What is THR Mandatory Allowance for Workers in Indonesia?

illustration courtesy of asenat29

THR allowance is a mandatory allowance for workers in Indonesia  to celebrate religious holiday.

In Indonesia, it is mandatory for employer to pay one monthly salary/wage a week before their employees religious holiday celebration.  This unique allowance is called THR (short for Tunjangan Hari Raya Keagamaan) which I loosely translate it as Religious Holiday Allowance.

This THR mandatory allowance is regulated in Indonesian Minister of Manpower Regulation No. PER-04/MEN/1994 tanggal 16 September 1994.

I have summarized from that regulation as follows:

Consideration:

  • that Indonesian society  is a society of religion believers which celebrate religious holiday every year according to their own religion;
  • that workers need additional cost for the celebration;
  • that for the worker to be able to afford celebration it is proper for employer to give Religious Holiday Allowance;
  • that to create peaceful business condition, increase workers welfare and  provide uniformity in payment the Religious Holiday Allowance  should be determined by the Minister

Definition:

THR is labor allowance that must be paid by the employer to the worker or his family before the religious holiday in cash and/or other form.

Eligibility

  • Employer must pay THR for employee that has minimum of 3 months of continuous service
  • Former Permanent Employee that his employment terminated in period of 30-days before his Religious Holiday is still eligible for THR
  • Former Contract-based Employee that his contract terminated before his Religious Holiday is not eligible for THR

Payment

  • Employer must pay THR once a year in accordance to employee religion,
  • Payment must be made at least 7 days before Religious Holiday of each employees (unless employee and employer has agreement for other time of payment)
  • Religious Holiday in Indonesia considered for THR payment:
    • Moslem: Eid al-Fitri
    • Christian: Christmas
    • Budhist: Waisak (Vesak)
    • Hindu: Nyepi
  • Payment in Cash but payment in other form (in kind) is allowed in maximum value of 25% of total THR (but not allowed in in form of liquor, drugs/emdicine or material for drugs/medicine)

Amount

  • THR amount is minimum 1 monthly salary/wages (= basic salary + other fixed allowance) for workers that have minimum 12 month of service.
  • For workers that have > 3 months of service and <12 months of service, THR amount is apportioned accordingly (= month of service/12 x 1 monthly salary)

 Violation

For employers who violate the obligation to pay THR allowance shall be subject to punishment.

Deviation

For employers who unable to pay THR because of the company condition must submit request about deviation of THR amount to Directorate General of Industrial Relations and Labour Inspection at least 2 (two) months before the nearest Religious Holiday.

Notes:
Google “rough” English Translation for PER-04/MEN/1994 can be found at http://bit.ly/thr-english quoted from http://www.bigwisu.com/2010/01/21/what-is-thr

 

About Erwin Muniruzaman

just a simple mind Indonesian compensation & benefit specialist with an astronomical background Erwin Muniruzaman has been working at Bank Negara Indonesia, one of the largest Indonesian national bank, since May 1995. He has been the Head of Employee Service Group, Human Capital Division since Jan 2011, where he is responsible for managing and administering corporate-wide payroll, compensation, benefits and services for more than 25.000 employees across Indonesia. Prior to this, he was the Compensation and Benefits Manager of the bank from 2003 to Jan 2011. He was responsible for developing the Corporate Remuneration Strategy that was administered bank wide, creating, designing and reviewing the compensation and benefits policies including salary structure, bonus, incentive scheme, health care benefits, pension fund programs and employee loans. Prior to this, he had held other positions in the bank including Small Business Loan Officer and Marketing Officer. He has been in the banking industry since 1995. He is currently located at Jakarta, Indonesia.

25 comments

  1. Thank you for your explanation Mr. Erwin. :)

  2. Janardhan S

    What is mean by fixed allowances ( Food Allowance is included or not)

    • Fixed Allowance in Indonesia defined by regulation is any (monthly) allowance that given not related to Performance nor Absent.
      If Food Allowance is not related to absent and given in the same amount then it is considered as Fixed Allowance. On the other hand, if the Food Allowance amount is fluctuated base on absent then it is not consider as fixed allowance.

  3. Paulus

    My company has a policy of NOT paying THR if the employee resigns before the THR period. Isn’t that against the law?

    • If a PERMANENT employee resign/terminate WITHIN 30 days before D-DAY (Idul Fitri/Christmas/Waisak/Nyepi) he is still eligible by REGULATIONS for (proportionate) THR.
      but
      If CONTRACT employee resign/terminate even only ONE day before D-Day, he is NOT eligible by regulations. In this case it is up to company internal regulations or agreement with employees.

      Please refer to PERMEN 04/1994 about THR article 6 below:

      Pasal 6
      1. Pekerja yang putus hubungan kerjanya terhitung sejak waktu 30
      (tiga puluh) hari sebelum jatuh tempo Hari Raya Keagamaan
      berhak atas THR.
      2. Ketentuan sebagaimana dimaksud dalam ayat (1) tidak berlaku
      bagi pekerja dalam hubungan kerja untuk waktu tertentu yang
      hubungan kerjanya berakhir sebelum jatuh tempo Hari Raya
      Keagamaan.

    • If they are permanent employee that resign more than a month before, they are not eligible. They only eligible if resign less then a month before Idul Fitri.

  4. Mr Ong

    Dear Sir,
    Seek your advice on the THR.

    Does my company still has to pay THR to an employee although we do not have an registered office in Indonesia ? This employee is under employment from HQ in Singapore

  5. ya… :-)
    tHR pasti dinantikan oleh semua orang terutama para karyawan :-)
    ini hampir lagi, mo lebaran sob, hehehe

  6. Ben

    Hi,

    Thanks for the info.

    Question: What about expatriates? Are they entitled or not?

    Thanks!

  7. Erwin, apa kabar?

    Lagi cari info THR dalam bahasa Inggris ketermu blog ini.

    Good info …

  8. Aileen

    Dear Sir

    My company is facing gross financial difficulties and would like to appeal for waiver of THR payment.

    Do you have a sample for me to appeal to the Director General of Industrial Relations and Manpower Control?

    Appreciate your help.

    Regards
    aileen

  9. Meina

    Dear Pak Erwin, adakah regulasi THR No 04/1994 dalam versi bahasa Inggris ?

    • Dear Meina, sampai sekarang saya belum menemukan dokumen resmi versi bahasa Inggris nya. Itu lah sebabnya saya buatkan posting ini dalam bahasa Inggris ini untuk membantu

      • meina

        Dear pak Erwin, terimakasih untuk fast reply nya, saya harap kedepannya ada yg bisa menterjemahkan regulasi ini, krn kami harus melampirkan regulasi THR english version ini sebagai data pendukung ke pimpinan expatriat kami.

      • He he he
        Dear Mba Meina, kalau itu minta aja penerjemah resmi utk buat terjemahan nya khusus untuk perusahaan Mba Meina. Karena tidak setiap dokumen/peraturan pemerintah di sediakan terjemahan versi inggrisnya oleh pemerintah.

  10. meina

    pak Erwin
    staff ditempat kami transportnya dibayar berdasarkan aktual pemakaian, tp khusus untuk sales, mereka yg memiliki mobil pribadi menggunakan mobil tsb sbg pengganti transportasi dan perusahaan memberi penggantian transportasi berupa tunjangan kendaraan yg diterima stp bulan.
    pertanyaan saya, apakah tunjangan kendaraan tsb bisa di kategorikan sbg tunjangan tetap dan juga harus dimasukkan dalam THR ?

    • Dear Meina,
      Pengertian tunjangan tetap adalah tidak terkait dengan prestasi/kinerja dan tidak terkait dengan kehadiran.
      Jadi kalau nilai tunjangan kendaraan nya tetap, tidak berubah karena kinerja/kehadiran maka masuk tunjangan tetap dan harus masuk komponen THR

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 1,682 other followers

%d bloggers like this: