The Employment Creation Omnibus Act eliminates the setting of sector-specific minimum wages, and as a result, the minimum wage that each company must apply has not increased. However, employees often ask for a break without a raise, and while employees are looking around and thinking about what to base their wage adjustment on, the time to make a decision often passes. For example, we often see cases where the new adjusted wage is applied from January every year, but since the final decision was made at the end of April, the difference from January, which is the period for annual wage adjustment, is paid in April. We know the difference in monthly wages, but to what extent should we consider its impact?

[Impact on overtime wages, social security, income tax, and religious festival allowance]

First, overtime wages are calculated based on the monthly fixed wage Upah Tetap, so if the monthly fixed wage amount changes, recalculation is required. Since it varies depending on overtime working hours, each person will need to recalculate and prepare accordingly.
On the other hand, social security insurance premiums are based on the actual wages paid, but currently the majority of companies seem to calculate them based on fixed monthly wages. Considering that there is currently no guidance from social security companies regarding this, and that social security almost does not have a system for correcting already paid insurance premiums (it is a manual process), I think that applying this to insurance premium calculations after the annual wage adjustment is determined will not pose a major problem.
In addition, income tax can be dealt with by filing an annual tax return based on actual income, so it is not a matter of amending the amount already paid.
The religious festival allowance Tunjangan Hari Raya/THR is also calculated based on the fixed monthly wage, so it will be calculated based on the corrected amount, and if it has already been paid, the difference will need to be paid.

[Differential payment to employees after retirement]

As in the example above, employees whose wages were decided in April but already retired in March will actually incur the difference in wages from January to March. If you quit your job within one month before the religious festival, there will be a difference in the amount of your religious festival allowance. How this payment should be made is a delicate issue. There is no law that stipulates annual salary increases. Regular reviews are required, but reviews and raises are not necessarily the same thing. It is also prohibited to pay wages that are less than the minimum wage, but there is generally no violation if the wage is higher than the minimum wage. Therefore, if annual wage adjustments are made retroactive by limiting them to employees who were still employed at the time of the decision, there will be no obligation to pay the difference to retirees. However, if the employee is paid less than the minimum wage, the company should pay the difference. This is a violation of the company rather than an employee issue. In order to avoid paying wages below the minimum wage, many companies raise wages only to the extent that the new minimum wage is met from January 1st, when the new minimum wage takes effect. Some companies will first give all employees the amount of the minimum wage increase as a base increase.
Although the determination of new wage amounts may be delayed for various reasons, we recommend that you prepare to avoid mistakes and omissions in calculations.