Overtime Policy is used to add overtime policy settings when a company has more than one overtime policy. You can also learn how to set the maximum overtime limit policy here.
Below are the steps to manage Overtime policy settings:
Go to the “Settings” menu.
In the Time menu, click Overtime.
Click the “Overtime policy” tab.
A. Creating an Overtime Policy
Click “Create policy” to add an overtime policy.
Enter the overtime policy name in the “Overtime policy name” section.
Select the overtime compensation type in the “Compensation type” field to determine the form of compensation employees receive. Select Combined compensation if the company provides dual compensation consisting of overtime pay and additional overtime leave balances at the same time. If you only want to provide financial compensation included in payroll, select Paid overtime. Meanwhile, select Overtime leave if the compensation is converted entirely into the employee’s leave entitlement instead of overtime pay.
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Next, determine the currency option to be used for calculating overtime pay. The available options are obtained from the currency rate payroll component settings.
If you select a currency other than “Default - Indonesia Rupiah”, the Currency method field appears. You can select one of the following options:
- Convert to Indonesian Rupiah: Overtime calculations will be converted to Rupiah (IDR) using the exchange rate specified in the Payroll - Currency rate settings.
- Keep in original currency: Overtime calculations will continue to use the selected foreign currency and will be displayed in that currency on the payslip. Check “No rounding” if minutes should not be rounded in the overtime policy.
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If you select an overtime rounding option, enter the details in the available fields. To delete a rounding duration that has been created, click the “-” icon.
The example above means that overtime lasting 20–39 minutes will be rounded by the system to 30 minutes. Overtime lasting 40–59 minutes will then be rounded to 60 minutes.
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After that, you can select the rate option more specifically in the Custom multiplier rate section: Daily (overtime compensation is calculated based on the number of days the employee works overtime) or Hourly (overtime compensation is calculated based on the number of hours the employee works overtime).
If you enable this Custom multiplier rate option, you must define the rate calculation manually, as explained below:
- Fixed amount: Select this option if the hourly or daily rate is fixed. Enter the amount in the “Amount” field.
- Default formula: Select this option if the rate is calculated based on the system’s standard formula, namely total base salary (plus certain allowances) divided by a specific coefficient. You can specify the coefficient value in the “Coefficient” field and add relevant allowances through the “Allowance” field. To delete an allowance you have selected, click the “-” icon.
With the Default formula option, you can check Enable backpay overtime to recalculate any underpayment of overtime when a retroactive increase or adjustment to the employee’s basic salary applies. For example: In January, an employee’s salary is Rp 5,000,000 and the employee works overtime. In March, the company decides to increase the employee’s salary to Rp 6,000,000, effective from January (backpay). If this option is enabled, the system will automatically calculate the difference in the employee’s January and February overtime pay using the new salary basis (Rp 6,000,000) and pay the difference in the next payroll.
- Custom formula: Select this option if the rate calculation uses a custom formula based on the previous formula model (legacy formula). You can add the formula by clicking the “Add formula” button.
The following pop-up appears. Click “+Add parent” to add a new row criterion to the calculation formula. Next, specify the criteria based on the position in the Job Position field and set the compensation component formula in the Amount field. You can also add or delete variable conditions using the “+” and “x” buttons, then click “Save” to save the formula settings.
- Next, you must select one of the options in the Compensation rate for unassigned shifts section. Select “Per day” if the overtime compensation rate is calculated as a fixed amount per day. Enter the amount in the “Amount” field.
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Alternatively, select “Custom multiplier” if overtime compensation is calculated progressively based on overtime duration ranges. You can specify the duration range in the “Overtime hours” field and enter the compensation multiplier in the “Multiplier” field. You can also add an additional hourly rate by clicking “+ Add hourly rate”. To delete an unnecessary rule level, click “Remove”.
Important
To use the Custom multiplier feature when creating an Overtime policy, contact support-hr@mekari.com.
- Example 1 (all compensation multipliers are hourly rates):
As an illustration, the overtime multiplier scheme above shows the company applying tiered rates. When an employee works overtime for less than 2 hours, compensation is calculated at 2 times the specified daily rate. However, if the overtime duration exceeds 3 hours, it is calculated at 3 times the daily rate.
- Example 2 (hourly and daily compensation multipliers):
For example, a company sets a Daily rate with a Fixed amount of Rp100,000 and an Hourly rate using the Custom formula Salary/173, resulting in Rp30,000 per hour for a salary of Rp5,190,000. For overtime lasting 0–2 hours, compensation is calculated as 0.75 times the daily rate, or 0.75 × Rp100,000 = Rp75,000. For overtime lasting 2 hours or more, compensation consists of 1.5 times the daily rate (1.5 × Rp100,000 = Rp150,000) plus hourly compensation of 0.5 times the hourly rate, or 0.5 × Rp30,000 = Rp15,000 for each overtime hour within this range. Therefore, an employee who works overtime for 1.5 hours or exactly 2 hours receives Rp75,000. If the employee works overtime for 3 hours, the compensation is Rp75,000 + Rp150,000 + (1 × Rp15,000) = Rp240,000. If the employee works overtime for 4 hours, the total compensation is Rp75,000 + Rp150,000 + (2 × Rp15,000) = Rp255,000.Because you need to change the Multiplier from Daily rate to Hourly rate (or vice versa), you can click the “down arrow” icon.
The custom multiplier settings will then appear as follows.
You can also set a special overtime compensation policy for a specific shift by clicking “Add shift”. This displays the Compensation rate settings according to the shift you specify in the “Select shift” section. Next, select the desired compensation calculation scheme, either “Per day” or “Custom multiplier.” To delete this policy, click the “-” icon.
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In the Minimum overtime paid duration section, you can set the minimum duration threshold for an employee’s overtime to be calculated and paid. Enter the minimum overtime minutes before the work shift starts in the “Overtime payment before the shift starts” field, and the minimum overtime minutes after the work shift ends in the “Overtime payment after the shift ends” field.
- Overtime payment before shift starts (minutes): The minimum duration before overtime calculation begins before the work shift starts. If you enter 60 minutes, overtime calculation will begin at the 61st minute. However, the first 60 minutes will still be paid.
- Overtime payment after shift ends (minutes): The minimum duration before overtime calculation begins after the work shift ends. If you enter 60 minutes, overtime calculation will begin at the 61st minute. However, the first 60 minutes will still be paid. -
In the Automatic deduct overtime duration section, you can automatically deduct overtime duration based on certain time criteria. Enter the total overtime duration in the “For total overtime duration” field and specify the number of minutes to deduct in the “Automatically deduct by” field. You can also enable “Enable automatic deduct overtime duration by multiplier” so that the deduction is calculated and applied to each overtime duration multiplier.
Example:
- For example, a company applies a rule that every overtime period reaching a minimum duration of 4 hours (240 minutes) will automatically be reduced by 30 minutes for break time. Enter “240 mins” in the “For total overtime duration” field and “30 mins” in the “Automatically deduct by” field. Therefore, if an employee works overtime for 4 hours, the net overtime duration calculated and paid by the system will be 3 hours and 30 minutes.
- For example, your company enables “Enable automatic deduct overtime duration by multiplier” with 30 minutes in the “Automatically deduct by” field for each overtime period of at least 240 minutes in the “For total overtime duration” field. The result is:
A. 200 minutes of overtime → 200 minutes (does not meet the 240-minute requirement, so no deduction).
B. 240 minutes of overtime → 210 minutes (meets the requirement, so 30 minutes are deducted).
C. 500 minutes of overtime → 470 minutes (30 minutes are still deducted only once).
- However, if “Enable automatic deduct overtime duration by multiplier” is disabled:
A. 240 minutes of overtime → 30 minutes deducted (1× multiple) → 210 minutes.
B. 479 minutes of overtime → 30 minutes deducted (still 1× multiple) → 449 minutes.
C. 500 minutes of overtime → 60 minutes deducted (2× multiple) → 440 minutes.
D. 730 minutes of overtime → 90 minutes deducted (3× multiple) → 640 minutes. Next, click “Create policy” to create and apply this policy.
B. Editing and Deleting an Overtime Policy
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All overtime policy settings (Overtime policy) you have created will be listed on the Overtime policy tab, including the system’s Default Policy, which always appears in the top row. This default policy automatically applies to all employees who are not connected to a custom overtime policy (custom policy). To make it easier to find settings, you can use the filter based on “Compensation” and the “Search policy name” search field to search by policy name.
- Default Policy: The policy settings are adjusted according to the company’s previously configured Master Overtime settings. Although it cannot be deleted, the Super Admin/Admin can edit and save changes to the Compensation Type, Rounding Setting, Multiplier, Overtime Compensation, and Minimum Overtime Duration settings. In addition, the list displays the Default label next to the policy name in the Policy name column to identify the system’s default settings.
- Mekari Talenta now uses only 1 Multiplier. The multiplier day off setting from the previous version is automatically migrated by the system into a separate new policy. This new policy uses the same name as the original policy, with the words “Day Off” added to the end of the policy name (Policy name).
- Compensation type column: Displays information about the compensation type applied to the policy (for example: Paid overtime).
- Last modified column: Displays the date and time of the latest policy change, along with the name of the account that made the update. -
You can change the policy rules by clicking “Actions”, then clicking Edit policy. To delete the policy rules, click Delete policy.
Important
You cannot delete a policy that has already been assigned to an employee. To delete it, first move the employee to another policy.