Wage Provision for WFH, WFO, and Laid-Off Employees During the Covid-19 Pandemic

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Wage Provision

Covid-19 pandemic forces many business actors to undergo difficult times that lead to the condition where business actors are unable to pay wages to their employees.”

During the Covid-19 pandemic, many people are undergoing difficult times, including the business actors and the workers or the employees. Somehow, the Covid-19 pandemic has forced all parties (including business actors and workers) for being adaptive to the current conditions to maintain their business continuity.

Furthermore, it can not be denied that the Covid-19 pandemic has many impacts on business activities such as the increasing of companies’ closure figures, reducing workers’ wages, and termination of employment. According to Indonesian law, waging matters are specially regulated by Government Regulation Number 36 of 2021 concerning Wages (Government Regulation 36/2021).

The definition of wages can be found on Article 1 number 1 Government Regulation 36/2021 which statues:

Wages shall be workers’/laborers’ rights received and expressed in cash as compensation from the employer to workers/laborers, set and paid according to an employment agreement, agreement, or laws and regulations, including allowances for workers/laborers and their families for a job and/or service that has been or, will be performed.”

Wages, as stated above, are paid by employers to the workers who are working their jobs at home (Work From Home (WFH)), in-office (Work From Office (WFH)), or a combination of both working methods. This matter is regulated by Circular of Minister of Manpower Number 104 of 2021 concerning Guidance on Implementation of Employment Relationship During Corona Virus Disease 2019 (COVID-19) (hereinafter stated as Circular 104/2021).

According to Circular 104/2021, employers who are unable to pay their workers’ wages because of the Covid-19 pandemic may adjust the amount of the wage which shall be stated in an agreement between employers and employees. 

Read more: Business Licensing for Foreign Company Representative Office Based on OSS RBA 

The agreement between employers and employees regarding wage adjustment shall consist of:

  1. The amount of wage;
  2. The method of wage payment which can be paid by cash or in installment; and
  3. The period of agreement validity.

In these terms, the employer shall deliver the result of the written agreement to the employee/worker and make an online report to the Manpower Agency at the Province level.

Meanwhile, towards the laid-off workers, employers shall pay their wages as usual. On the condition that the laid-off workers’ wage payment has already been stated on the working agreement, company agreement, or joint working agreement, then the parties shall refer to the existing document.

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Author: Bima Satriojati

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