One type of penalty is pay reduction. I often get asked, ``Isn't it illegal to lower wages in Indonesia?'' However, there is no legal provision that prohibits lowering wages. When the minimum wage decreases, it states that ``it is not permissible to lower the wages already paid to match the lower minimum wage,'' which is just an expanded interpretation to mean that wages cannot be lowered. However, pay cuts are of course very sensitive issues, and often lead to labor-management disputes. How can we avoid conflict even if only a little?

[Reasons for pay reduction and supporting evidence]

The reason why you want to take a pay cut may be that your performance doesn't match the amount of pay, in other words, you haven't achieved your goals or you lack ability. They become increasingly dissatisfied with the fact that they are not working as expected or that what they say is not being understood, and they want to lower their wages because they are unable to achieve the goals they set at the beginning of the year. Pay cuts have a big impact, so instead of implementing them emotionally, you should first prepare the reason and objective evidence for it. For example, if a goal has not been achieved, it is necessary to have an ``appropriate'' goal set and data to support the goal. I think the company's position will be stronger if employees themselves propose goals and self-evaluate their progress toward achieving them. On the other hand, if the violation caused significant damage to the company, it would be more deserving of compensation than a pay reduction. Wages should be paid based on an employee's ability, so if wages are to be reduced, the reason should be that the employee's ability is not commensurate with the amount being paid.

[Setting of salary reduction amount]

Next, we need a clear basic idea of ​​how much the salary will be reduced. Wage scales and competency standards play a major role here. By setting specific competency standards for each job or position, it becomes clear where the employee's abilities actually lie. The amount of wages that should be paid to the employee in that position can then be calculated from the wage scale. For example, let's say that the line's ability to satisfy 100% of the manager's ability standards is insufficient, but the minimum required ability has been reached. There 1 Let's also compare it with the ability standards for assistant managers at the lower level. Let's say you find that you've met, but only slightly exceeded, the 100% satisfaction line of assistant managers. If so, the amount of wages to be paid would be slightly above the middle of the assistant manager's wage scale. Wages can be calculated more clearly if the level of ability achieved can be quantified using stages, rates, and points. Of course, competency standards and wage scales are not intended to set pay reduction amounts, but they could also be used in that way. Each company is required to set a wage scale. We need to devise ways to create things that are usable, rather than things that just need to be made.

Related legislation: Article 92 of Law No. 13 of 2003 UU-13/2003