Religious Holiday Allowance Payment in 2024
On March 15, 2024, the Minister of Manpower issued Circular Letter No. M/2/HK.04/III/2024 regarding Implementation of Religious Holiday Allowance for Workers in Companies (the “Circular Letter”). The issuance of the Circular Letter revolves on the importance of providing for the needs of the workers and their families during the upcoming religious holiday of Idul Fitri. The obligation to pay the Religious Holiday Allowance (in Indonesian, Tunjangan Hari Raya or the “THR”) is regulated under Government Regulation No. 36 of 2021 on Wages (“GR 36/2021”), and Minister of Manpower Regulation No. 6 of 2016 on THR for Workers in Companies (“MOMR 6/2016”).
In this Newsflash, we set out several key points regarding the implementation of the THR in 2024 and the Government’s policies to ensure the payment of the THR is carried out lawfully.
♦ Implementation of THR Policy in 2024
According to the Circular Letter, every employer must pay the THR to their workers. The THR must be paid in full and may not be paid in installments. Further, the THR must be paid at the latest of 7 (seven) days prior to the religious holiday and it shall be given to the following:
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- Workers who have been working for 1 (one) month without any interruption or more; and
- Workers who are employed under an indefinite term employment agreement (in Indonesian, Perjanjian Kerja Waktu Tidak Tertentu) or a fixed term employment agreement (in Indonesian, Perjanjian Kerja Waktu Tertentu).
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The amount of the THR is given as follows:
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- For workers with a working period of 12 (twelve) months consecutively or more, shall be given 1 (one) month of salary.
- For workers with a working period of 1 (month) consecutively, but less than 12 (twelve) months, shall be given proportionately based on the following calculation:
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In the event the workers whose works are based on a freelance agreement, 1 (one) month of salary shall be calculated as follows:
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- Workers with a working period of 12 (twelve) months or more, 1 (one) month of salary shall be calculated based on the average salary of the last 12 (twelve) months before the religious holiday.
- Workers with a working period less than 12 (twelve) months, 1 (one) month of salary shall be calculated based on the average wage obtained each month during the working period.
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For workers whose salary is set based on the unit of output, the Circular Letter provides that the 1 (one) month salary shall be calculated based on the average salary of the last 12 (twelve) months before the religious holiday. For companies that set the amount of the THR greater than the amount of the minimum THR, then the THR shall be paid to the workers based on the employment agreement, company regulation, collective work agreement, or common practice.
To ensure the payment of the THR is carried out lawfully, the Government encourages companies to pay the THR in accordance with applicable laws and regulations before the due date. To anticipate complaints in the payment of the THR, each provincial and regent/city area is expected to establish a Command Post (Posko Satgas) for consultations services and law enforcement of the THR which is integrated through https://poskothr.kemnaker.go.id.
♦ Administrative Sanctions
GR 36/2021 and MOMR 6/2016 provide administrative sanctions that may be imposed on employers if they fail to comply with the THR payment.
An employer that is late in paying the THR payment to their workers may be imposed a monetary fine in the amount of 5% (five percent) of the total THR that must be paid from the due date. Note that the imposition of such a fine does not eliminate the obligation of the employers to pay the THR.
Moreover, an employer that fails to pay the THR may be subject to the following administrative sanctions under GR 36/2021:
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- Written reprimand;
- Restriction of business activities;
- Temporary suspension of part or all the production tools; and
- Suspension of business activities.
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AKSET
Please contact Johannes C. Sahetapy-Engel [jsahetapyengel@aksetlaw.com] or Thomas P. Wijaya [twijaya@aksetlaw.com] for further information
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