THR Bonuses in Indonesia: What HR Needs to Understand

In Indonesia, employees enjoy a special benefit known as Tunjangan Hari Raya (THR), a bonus provided to celebrate significant religious holidays.

This bonus, deeply embedded in the country's employment culture, is an essential aspect of the overall benefits package for workers. THR is not just a financial perk but a reflection of Indonesia's rich tradition of honoring major religious festivities.

Read more to discover how THR works, its impact on employee satisfaction, and the regulations governing this unique bonus in Indonesia.

THR, or Tunjangan Hari Raya, is a mandatory bonus given to employees in Indonesia before major religious holidays.

This payment is intended to provide additional financial support to employees during festive seasons, ensuring they can celebrate these important occasions with greater ease.

The regulation for holiday allowances refers to Minister of Manpower Regulation No. 6/2016:

1. Religious Holiday Allowance, or THR, is a non-wage income that employers are required to pay to their employees or their families before a religious holiday.
   
2. Non-wage income refers to the financial benefits provided by employers to employees for religious fulfillment, motivating increased productivity, or enhancing the welfare of employees and their families.
   
3. Religious holidays include Idul Fitri for Muslims, Christmas for Catholics and Protestants, Nyepi for Hindus, Vesak for Buddhists, and Chinese New Year for Confucians.
   
4. When should THR be paid to employees? It should be noted that THR is mandatory and must be paid by the employer no later than 7 days before the religious holiday.
   
5. THR is paid once a year, corresponding to each employee's religious holiday, unless otherwise specified by an agreement between the employer and employees in a work agreement, company regulations, or a collective labor agreement.

The amount of THR is equivalent to one month’s salary. This means that employees will receive an additional sum equal to their regular monthly pay. THR includes:

• Base Salary: The core component of the bonus is the employee’s regular monthly salary.

• Fixed Monthly Allowance: If employees have a fixed monthly allowance in addition to their base salary, this is also included in the THR calculation.

The detailed calculation of THR (Tunjangan Hari Raya) for employees can be found in Article 3 and Article 4 of Permenaker 6/2016. Here are the details:

• Employees who have worked for 12 months or more continuously are entitled to one month’s salary as THR.

• Employees who have worked continuously for less than 12 months are entitled to a proportional amount based on their length of service, calculated as follows: The one-month salary referred to includes salary without allowances, which is the net wage (clean wages); or basic salary including fixed allowances.

Example Calculation of THR

For example, if your monthly salary is Rp5,000,000 and your length of service is 1.3 years, you will receive THR equivalent to one month’s salary, which is Rp5,000,000.

On the other hand, if your length of service is, for instance, 5 months, the THR calculation would be:

5/12×Rp5,000,000= Rp2,083,333

So, you would receive Rp2,083,333 as THR.

By understanding THR's guidelines, calculations, and regulations, both employers and employees can better navigate this integral aspect of Indonesia's labor benefits. For further insights into how THR enhances employee satisfaction and complies with legal standards, continue exploring the details of this unique benefit.

How much is THR in Indonesia?

Employees who have worked for 12 months are entitled to receive THR equal to one month’s salary.

Can employees with 6 months of work receive THR?

Employees who have worked for at least 1 month are entitled to receive the religious holiday THR from their employer.

When is the latest THR payment date?

The religious holiday THR must be paid in full and no later than 7 days before the religious holiday.

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Find out more by following this link:

• Paid Leave Entitlements for Indonesian Workers

• Indonesia's Internship Program Policies

• Indonesia's Working Hours and Overtime Regulations

• Hiring Employees in Indonesia: Employment Laws and Regulations

• Payroll System in Indonesia: Rules, Regulations, and Compliance

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