Payday: From 25, 27, to 30 How to Schedule Your Payroll Well?
The terms and conditions for the employee's payment such as salaries or wages which include the period and date of payment can be arranged by the company. However, with additional note that every employee has understood and agreed to these provisions. This is usually stated in the employment agreement between the company and the employee.
But uniquely, for companies that pay monthly salaries, we recognize that there are various dates. There are companies that pay employees every 25th, some on the 27th, 28th, 30th or 31st. Which one is yours?
This variation is possible because according to the Government Regulation of the Republic of Indonesia concerning Wages (PP Pengupahan Article 19):
"Payment of Wages by Employers is carried out within a maximum period of 1 (one) time a week or a month at the latest 1 (one) time, except if the Work Agreement is for less than one week."
It is with the assumption that the employee is paid a maximum of 1 month after work, the pay date is set near the end of the month. Thus, the company meets the aspects of compliance with government regulations.
Usually, changes can occur when payday dates clash with holidays or weekends - usually payroll processing will be brought forward at these moments.
There is no standard rule that an organization must pay its salary on a certain date, as long as it still complies with the Government Wage regulations. Last but not least, this pay date needs to be informed to every employee from the start of work so they could get a good understanding.
What if there are new employees who come in in the middle of the month? Do they get paid on the same date as other employees? The answer is usually yes, because it is more practical than setting different pay dates for several employees. Generally, the company will immediately process the salary for the new employee on the same date as the other employee, but the calculations are different.
Are you currently considering the most suitable payroll scheduling for your organization? When weighing options between payroll schedules, it’s important to take into account the kinds of employees you have, as well as the cost, time, and resources you need to manage your payroll.
Every organization needs to determine which payroll schedule is right for their company. Doing so can impact the company's culture, employee satisfaction, even recruitment and retention rates.
KPSG is a service partner for payroll that many companies in Indonesia have relied on for the past 30 years. Feel free to contact us and discuss your payroll issues.