Compensation and Benefits of Indonesian Employees – Tunjangan Hari Raya (THR) – Festive Bonus in Indonesia (commonly known as the 13th-month salary in Indonesia).

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✅ What is THR?

  • THR is a mandatory religious holiday allowance paid by employers to employees.
  • It is equivalent to 1 month’s salary and is paid once a year.
  • Commonly called the 13th-month salary, although it’s not an official monthly wage.

 

📅 When is THR Paid?

  • Typically paid 7–14 days before the Eid al-Fitr holiday (the biggest Muslim festival in Indonesia).
  • For non-Muslim employees, THR must still be paid but aligned with their respective religious holidays (e.g., Christmas, Nyepi, Waisak).

 

👥 Who Is Eligible?

  • Permanent and contract employees (PKWTT and PKWT)
  • Must have worked at least 1 month continuously.
  • If employed less than 12 months, the THR is prorated: 

           THR = Monthly Salary × (Months Worked/12​)

 

💵 How Much Is the THR?

  • 1 month’s full salary for employees who have worked for 12 months or more.
  • Includes base salary + fixed allowances.

 

📜 Legal Basis

  • Governed by Ministry of Manpower Regulation No. 6 of 2016.
  • Non-compliance can lead to administrative sanctions, including fines and suspension of business operations.

 

📌 Notes:

  • THR is taxable under income tax (PPh 21).
  • Must be paid in full and cannot be replaced by gifts or goods.
  • Many companies pay THR before Eid even for non-Muslim employees, to follow national norms.

 

Religious Holidays Covered

  • Eid al-Fitr (Muslim employees)
  • Christmas (Christian/Catholic employees)
  • Nyepi (Hindu employees)
  • Waisak (Buddhist employees)
  • Chinese New Year (Confucian employees)

 

📄 Contract-End Compensation Policy (for Contractual Employees)

Purpose

To outline the provisions regarding contract-end compensation for employees on fixed-term contracts, separate from the Tunjangan Hari Raya (THR) payment.

 

Scope 

This applies only to employees hired under fixed-term/contractual agreements, in accordance with the Indonesian Labor Law (UU Cipta Kerja and its derivatives).

 

Eligibility

  • Employees under annual fixed-term contracts.
  • Must complete 12 consecutive months under the current contract term.
  • This does not apply to permanent (indefinite-term) employees.

 

Compensation Details

  • Upon successful completion of a 12-month contract term, the employee is entitled to receive a lump sum compensation equivalent to 1 month of their base salary.
  • This is not pro-rated for partial years unless otherwise stated in the contract.

 

Timing of Payment

Payment is processed and disbursed at the end of the contract period, typically during the final payroll cycle or within 14 days of contract end.

 

Taxation

Subject to applicable PPh 21 income tax. Reflected separately from monthly salary or THR in the payslip for clarity.

 

Exclusions

Not applicable for:

  • Contracts terminated early by the employee (resignation).
  • Contracts terminated for cause.
  • Employees transitioned to permanent status during the contract year.