Companies with five working days: Two times the hourly  wage for the first eight hours, three times hourly wage     for the ninth hour, and four times hourly wage for the following 

Companies with six working days: Two times the hourly wage for the first seven hours, three times hourly wage       for the eighth hour, and four times hourly wage for the following hours

 

Notes:

Source :The overtime provisions for employees regulated in accordance with the provisions of the Employment Law Article 78 No. 13 of 2003 are as follows: Overtime for workers is a maximum of 14 hours in one week.

Max overtime allowed = 4 hours/day or 14 hours/week.

Overtime must be approved and documented

Managerial/executive roles may be exempt under certain conditions

 

🕒 Standard Legal Framework for Overtime in Indonesia

🧾 Regulation:

  • Governed by UU No. 13/2003 on Manpower and PP No. 35/2021
  • Applies to employees not in managerial positions and not receiving fixed allowances covering overtime

 

⏰ Normal Working Hours:

  • 40 hours/week, typically:
  • 5 days/week × 8 hours/day OR
  • 6 days/week × 7 hours/day

 

🕜 Overtime Eligibility:

  • Work beyond 40 hours/week or outside normal work hours
  • Overtime must be approved by employer in writing (or digitally recorded)

 

💰 Overtime Pay Calculation (Legal Minimum)

Formula (Monday–Friday):

First hour: 1.5x hourly wage

Next hours: 2x hourly wage

Example:

If monthly salary = IDR 6,000,000, hourly wage =

= (1/173) × monthly salary ≈ IDR 34,682

1st OT hour: IDR 52,023

2nd OT hour: IDR 69,364

⚠️ Max overtime allowed by law: 4 hours/day, 18 hours/week

 

🧩 Competitive/Optional Overtime Benefits (Beyond Law)

To stand out, companies may offer:

✅ Flat Overtime Allowance

  • Fixed monthly allowance for roles expected to work extended hours regularly
  • Common in roles where exact OT tracking is impractical (e.g., sales, IT, projects)

✅ Meal & Transport Allowance for Overtime

  • Cash or reimbursement when working late (e.g., after 7 PM)

Covers:

  • Dinner (IDR 25,000–50,000)
  • Ride-hailing (Grab/Gojek) or company car

✅ Weekend/Holiday Overtime Bonus

  • Higher multiplier (e.g., 3x wage) for voluntary weekend work
  • Additional day-off in lieu (“time off in lieu”)

✅ Compensatory Leave

  • Option to convert overtime hours into extra leave days
  • Especially attractive for younger, work-life-balance-conscious staff

✅ Overtime for Non-Eligible Roles (Managerial)

Some companies voluntarily offer overtime pay or token

allowances to junior managers or supervisors, even if not legally required.