The Minister of Labor and Transmigration has recently issued Ministerial Decision Number KEP.102/MEN/VI/2004 on Overtime and Overtime Wages (the “Decision”). The Decision has been issued to facilitate the implementation of Article 78(4) of Law No. 13 of 2003 on Labor (the “Labor Law”) particularly as this provision relates to overtime and the entitlements that are to be paid to employees who work overtime.

Overtime is defined in the Decision as more than 7 hours per day and 40 hours per week for a 6-day working week and 8 hours per day and 40 hours per week for a 5-day working week. Furthermore, the entitlements to be paid to an employee who works any overtime are defined as a right and any breach of this right will give rise to the consequences provided in the prevailing law and regulations. This Decision is applicable to any companies except for companies operating in particular sectors which will is regulated in other ministerial decrees.

The maximum amount of overtime allowed to be worked any one day is 3 hours and a maximum of 14 hours is permissible per week. The Decision states unequivocally that before overtime may be worked there must be a written order from the employer and such order must be agreed also in writing by the relevant employee. The Employer must also create a list of employees participating in the overtime work.

Employers are obligated to pay the appropriate overtime entitlement and where necessary provide sufficient periods of rest or break times to the employee. Furthermore, where the overtime lasts for a period of 3 hours or more the employer must also provide food and drinks with a caloric value of at least 1400 calories.

The hourly rate for overtime is defined as 1/173 of the relevant employees monthly salary. However, if the overtime entitlement is to be paid on a daily basis then the overtime payment is calculated by multiplying the relevant employees daily salary by 25 and then applying the 1/173 figure. The first hour of overtime is calculated at 1.5 times the hourly rate and for each additional hour after this the rate is 2 times.

In case differences in calculating hourly rate for overtime arise, the city labour supervisor of the  shall decide the appropriate calculation. (1) If the parties still objected such calculation, then the provincial labour supervisor shall have the power to decide. (2) In cases where differences of calculation arise from a similar company which have production site in different cities, but is on the same province, then the provincial labour supervisor shall have the authority to decide. If the parties still objected with the decision in (1) and (2) the parties may request the Ministry of Manpower to reconsider.  (mma/edited)