Religious Holiday Allowance in Indonesia

What is Religious Holiday Allowance?

Religious Holiday Allowance or Tunjangan Hari Raya (“THR”) is a mandatory non-wage income or employee’s income outside of the basic wages that must be paid by the company to employees ahead of religious holidays. THR is given by the company to employees in accordance with their respective religious holidays.

Eligibility and Calculation Formula

Based on Minister of Manpower Circular Letter M/2/HK.04.00/III/2023, THR for 2023 is paid under the following conditions:

THR is given to employees who have worked continuously for 1 (one) month or more based on an Employment Agreement.
The amount of THR is determined as follows:
- Employees who have worked continuously for 12 (twelve) months or more are given THR equal to 1 (one) month’s wage.
- Employees who have worked continuously for 1 (one) month or more but less than 12 (twelve) months are given THR proportionally according to the following calculation:
Employees working based on casual daily employment agreements are given THR equal to 1 (one) month’s wage according to the following calculation:
- For employees who have worked for 12 (twelve) months or more: the average wage received in the last 12 (twelve) months before religious holidays.
- For employees who have worked for less than 12 (twelve) months: the average wage received each month during the working period.
Employees whose wages are determined based on production units are given THR equal to 1 (one) month’s wage calculated based on the average wage received in the last 12 (twelve) months before religious holidays.
For companies that determine a greater THR amount than that stated in number 2 above in their employment agreements, company regulations, collective labor agreements, or in practice, the THR value set by the company will prevail.
For certain export-oriented labor-intensive industrial companies that carry out adjustments to working time and wages as referred to in Minister of Manpower Regulation Number 5 of 2023 concerning Adjustment of Working Time and Wages for Certain Export-Oriented Labor-Intensive Industrial Companies affected by Changes in the Global Economy e.g textile and apparel industry, footwear industry, leather and leather goods industry, furniture industry, and children’s toy industry, THR is calculated by using the last wages before wage adjustments based on an agreement.

When Should the THR be Distributed to Employees?

According to the law, THR must be given to employees no later than 7 days before the employee’s religious day. Furthermore, the Minister of Manpower urges companies to comply with this requirement especially because the needs of employees tend to increase before the religious holidays.

In addition, one of the main reasons for the company to distribute the THR in accordance with the law is principally to avoid administrative sanctions (i.e. Written warning, Restrictions on business activities, Temporary suspension of part or all of the means of production; and Business suspension) and late fines in the amount of 5% of the total THR that should be paid as regulated under Government Regulation Number 36 of 2021 concerning Wage.

As an example case, PT Dunkindo Lestari (“Dunkin Donuts”) is known to have not paid THR to its employees for 2 years (2021 and 2022). Mirah Sumirat, President of the Association of Indonesian Trade Unions (“ASPEK Indonesia”) then followed this up by reporting Dunkin Donuts to the Minister of Manpower. The Minister of Manpower finally issued a Letter of Recommendation through the Mediator of the Minister of Manpower, which ordered Dunkin Donuts to immediately pay its THR obligations to its employees.

¹ Article 5 paragraph (4) of the Minister of Manpower Regulation 6/2016 jo. Article 9 paragraph (2) of GR 36/2021.

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