Overview of Payroll and Attendance Management Systems in Indonesia

In the development of payroll and attendance management systems in Indonesia, it is necessary to calculate and deduct personal income tax PPh21 and health insurance BPJS from the payment amount composed of basic salary and allowances. This enables accurate payroll calculations.

Attendance System

In Indonesia, it is common to use a time card (kartu absensi) to stamp the time of arrival and departure. This time card writes data into internal memory when pressed, and some types can be extracted in CSV file format via USB.

However, many models have small memory capacities of 2-4MB, so it is essential to size the necessary data amount per person per day, the number of employees, the data retention period in memory, and the capacity required for the master in advance to avoid trouble after operation starts. For example, there may be situations where you thought the attendance data was still in memory, but it had already been overwritten.

To prevent proxy stamping and reduce the load of attendance data aggregation, three types or combinations (such as a set of employee card and fingerprint authentication) are used: employee card, fingerprint authentication, and hand vein authentication. Fingerprint authentication machines are available from around 30,000 yen, but hand vein authentication machines are expensive, costing over 200,000 yen.

If a queue forms in front of the machine, people who are just on time may end up being late, so increasing the number of machines increases the investment amount.

For fingerprint and hand vein authentication, pre-registration work is performed to create a matching table with the employee code, and this table is stored in the machine's memory. Attendance data is also stored in the machine's memory, but it is downloaded to the PC in CSV format or AccessDB via network using the attached utility software. This work is usually done manually, and HRD personnel regularly perform the download work.

The downloaded attendance data is classified into absence (absen), tardiness (keterlambatan), early leave (Ijin), overtime (Overtime), etc., and used for payroll calculation. It is common to apply for overtime and early leave in advance (Overtime request, Leave request), and the amount is determined by comparing the overtime application registration information with the attendance data.

Human Resource Management System

To perform payroll calculations based on attendance data, master data that manages data necessary for calculating allowances, such as the year of joining, position, address, and family structure of employees, is required. This system that manages this data is called a human resource management system. There are systems that can register data other than required items separately from the payroll system, but they are inherently inseparable from the payroll system.

Payroll System

In Indonesia's payroll system, master information such as tax rates, burden rates, and overtime coefficients is required. These are reflected in payroll calculations, and pay slips are issued at the end of the month. As of August 2013, due to the impact of worker demonstrations, overtime coefficients have increased, with weekday overtime being 1.5 or 2 times the basic hourly wage, and holiday overtime being 2, 3, or 4 times. As a result, it is difficult to make a profit even if orders increase.

PPh21 (Personal Income Tax)

In Indonesia, it is generally assumed that the company bears the income tax, but in reality, only withholding is done. If you do not issue Bukti potong PPh21 from the company by the end of March each year and apply to the tax office, it is considered that you have not fulfilled your tax obligations. Therefore, queues form in front of the company's general affairs at the end of March, and the number of staff taking half-days off increases.

In Indonesia, the accounting period is often from January to December, but the declaration to the tax office is at the end of March. Employees also go to the tax office with withholding certificates at the end of March, and audits of financial statements and voucher checks by corporate auditors are also conducted at this time. After a provisional closing at the end of December, adjustment journal entries are entered in the 13th month as a result of the audit.

Jamsostek (Abolished as of 2014) ⇒ BPJS

Indonesia's social insurance system includes workers' compensation insurance (JKK), death insurance (JKM), pension (JHT), and health insurance (JPK), and full-time employees are required to join. It was operated by a state-owned company called Jamsostek, but as of January 2015, joining BPJS Kesehatan is recommended. This is a set of pension (JHT) and health insurance (JPK).

The system is broadly the same as Japan's social insurance, but there is no equivalent to national health insurance or national pension in Indonesia. The obligation to pay taxes arises regardless of whether you are a company employee or self-employed, and it is necessary to obtain an NPWP (taxpayer number) including for spouses.

Family Structure

Family structure information affects the income deduction amount (Penghasilan Tidak Kena Pajak) in payroll calculations. PTKP is the non-taxable portion of income and affects the calculation of monthly payroll withholding tax (PPh21), year-end adjustments, and annual tax returns.

Employee Information

Information such as educational background, religion, position, and years of service may affect payroll calculations. Some companies apply their own calculation methods, so customization may be necessary when introducing a payroll system.

Allowance Master

This is a master that sets the types of bonuses and coefficients necessary for calculation, such as THR (Tunjangan Hari Raya), which is a Lebaran allowance.

Salary Structure

Words like Upah Minimum Propinsi (UMP) / Upah Minimum Kabupaten (UMK), which mean minimum wage, always appear during the season of worker demonstrations. These are set to protect the basic rights of workers.

Frequently Asked Questions | Payroll and Management in Indonesia

We will briefly organize the frequently asked questions based on the content of this article.

What are the characteristics of Indonesia's attendance management system?

Indonesia's attendance management system uses time cards, fingerprint authentication, and hand vein authentication. These machines store attendance data in internal memory and can be downloaded to a PC via USB or network. Due to the small memory capacity, data sizing is important.

What information is needed for payroll calculation in Indonesia?

Payroll calculation requires information on basic salary, allowances, personal income tax PPh21, and health insurance BPJS. Master data such as the year of joining, position, and family structure of employees is also important. Accurate payroll calculations are performed based on this information.

What social insurance systems exist in Indonesia?

Indonesia's social insurance system includes workers' compensation insurance, death insurance, pension, and health insurance. Full-time employees are required to join, and joining BPJS Kesehatan has been recommended since 2015. The system is broadly the same as Japan's social insurance, but there is no equivalent to national health insurance or national pension.