Indonesia statutory holiday allowance (THR): Only negligible relief for employers

28 April 2021

On 12 April 2021, the Indonesian Manpower Ministry issued Circular Letter M/6/HK.04/IV/2021 to all governors in Indonesia on the Implementation of Payment of Religious Holiday Allowances (“THR”) in 2021 for Company Employees (“new THR policy”). THR is an acronym for a Bahasa Indonesia term (Tunjangan Hari Raya) which refers to an annual bonus of one month’s salary given to employees before the start of a religious holiday.

In brief, the new THR policy provides guidance on the payment of the 2021 THR to employees by:

• reaffirming the current regulated position that employers must pay the full THR amount to their employees at least seven days before the relevant religious holiday date (“Holiday Date”); and 
• providing an option for employers who have been impacted by the Covid-19 pandemic to cause them to be financially unable to pay employees the 2021 THR at least seven days before the Holiday Date, to negotiate a written agreement with employees to defer such payment, provided that the payment deferral date is no later than the Holiday Date.

This is an extract of an article by Soemadipradja & Taher, Allen & Gledhill’s associate firm in Indonesia. To read the full article from the Soemadipradja & Taher website www.soemath.com, please click here.