Leave encashment allows employees to receive cash payment for their unused paid leave days. This benefit is typically given upon resignation, retirement, or at the end of a financial year. It ensures employees are fairly compensated for earned leave they couldn’t take during their employment period.
A late payment penalty is an additional charge imposed when a payment such as taxes, bills, or employee contributions is made past its deadline. It encourages timely compliance and compensates for administrative delays. The penalty amount is usually a percentage of the unpaid balance or a fixed rate set by law or policy.
A job grade is a system used by organizations to categorize positions based on their responsibilities, skills required, and impact on the business. Each grade corresponds to a specific salary range and benefits structure. Job grading ensures fairness, consistency, and transparency in employee compensation and career progression.
Indemnity refers to an agreement or obligation to compensate someone for losses or damages they experience. It’s commonly used in insurance, employment, or contract contexts to protect one party from financial harm. Indemnity ensures that individuals or organizations are reimbursed for covered risks or liabilities.
Income Tax Article 26 (PPh 26) applies to income earned in Indonesia by non-resident individuals or foreign companies. It covers payments like dividends, interest, royalties, and service fees sent abroad. The Indonesian payer withholds a specified tax rate before remitting the payment, ensuring proper taxation of foreign income sources.
Income Tax Article 23 (PPh 23) regulates the withholding of tax on certain non-salary payments made to resident taxpayers in Indonesia. It applies to income such as professional services, rentals, royalties, interest, and dividends. The payer withholds a percentage of the payment and remits it to the Directorate General of Taxes as part of compliance.
Income Tax Article 21 (PPh 21) is an Indonesian tax regulation requiring employers to withhold income tax from employee salaries. The amount depends on income level, benefits, and marital status. Employers are responsible for calculating, deducting, and reporting PPh 21 to the Directorate General of Taxes each month.
An honorarium is a voluntary payment made to someone for professional services or contributions not covered by a formal contract. It’s often given to speakers, consultants, or experts as a gesture of appreciation rather than as regular compensation. Honorariums are typically subject to specific tax regulations depending on local laws.
The Gross Up Method is a payroll calculation technique where an employer increases an employee’s gross salary to include applicable taxes. This ensures the employee receives the intended net amount after tax deductions. It’s commonly used for bonuses or benefits that employers want employees to receive in full without tax reduction.
Garnishment is a court-approved procedure where an employer withholds part of an employee’s salary to pay off debts or legal obligations. Common reasons include unpaid loans, taxes, or child support. Employers must follow legal limits and procedures to ensure fairness and compliance during wage garnishment.
A fixed allowance is a consistent amount paid to employees on top of their basic salary, usually for expenses like transportation, meals, or housing. Unlike variable pay, it doesn’t change based on performance or attendance. Fixed allowances help standardize compensation and provide predictable financial support to employees.
E-SPT (Electronic Surat Pemberitahuan) is a digital application provided by Indonesia’s Directorate General of Taxes for filing tax returns online. It replaces manual paper forms, making tax reporting faster, more accurate, and environmentally friendly. Through E-SPT, individuals and companies can easily submit monthly or annual tax reports electronically.
Employer contributions are mandatory or voluntary payments that employers make on behalf of their employees to benefit programs. These may include social security, health insurance, retirement funds, or other welfare schemes. Such contributions ensure employees receive long-term protection and financial security beyond their regular salary.
Employee Self Service (ESS) is a digital platform that allows employees to view and update their personal details, payslips, leave balances, and attendance records. It reduces administrative workload by enabling staff to handle routine HR tasks themselves. ESS improves efficiency, transparency, and employee engagement within organizations.
E-Bupot (Electronic Bukti Potong) is a digital platform developed by Indonesia’s Directorate General of Taxes for reporting and issuing withholding tax slips. It simplifies the process of managing PPh 23 and PPh 26 transactions by automating data entry and submission. E-Bupot enhances accuracy, transparency, and compliance in tax reporting.
DPLK (Dana Pensiun Lembaga Keuangan) is a financial institution pension fund in Indonesia designed to help individuals prepare for retirement. Managed by banks or insurance companies, DPLK programs allow participants to make regular contributions that grow over time. The accumulated savings provide financial security upon retirement.
A digital payslip is an online or electronic document that shows an employee’s salary breakdown, including income, deductions, and take-home pay. It replaces paper payslips, offering secure and convenient access via email or HR platforms. Digital payslips improve efficiency, reduce paper use, and make payroll management easier for both employers and employees.
DGT (Directorate General of Taxes or Direktorat Jenderal Pajak) is the Indonesian government body that manages tax collection and enforcement. It oversees taxpayer registration, audits, and compliance with tax regulations. The DGT ensures the effective implementation of Indonesia’s tax system and revenue policies.
De Minimis Benefits are minor, low-value perks or allowances given by employers that are not subject to income tax. Examples include small meal allowances, uniforms, or holiday gifts. In the Philippines, these benefits are defined by the Bureau of Internal Revenue (BIR) to simplify tax compliance and support employee welfare.
Cost to Company (CTC) represents the total annual expense an employer incurs for an employee. It includes basic salary, bonuses, benefits, insurance, and other allowances. Understanding CTC helps employees see the full value of their compensation package beyond just take-home pay.