Wage components refer to the individual parts that together form an employee’s overall compensation package. These typically include the basic salary, fixed and variable allowances, overtime, bonuses, and statutory deductions. Understanding wage components helps ensure transparency and compliance in payroll management.
A variable allowance is a component of an employee’s pay that fluctuates based on certain factors such as performance, sales targets, attendance, or company profits. Unlike fixed allowances, it can change from month to month. This type of allowance motivates employees to perform better and aligns rewards with results.
UPMK stands for Uang Penghargaan Masa Kerja, which translates to “Long Service Award” in Indonesia. It is a payment given to employees when their employment ends, recognizing their years of service. The amount is regulated by Indonesian labor law and varies depending on the employee’s tenure and termination type.
UPH stands for Upah Per Jam, meaning “wage per hour” in Indonesia. It represents the hourly rate an employee earns for each hour worked. UPH is commonly used for part-time employees, daily workers, or in calculating overtime pay to ensure fair and accurate compensation.
Time & Attendance Integration is the process of linking attendance tracking tools with payroll or HR systems. It ensures that employee work hours, overtime, and absences are automatically recorded and accurately reflected in payroll. This integration reduces manual errors, saves time, and improves workforce management efficiency.
Termination compensation refers to the financial benefits provided to an employee when their employment ends, either through resignation, layoff, or dismissal. It may include severance pay, accrued leave, bonuses, or other contractual entitlements. This compensation helps support the employee’s transition after leaving the company.
A tax slip is a statement issued by an employer detailing an employee’s income and the tax deducted during a specific period. It serves as proof of tax payment and is required when filing annual tax returns. In Indonesia, examples include forms like SPT Masa 1721 A1 for employees.
Tax Identification Matching is the process of confirming that a taxpayer’s identification number, such as a Tax ID or NPWP in Indonesia, correctly matches their personal or company details in tax authority databases. This verification helps prevent reporting errors, fraud, and compliance issues during tax filing or payroll processing.
Tax brackets are ranges of income levels that determine the percentage of tax applied to a person’s or company’s earnings. As income increases, it may fall into higher tax brackets with higher rates. This progressive system ensures fairer taxation based on the taxpayer’s ability to pay.
Statutory deductions are compulsory withholdings from an employee’s salary as required by law. These may include income tax, social security (like BPJS in Indonesia), and pension contributions. Employers are responsible for deducting and remitting these amounts to the appropriate government agencies.
SPT Masa 1721 A1 is a tax document issued by employers in Indonesia to report an employee’s total annual income and the PPh 21 tax deducted. It serves as proof of income and tax payment for employees when filing their annual tax return (SPT Tahunan). This form ensures accurate and transparent income tax reporting.
Sick leave allows employees to take time off work to recover from illness or injury. It helps protect their health and prevents the spread of illness in the workplace. Depending on company policy or labor law, sick leave may be paid or unpaid.
Shift allowance is an additional payment provided to employees who work irregular schedules, like night shifts or rotating shifts. It compensates for the challenges of working outside standard hours and serves as an incentive for employees to accept such assignments.
Sanctions refer to corrective measures or penalties applied when rules, regulations, or company policies are breached. In the workplace, they can include warnings, fines, suspensions, or other disciplinary actions intended to enforce compliance and maintain order.
Reimbursement refers to the repayment made by an employer to an employee for expenses incurred on behalf of the company such as travel, meals, or office supplies. This process ensures employees are not out of pocket for work-related costs and supports transparent expense management.
PTKP Update is the revision of the non-taxable income threshold (Penghasilan Tidak Kena Pajak) set by the Indonesian government. It determines how much income is exempt from PPh 21 tax, directly affecting employees’ take-home pay. Employers must stay informed of these updates to ensure accurate payroll tax calculations.
PTKP (Penghasilan Tidak Kena Pajak) refers to the portion of income in Indonesia that is exempt from taxation. It represents the minimum amount an individual needs for basic living expenses, so income below this threshold isn’t taxed. PTKP values vary based on marital status and number of dependents, reducing overall tax liability.
A provident fund is a long-term savings scheme where both employers and employees contribute a fixed portion of the employee’s salary each month. The accumulated funds can be withdrawn upon retirement, resignation, or under specific conditions. Provident funds promote financial stability and serve as a key component of employee benefits.
PPh 26 (Pajak Penghasilan Pasal 26) applies to income paid to non-residents or foreign entities from Indonesian sources. It covers payments such as dividends, royalties, interest, and service fees. The Indonesian payer withholds a fixed percentage of the payment as tax and remits it to the government.
PPh 21 (Pajak Penghasilan Pasal 21) is the Indonesian income tax applied to employee earnings, including salaries, bonuses, and benefits. Employers are responsible for calculating, withholding, and remitting this tax to the Directorate General of Taxes. It ensures proper tax compliance for both employers and employees.