Payroll problems usually start with “small” items: one allowance changes each month, overtime is paid off-book, or BPJS is delayed until someone complains.
When components are misclassified, the risk stacks fast—minimum wage exposure, BPJS arrears, and PPh 21 under-withholding can hit at the same time.
This guide explains the component basics so Payroll in Indonesia runs on consistent labels and evidence, anchored to PP 36/2021 on Wages (BPK).
Table of Contents
- Wage vs non-wage: the classification mindset
- The four wage structures you can use
- Fixed vs non-fixed allowances and minimum wage checks
- Variable earnings: overtime, THR, bonuses, and incentives
- Real Story: Made’s payslip fix in Canggu
- Statutory deductions: BPJS and PPh 21 on payslips
- Wage structure and scale: making pay decisions defensible
- A monthly component audit checklist for HR and finance
- FAQ's about payroll components
Wage vs non-wage: the classification mindset
Payroll compliance starts with vocabulary. “Wage” (upah) is not the same as “take-home pay,” and not every payment should sit inside wage components for manpower purposes.
Build your list in three buckets: wage items (basic wage and allowances), variable earnings (overtime, THR, bonuses, incentives), and true reimbursements (expense repayment backed by proof). If something is paid as cash every period without evidence, treat it as earnings and label it clearly.
The four wage structures you can use
PP 36/2021 allows wages to be built using four combinations: wage without allowances; basic wage plus fixed allowances; basic wage with fixed and non-fixed allowances; or basic wage with non-fixed allowances. Choose one model and keep it consistent across contracts, HR policy, and payroll coding.
To make the model usable, create a short “component dictionary” for every payslip line: purpose, eligibility, fixed or variable status, calculation method, and required evidence (attendance, approval, target sheet, receipts).
If you rely on a rule-of-thumb like “basic wage is 75%,” mark it Not confirmed until you tie it to current primary guidance.
Fixed vs non-fixed allowances and minimum wage checks
Allowances are where errors hide. Fixed allowances are paid in the same amount on the same schedule and usually attach to the role or grade. Non-fixed allowances change with conditions such as attendance, shifts, performance, or sales.
For minimum wage safety, many employers treat basic wage plus fixed allowances as the core base, so mislabeling a variable allowance as “fixed” can create back-pay exposure. Fixed allowances should not depend on targets, and they should not drop during lawful leave.
Keep names consistent on payslips, and keep the “allowance logic” written inside company regulation or HR policy.
Variable earnings: overtime, THR, bonuses, and incentives
Variable earnings are normal, but they must be measurable. Overtime needs time records and approvals, with a calculation method that can be repeated. If overtime is paid informally, it becomes hard to defend and easy to recharacterise.
THR is a mandatory annual benefit and should be treated as its own payroll event—separate from monthly salary—so your calendar needs a THR checklist: eligibility, pro-rata rules, cutoff date, and payment date. Bonuses and incentives should also have written triggers.
Real Story: Made’s payslip fix in Canggu
Made worked in Canggu as a senior villa administrator. His payslip listed “allowance” as one lump sum that moved up and down, and when he applied for a bank loan, the bank asked for a stable breakdown.
HR rebuilt the components: a clear basic wage, a fixed position allowance, and a separate variable item for shift cover and monthly performance—each tied to a simple proof trail and a pay grade.
Outcome: within two payroll cycles the payslip became consistent, the loan was approved, and the company avoided a minimum wage complaint triggered by unclear classification.
Statutory deductions: BPJS and PPh 21 on payslips
When Payroll in Indonesia reaches net pay, deductions must be transparent. In most employment setups, payroll needs to calculate employee BPJS shares and withhold PPh 21 on salary and most remuneration, then remit and store proof every month.
The critical control is mapping: each earning component should be tagged as included in the BPJS wage base (or not) and subject to PPh 21 (or a verified exemption). For practical notes on BPJS and PPh 21 interaction, see Ortax guidance.
Avoid publishing numeric caps or rates unless you confirm them directly from current BPJS and DGT releases for your payroll year.
Wage structure and scale: making pay decisions defensible
Permenaker 1/2017 expects employers to maintain a wage structure and scale (struktur dan skala upah), commonly applied for workers with at least one year of service. It helps show pay differences are based on job value, competence, and tenure.
Group roles into grades, assign minimum-to-maximum ranges per grade, then define progression rules (promotion, annual review, movement by performance). Align allowances so changes in grade automatically update the correct fixed components.
A monthly component audit checklist for HR and finance
Run a short audit before payroll is locked. Confirm employment status (PKWT or PKWTT), and check that basic wage and fixed allowances match the wage structure. Then verify variable items have evidence: overtime approvals, incentive calculations, and reimbursement receipts.
Next, reconcile statutory items: BPJS enrollment and payment proof, PPh 21 withholding logic, and special events like THR. Finally, review the “minimum wage view” of the payslip so you can explain what counts and why.
If you can pass this checklist, Payroll in Indonesia becomes easier to scale, because the system is consistent and repeatable.
FAQ's about payroll components
-
What is the difference between wage and take-home pay?
Wage is defined components; take-home pay is wage plus variables minus deductions.
-
Do fixed allowances need separate lines on payslips?
Yes—separate lines reduce disputes and support minimum wage checks.
-
Is THR part of monthly salary?
No—THR is a separate mandatory annual payment with specific timing rules.
-
Are reimbursements treated like wages?
True reimbursements need proof; regular cash benefits should be classified as earnings.
-
What should we do when a component rule is unclear?
Treat it as Not confirmed and verify in current primary regulations before payroll closes.
