Friday, 04 March 2022

Guides on Indonesia's Latest Payroll Regulation

Have you been a professional in managing payroll in the company? Ensuring employees have the best performance is important, but no less contributing to this is how you appreciate them through proper remuneration.

This has a direct impact on your company's image in the eyes of the talent pool and also the government as a regulator to monitor your compliance. So, let's check the following summary of Indonesian government regulations regarding payroll

Payroll components
The government allows both the nominal and the salary components to be determined based on an agreement between you and the employee. For example, if an employee is promised a basic salary, fixed allowance, and BPJS allowance in the employment contract, then these components must be included in the calculation and payment of the employee's salary. The amount must be in accordance with the agreed-upon.

Payroll date
The law stipulates that salaries must be paid in Indonesian currency, and paid in full in each period and per date of payment of wages. The period of payment of salaries should not be more than one month.

The salary payment date is agreed upon between the employee and the employer. If it falls on a holiday or weekly rest, then the implementation of salary payments is regulated in a work agreement, company regulations, or collective work agreement.

So, it doesn't matter whether the salary is paid at the end of the month or the beginning of the month, as long as this is agreed upon by both parties. However, one thing is for sure, the salary should not be in installments.

Payroll procedures
There is generally a payroll procedure involving the following stages:

- HRD (Human and Talent Acquisition Resources Department) recaps employee attendance data, including the number of leave and leave/sickness in the payroll period. This data is useful for calculating attendance allowances and paid and unpaid holidays/leave/permissions.
- Calculate each component of employee income, such as salary, benefits, overtime, bonuses, and so on.
- Calculating PPh 21 tax on the employee's taxable income
- Calculates all salary deductions, such as BPJS premiums, loans, and taxes.
- Prepare salary slips along with a list of salaries for all employees
- The Finance Department evaluates the salary slip document along with the employee salary list
- The Accounting Section writes a cash check according to the nominal value of all employee salaries
- Through partner banks, cash checks are transferred to each employee's account on the payroll date.

Make sure the calculation of your employee's salary is in accordance with the rules and the procedure is neat from the beginning of the calculation to the moment when your employee receives it. It's not as simple as sending a regular money transfer, so many companies choose to use the services of a partner in managing their payroll. Contact DEOS Group if you are currently considering it!

You May Also Read:

1. Trusting Your Payroll to the Right Service Provider

2. Does Your Management Approach Result in the Loss of Employees' Autonomy?