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  3. Beyond Compliance: Balancing Fairness in Employee Compensation

Beyond Compliance: Balancing Fairness in Employee Compensation

Profile photo of Mohamad Rafi Apriansyah
Writer: Mohamad Rafi Apriansyah
September 26, 2026, 17:11 WITA Editor: Danang Purnama
6 min read
Office discussion illustration by Vitaly Gariev on Unsplash
An illustration of a discussion between a manager and an employee. Transparency in determining salaries, bonuses, and incentives helps build a sense of fairness and trust in the workplace. (Photo: Vitaly Gariev/Unsplash) Source: Photo by Vitaly Gariev on Unsplash (Unsplash License – free to use, including for publication, at no cost).

JurnalPost.com — Whenever the topic of employee rights arises, the most common question is simple: is the salary received in accordance with the rules? If the answer is “yes,” many consider the matter settled.

However, there is another equally important question: does compensation that complies with the rules actually feel fair to the employee?

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Compensation is more than just a salary. It encompasses allowances, bonuses, incentives, overtime pay, and various facilities provided by the company to its employees.

Hasibuan (2017) defines compensation as all rewards, whether direct or indirect, received by employees for the services rendered to the company. For employees, compensation is a form of appreciation for the time, energy, skills, and contributions they provide. For the company, compensation is an investment in human resources.

Rules Set the Minimum Threshold

Companies are certainly obligated to meet applicable regulations when providing wages to employees.

Law Number 13 of 2003 concerning Manpower, as amended by Law Number 6 of 2023, regulates wage provisions, including the prohibition of paying wages below the minimum wage.

Article 88E stipulates that the minimum wage applies to workers or laborers with less than one year of service at the company in question.

These provisions indicate that the minimum wage essentially functions as a safety net for workers, not as the sole metric for measuring the appreciation of an employee's contribution.

For workers with longer tenures, companies also need to pay attention to wage structures and scales.

Government Regulation Number 36 of 2021 concerning Wages stipulates that employers are required to develop and implement a wage structure and scale, taking into account the company's capabilities and productivity.

In practice, compensation can also be influenced by various other factors, such as job position, length of service, education, experience, responsibilities, competencies, and employee performance.

Therefore, an ideal compensation system should not only be built upon compliance with regulations, but also consider fairness.

Compliance Does Not Always Mean Fairness

In my view, compensation that complies with legal provisions is not automatically perceived as fair by employees.

Imagine two employees receiving salaries that meet the applicable regulations. However, one of them has significantly greater responsibilities, higher work targets, and makes a larger contribution to the company.

If both receive the same compensation without any recognition of the difference in their contributions, there may be no issue regarding the minimum wage threshold. However, from the employee's perspective, this situation can lead to a feeling of being undervalued.

This concept can be explained through Equity Theory , developed by John Stacey Adams in 1965. The theory explains that individuals tend to compare what they contribute to an organization with the rewards they receive, and then compare that ratio to others.

When this comparison is perceived as unbalanced, a sense of injustice can arise. The impact is not only dissatisfaction but also the potential to affect the motivation and effort put into the work.

Therefore, compensation should not be viewed merely as a company's obligation to pay workers.

Compensation is also a form of appreciation.

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Employees who have better performance, greater responsibilities, or higher contributions should ideally have the opportunity to receive additional rewards through salary increases, bonuses, incentives, promotions, or other forms of recognition.

Transparency in Determining Compensation

It is not just the amount of compensation that matters. How a company determines compensation also influences employees' perceptions of fairness.

Colquitt (2001) explains that organizational justice is not only related to the outcomes one receives but also to the decision-making process and how those decisions are communicated.

Therefore, employees should understand the basis used by the company in determining salary increases, bonuses, incentives, and other forms of rewards.

A transparent system can help reduce jealousy and misunderstandings among employees.

When an employee knows that a compensation increase is based on clear indicators—such as target achievement, competency improvement, responsibilities, or length of service—the company's decisions will be easier to understand.

Wage regulations also address this aspect. Under Government Regulation Number 36 of 2021, the wage structure and scale established by the company must be communicated to workers or laborers individually.

This means that transparency is not just a matter of building good relationships between the company and employees, but is an essential part of managing a wage system.

Fairness Must Also Be Realistic

Nevertheless, fairness in providing compensation does not mean that a company must provide the highest possible rewards without considering business conditions.

Companies have varying financial capabilities. Operational costs, revenue, productivity, market conditions, and business sustainability must also be taken into account.

Therefore, balance is required.

On one hand, employees have the right to receive decent compensation and recognition for their contributions. On the other hand, companies need to maintain their financial health to continue business operations and sustain jobs.

A healthy compensation system should be able to reconcile these two interests.

Minimum Standards, Not Final Standards

Companies need to build a compensation system that is transparent, objective, and accountable.

Compensation determination should consider workload, level of responsibility, length of service, competency, and employee work results. Evaluations should also be conducted periodically so that the compensation structure remains relevant to the company's development and labor conditions.

Rewards do not always have to be monetary.

Companies can provide career development opportunities, training, work flexibility, achievement recognition, supporting facilities, or other non-financial benefits.

Ultimately, in my opinion, “complying with the rules” should be the minimum standard, not the final standard in building a compensation system.

A good company is not just one that can fulfill its legal obligations, but also one that can foster a sense of fairness among its employees.

When employees feel their contributions are valued and the compensation process is transparent, the relationship between the company and its workers can become healthier. This condition can ultimately support motivation, loyalty, and productivity in the long term.

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  • #Social Media
  • #Employment
  • #Employees
  • #Employee Compensation
  • #Workplace Fairness
  • #Wage Regulations
  • #Compensation System
  • #HR

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Article source: https://jurnalpost.com/en/beyond-compliance-balancing-fairness-in-employee-compensation/97868/

Printed from JurnalPost.com on November 6, 2026, 17:25 WITA

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