THR in Indonesia: What Employers Need to Know

Tunjangan Hari Raya (THR) is a mandatory religious holiday allowance in Indonesia. It is a key part of employee rights, ensuring workers receive extra financial support before major religious celebrations. Employers must understand their obligations to avoid legal consequences. 

What is THR in Indonesia?

THR is a one-time annual payment given to employees before religious holidays. It applies to all permanent and contract employees who have worked at least one month with the company. The amount depends on the employee’s length of service and salary. 

THR is often referred to as the “13th month salary” because it is an additional mandatory payment given to employees outside their regular monthly salary.  

When Must Employers Pay THR?

THR must be paid at least seven days before the employee’s respective religious holiday. These holidays include: 

For employees who have worked for 12 months or more, the amount is equal to one month’s salary. Those who have worked between one and 12 months receive a proportional payment. 

Consequences of Not Paying THR

Failure to pay THR on time can lead to serious penalties. Employers who do not comply may face: 

• A written warning from the government 

• Fines of 5% of the total THR owed 

• Restrictions on business operations 

• Potential legal action from employees 

The Indonesian Ministry of Manpower monitors THR compliance closely. Employees can report violations, leading to government intervention. 

The History of THR in Indonesia

THR was first introduced in the 1950s as a voluntary bonus provided by some companies to their employees before Eid al-Fitr. The aim was to support workers in celebrating the holiday with their families. The practice became more formal when the Indonesian government, under President Sukarno, issued a regulation in 1961 that required employers to provide a holiday allowance to their workers. This move was aimed at improving workers’ welfare and boosting economic activity during festive period. 

In 1994, the Ministry of Manpower issued Regulation No. 04/1994, which made THR mandatory for all companies. 

In 2016, the regulation was updated through Ministerial Regulation No. 6/2016, which stated that: 

• Employees who have worked for at least one month are entitled to THR. 

• Employees with one year or more of service should receive one month’s salary as THR. 

• Those with less than a year receive a prorated amount. 

Ensure Compliance with THR Regulations

Employers must budget for THR well in advance. Compliance avoids legal risks and builds employee trust. If you need guidance on THR regulations, our team can help. Contact us today for expert assistance.