Payroll is the compensation a company must pay to their employees for their work for a certain period on a specified date. A company’s finance or Human Resource (HR) department is responsible for managing payroll. However, many companies have started transferring their payroll function to other companies that specifically deal with processing employee salaries and benefits, insurance, and withholding tax.
Payroll is the compensation a company must pay to their employees for their work for a certain period on a specified date. The employee payroll process includes calculating working time, salary calculations, and sending the funds to the employee’s bank account. The finance or Human Resource (HR) department is responsible for managing payroll.
Following The Indonesian Wage Regulation No. 36 of 2021, Article 53 states, “Payment of wages by employers is made based on employment agreements, company regulations, or collective labor agreements.” Article 57 explains, “Wages may be paid directly to Workers/Labourers or banks. If wages are paid through the bank, the Worker/Laborer must be able to convert the wages into money on the payment date of the wages agreed by both parties.”
Generally, employee payroll is one of the bigger expenses of a business. The people responsible for payroll in a company must also calculate employees’ salaries and deductions, such as tax, health insurance (BPJS), employment insurance (BPJS Ketenagakerjaan), and other factors until each employee obtains a net salary. It takes a long time to do the calculations, especially if the company still does them manually. This process takes even more time as the number of employees in the company increases. Therefore, many companies are developing open-service payroll services to help resolve this issue.
Indonesia implements a payroll system to manage employees’ payroll in a company. Apart from being used as a system to pay salaries, the payroll system is also used to ensure no miscalculation when paying an employee’s salary. The payroll system in Indonesia is regulated by the Job Creation Law and collected in Government Regulation No. 36 of 2021.
Several points related to the payroll system in Indonesia, as stated within the Government Regulation, are as below:
The payroll system in Indonesia requires companies to form a salary structure and scale based on the evaluation and analysis of positions and measured based on the company’s ability and minimum wage.
Regulation of the Minister of Manpower No. 1 of 2017 describes the stages of formation of the structure and scale of wages as follows:
Below are several payroll-related problems that often occur:
Aside from the main payroll service, there are also two other phases of a payroll service, pre-payroll and post-payroll. Pre-payroll covers all activities before employees receive their salary. In contrast, post-payroll is processed after the salary is received.
Outsourcing a payroll process has many advantages. Many UMKM (Usaha Mikro Kecil dan Menengah) companies to multi-national companies use the service. Payroll service uses a system, thus minimizing the occurrence of errors that occur. Here are the advantages of using a payroll service:
While some companies prefer conventional manual methods, large corporations use state-of-the-art software for payroll processing. The various methods and processes are illustrated below:
Putranto Alliance’s team is kept up with the latest changes to regulations. We are equipped to advise corporate clients on employment contracts, company policies, social security programs, and related employment matters. Let us assist you with our payroll services while you focus on growing the company. We help calculate the monthly salary, withholding tax, and social security payments. In addition, we assist with the mandatory reporting and ensure you meet the compliance requirements.
With employee termination, we provide human-resource-related advisory services and drafts of termination packages. We assist with employee negotiations to ensure our clients do not face labor-related issues later on
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