The manner in which workers are paid should be agreed on in work agreements. Full wages normally should be paid in cash at the workplace, unless the work agreement states otherwise, for example, payment may be made via bank transfer. Payments in the form of drugs or liquor are prohibited.
If wages are comprised of basic wages and fixed allowances, the basic wage must make up at least 75% of the total wage (basic wages + fixed allowances).
The employer should keep only one payroll, which includes the total regular hours worked, total overtime hours worked, and any other period of time for which premium pay is required.
Each worker should be provided with clear individual wage statements including wage deductions.
MANPOWER ACT NO. 13 OF 2003, ARTS. 54(1)(e), 94 [UU KETENAGAKERJAAN NO. 13 TAHUN 2003, PASAL 54(1)(e), 94];
GOVERNMENT REGULATION ON WAGE PROTECTION NO. 8 OF 1981, ARTS. 10, 12, 16 [PERATURAN PEMERINTAH TENTANG PERLINDUNGAN UPAH NO. 8 TAHUN 1981, PASAL 10, 12, 16];
MOMT DECREE NO. KEP.102/MEN/VI/2004, ARTS. 7-11 [KEPUTUSAN MENAKERTRANS NO. KEP.102/MEN/VI/2004, ARTS. 7-11]
5.4.1. Time and Frequency of Wage Payment
Wages should be paid on time and at least once per month, although they may be paid more frequently on a certain date as agreed in the work agreement.
Employers who pay wages late to the workers are subject to penalties, as follows:
- for delay of wage payment from the fourth day to the eighth day since pay day, the wage payment must include an additional 5% for each day of delay;
- for delay of wage payment from the ninth day since pay day, the wage payment must include an additional 1% for each day of delay;
- this additional penalty should not exceed 50% of wages that should be paid;
- if the wages are still not paid up to one month, the employer is also obliged to pay additional interest based on the bank’s interest rate as applied to the enterprise’s credit loans.
5.4.2. Place of Wage Payment
Employers must pay wages at the place of employment where the worker usually works, at the company office, or by bank transfer, unless otherwise stated in the work agreement or company regulations.
Wages must be paid directly to workers, however, a third party can receive wages on behalf of a worker if the worker has provided a power of attorney.
MANPOWER ACT NO. 13 OF 2003, ART. 54(1)(e) [UU KETENAGAKERJAAN NO. 13 TAHUN 2003, PASAL 54(1)(e)];
GOVERNMENT REGULATION ON WAGE PROTECTION NO. 8 OF 1981, ARTS. 10, 16 [PERATURAN PEMERINTAH TENTANG PERLINDUNGAN UPAH NO. 8 TAHUN 1981, PASAL 10, 16]
5.4.3. Wages Restrictions and Deductions
Employers must not restrict workers freedom to use their wages as they choose, such as pressuring workers to buy from the enterprise’s store or to purchase other services offered by the employer, such as meals or housing.
The value of in-kind payments, such as the cost of meals, housing or childcare may be deducted directly from workers’ wages if the workers agree. However, total in-kind payments may not exceed 25% of the workers’ wage to ensure that workers have enough to meet their subsistence needs and those of their family.
The employer should not make deductions from wages that are not authorized by law, outlined in company regulations or collective bargaining agreement or work agreement. Employers must properly inform workers about their wage payments and deductions.
Workers’ wage deductions for lost or damaged goods belonging to the employer cannot exceed 50% of the total monthly wage of the employee.
MANPOWER ACT NO. 13 OF 2003, ART. 88(3)(g) [UU KETENAGAKERJAAN NO. 13 TAHUN 2003, PASAL 88(3)(g)];
GOVERNMENT REGULATION ON WAGE PROTECTION NO. 8 OF 1981, ARTS. 14, 20, 23, 24 [PERATURAN PEMERINTAH TENTANG PERLINDUNGAN UPAH NO. 8 TAHUN 1981, PASAL 14, 20, 23, 24].