Not long ago, the government officially changed the rules regarding wages in Indonesia. The changes are outlined in PP No. 36 of 2021 which is also a derivative of the Job Creation Law. In the latest regulation, there are several changes regarding the amount of wages and how they are determined. Not only changing the wage provisions, this regulation also provides convenience for MSMEs. To find out more about the new wage regulation and what are the changes, Kontrak Hukum will discuss it below. Check out the review below! For information, before PP No. 36 of 2021 came into effect, wage rules in Indonesia were regulated in PP No. 78 of 2015. According to PP 36 of 2021, wages are the rights of workers/laborers who are received and expressed in the form of money as compensation from employers/employers to workers/laborers who are determined and paid according to work agreements, agreements, or laws and regulations, including benefits for workers/laborers and their families for work and/or services that have been performed. The wages in question are determined based on units of time and units of results. In the old regulation, wages based on units of time were determined on a daily, weekly and monthly basis while in the latest regulation, wages are now determined on an hourly, daily and monthly basis. The determination of hourly wages is indeed one of the new provisions and is intended specifically to accommodate workers/laborers who work on a part-time/freelance basis. The hourly wage can be set based on an agreement between the employer and the worker/laborer. However, the agreement must not be lower than the result of the calculation of the hourly wage formula (monthly wage/126). Part-time work must also be performed for less than 7 hours per day or 35 hours per week. For wages set on a daily basis, the wage calculation remains the same, namely a month’s wage divided by 25 days for companies with a 6-day working time system and a month’s wage divided by 21 for companies with a 5-day working time system.Another change regarding wages also occurs in terms of determining the minimum wage. If previously the wage determination was carried out annually based on the need for a decent living by taking into account productivity and economic growth, then in the latest regulation, the provincial minimum wage will be determined based on economic and labor conditions. The economic and employment conditions referred to include purchasing power parity variables, labor absorption rates, and median wages. Meanwhile, the district / city minimum wage is determined by taking into account regional economic growth or inflation in the district / city concerned. As mentioned earlier, PP No. 36 of 2021 also provides special facilities for MSMEs. This convenience is contained in Article 36 which states that MSMEs are exempted from following the minimum wage provisions. Instead, employers can make agreements with workers/laborers. However, the agreement must fulfill the provisions:
- At least 50% of the average public consumption at the provincial level; and
- The agreed wage rate is at least 25% above the provincial poverty line.
Data on average public consumption and the poverty line above must be obtained from an authorized institution in the field of statistics/Central Bureau of Statistics. To be able to obtain the above exemptions, MSMEs must meet predetermined criteria, such as not having a business capital of more than IDR 1 M and an annual income of more than IDR 2 M for micro businesses and a business capital of more than IDR 5 M and an annual income of more than IDR 15 M for small businesses. In addition, MSMEs must also rely on traditional resources and are not engaged in high-tech and non-capital-intensive businesses. Read also:
KH Contact
Well Friend KH, that’s the explanation of the latest wage rules and changes. If you have questions and want to consult about labor law or other legal issues, don’t hesitate to contact Kontrak Hukum at the Ask KH link or via Instagram @kontrakhukum.
