What is THR Mandatory Allowance for Workers in Indonesia? [as per Regulation update 2016]

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. 06/2016 March 8th, 2016.

[previously: 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 1 (one) of continuous service [previously: 3 months]
• 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
  • Konghucu: Imlek [added in 2016]
• Payment in Cash only in Indonesian Rupiah currency [added in 2016]
• [Previously: 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 > 1 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.
• Penalty for late payment of THR is 5% of Total Amount of THR. [added in 2016]

Deviation

in 2016 no deviation is mention in new regulation

[Previously : 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
•  Download THR Regulation (click here: Permenaker THR No. 06 / 2016 )
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Tags: 2012, 2016, allowance, Compensation, Human Capital, Human Resources, Indonesia, Kompensasi, mandatory, mandatory allowance, PER-04/MEN/1994, Peraturan Menteri Tenaga Kerja, Permenaker 06 2016, Remunerasi, Remuneration, THR, tunjangan wajib