Religious-Holiday Allowance for Workers

As Eid Al-Fitr Day draws nearer, most of the Indonesian working population awaits anxiously to receive their religious-holiday allowance (tunjangan hari raya or commonly known as THR) and soon to embark on their collective homecoming tradition.

The government has also reminded[1] every state-owned and private-owned companies of their legal obligation to provide their employees with their rightful religious-holiday allowance as stipulated by the Minister of Employment (“THR Regulation”).[2]

What is Religious-Holiday Allowance?

Religious-holiday allowance is payment given to every Indonesian employee once every year before their respective annual religious holiday as follow:[3]

  1. Eid Al-Fitr Day (Idul Fitri) for Islam employees;
  2. Christmas Day (Natal) for Christian and Catholic employees;
  3. Seclusion Day (Nyepi) for Hindu employees;
  4. Vesak Day (Waisak) for Buddhist employees; and
  5. Chinese New Year (Imlek) for employees who follow Confucianism.

The religious-holiday allowance must be paid to every employee at least 7 days before their respective annual religious holiday. Those that are eligible for religious-holiday allowance are those that have worked for at least 1 month, whether hired on a permanent or temporary basis.[4]

How Much?

The amount each employee receives for his/her religious-holiday allowance varies depending on his/her total working period. Employees who have been working for the same employer for 12 consecutive months or more will receive a religious-holiday allowance equal to their monthly salary.[5]

For those being paid wages, the religious-holiday allowance is calculated based on their average wage over the 12-month period (if less than 12 months, the average of the wages paid each month during his/her working period) before the employee’s respective annual religious holiday.[6]

An employer may provide more than what is stipulated above based on each employment contract, company regulation, or collective employment contract. An employer may even provide more if such has been typical for the company each year (does not have to be written).[7]

Note that religious-holiday allowance must be paid with money in Rupiah. Religious-holiday allowance cannot be substituted with goods or services nor be provided in another currency.[8]

Sanctions for Non-Compliance

Employers that fail to pay religious-holiday allowance in due time (7 days before the respective annual religious holiday) will be subject to a fine of 5 percent of the total amount of religious-holiday allowance that should have been paid. This fine will be managed and used for the welfare of the employees in accordance with the collective employment contract or company regulation.[9]

Note that the payment of the said fine does not annul the obligation of the employer in question to pay religious-holiday allowance to employees.[10]

There are also other administrative sanctions for employers that fail to pay their employees with their religious-holiday allowance, including:[11]

  1. Written warning;
  2. Limitation to or temporary suspension of business activities; or
  3. Temporary suspension of production facilities (partially or wholly).

 


FOOTNOTES

[1] Minister of Employment Circular Letter No. 7/MEN/VI/2015 regarding Payment of Religious Holiday Allowances and Recommendations for Joint Homecoming

[2] Minister of Employment Regulation No. 6 of 2016 regarding Religious-Holiday Allowance for Employees

[3] THR Regulation, Art. 5 (1) jo. Art. 1 no. 2

[4] THR Regulation, Art. 2, and Art. 5 (4)

[5] THR Regulation, Art. 3 (1)

[6] THR Regulation, Art. 3 (3)

[7] THR Regulation, Art. 4

[8] THR Regulation, Art. 6

[9] THR Regulation, Art. 10 (1) and (3)

[10] THR Regulation, Art. 10 (2)

[11] For more information on the applicable administrative sanctions for employers, see: 1) Government Regulation No. 78 of 2015 regarding Pay, and 2) Minister of Labour Regulation No. 20 of 2016 regarding Procedures to Impose Administrative Sanctions under Government Regulation No. 78 of 2015 regarding Pay


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