Calculating overtime pay often poses a unique challenge for both business owners and HR teams. When done manually, the risk of data entry errors is extremely high and can trigger team dissatisfaction. In reality, easy ways to calculate employee overtime have been clearly regulated in the latest policies to ensure fairness for all parties.
The legal foundation used is Law No. 6 of 2023 concerning Job Creation, along with its derivative rules in Government Regulation No. 35 of 2021. Let us understand the calculation steps!
Step One: Determine the Hourly Wage
Before calculating the total overtime pay, you are required to know the hourly wage value of the employee. According to government provisions, the formula used is as follows:
Hourly Wage = 1/173 x Monthly Wage
The monthly wage referred to here consists of the basic salary plus fixed allowances. The number 173 represents the average working hours of an employee in one month, which has become the national standard.
Step Two: Apply the Workday Overtime Multiplier
After obtaining the hourly wage figure, you can apply the overtime multiplier provisions for regular workdays. Here is the legally applicable multiplier scheme:
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First Overtime Hour: Employees are entitled to a wage of 1,5 x Hourly Wage.
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Second Hour and Beyond: Employees are entitled to a wage 2 x Hourly Wage.
Make sure you record the overtime duration of every team member with great precision. A small mistake in recording minutes can have a big impact on your company’s total monthly salary expenditure.
Mandatory Overtime Time Limits
The government has also set limits on overtime hours to protect workers' health. Here are the rules that companies cannot break:
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Maximum Daily Overtime: At most 4 hours in just one workday.
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Total Weekly Overtime: The accumulation in one week must not exceed 18 hours.
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Team Agreement: Overtime must be based on a written agreement or digital approval between the supervisor and the subordinate.
iPresens: Automated Overtime Calculation in Your Hands
Calculating all the components above manually is certainly exhausting and wastes a lot of your productive time. iPresens is here as a smart solution to manage overtime automatically and accurately. Here are the excellent features that will make your life easier:
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Automated Payroll Calculation: The system automatically calculates overtime pay based on the latest formulas without the risk of human error.
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Digital Overtime Approval: Employees can apply for overtime through the app, and you can simply approve it instantly.
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Real Time Compliance Monitoring: Monitor the accumulation of team overtime hours so they do not exceed the maximum limits set by law.
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Attendance and GPS Validation: Ensure overtime data remains valid with the support of face verification and locations that cannot be manipulated.
Make Your Business More Practical and Organized
It is time for you to leave behind high risk old methods and switch to more modern HR management. iPresens is ready to be your strategic partner in creating a work system that is more transparent and efficient. Prove the transformation for yourself by utilizing the FREE PERUSAHAAN package.
You can enjoy free demo access for 2 full months for a capacity of up to 50 employees. Subsequent subscription fees are very economical, starting from just 45 thousand rupiah per month.
Do not miss this opportunity, register right now!
