Tunjangan Hari Raya (THR)

Intro to Tunjangan Hari Raya (THR)?

Tunjangan Hari Raya (THR) is a mandatory religious holiday allowance unique to Indonesia’s employment landscape. This special annual bonus is typically distributed before major religious holidays, reflecting Indonesia’s commitment to cultural and religious inclusivity in the workplace. Required by law, THR represents an important component of Indonesia’s employee compensation structure and has significant implications for both employers and workers.

Definition of Tunjangan Hari Raya (THR)

Tunjangan Hari Raya (THR), or Religious Holiday Allowance, is a mandatory benefit that employers in Indonesia must provide to employees before their respective religious holidays. Regulated under Ministry of Manpower Regulation No. 6/2016 and subsequent amendments, THR is essentially an annual bonus equal to one month’s salary for eligible employees.

The primary features of THR include:

Eligibility: All employees who have worked for at least one month are entitled to THR, including permanent, contract, part-time, and daily workers.

Calculation: For employees with at least 12 months of service, THR equals one month’s salary. For those employed less than 12 months, THR is calculated proportionally based on their length of service.

Timing: THR must be paid no later than seven days before the relevant religious holiday:

• Idul Fitri for Muslim employees
• Christmas for Christian employees
• Nyepi for Hindu employees
• Vesak for Buddhist employees

Components: THR calculations typically include basic salary and fixed allowances regularly received by the employee.

Note: Specific THR regulations may be updated by the Indonesian government. Companies should verify current requirements with legal advisors to ensure full compliance.

Importance of Tunjangan Hari Raya (THR) in HR

THR plays a pivotal role in Indonesian human resource management for several important reasons:

Legal Compliance: Providing THR is not optional but a legal obligation for all employers in Indonesia. Failure to comply can result in administrative sanctions, financial penalties, and damage to a company’s legal standing and reputation.

Financial Planning: THR represents a significant financial obligation that HR and finance departments must budget for annually. Proper forecasting and provisioning for THR payments are essential aspects of organizational financial planning.

Employee Morale and Engagement: Beyond legal compliance, THR acknowledges the cultural importance of religious celebrations in Indonesian society. Timely and accurate THR payments demonstrate respect for employees’ cultural identities and enhance workplace satisfaction and loyalty.

Competitive Compensation Strategy: Some organizations offer THR payments above the minimum legal requirement as part of their total rewards strategy to attract and retain talent. HR departments must consider how THR fits into the overall compensation package they offer.

Workforce Management: The period around major religious holidays, particularly Idul Fitri, often involves employee migrations and extended leave periods. HR must manage THR payments while simultaneously handling holiday staffing needs and temporary workforce adjustments.

Cultural Sensitivity: Proper THR administration demonstrates an organization’s cultural intelligence and sensitivity to Indonesia’s religious diversity, reinforcing inclusive workplace practices and strengthening employer branding.

Examples of Tunjangan Hari Raya (THR)

The following examples illustrate how THR works in practice across different employment scenarios:

Example 1: Full-Year Employee
Budi has worked at PT Sejahtera for three years as a marketing manager with a monthly salary of IDR 15 million. Before Idul Fitri, Budi receives a THR payment of IDR 15 million (equivalent to one month’s salary). The company ensures this payment is made 10 days before the holiday, exceeding the minimum seven-day requirement. The HR department provides Budi with a detailed breakdown of his THR calculation along with the payment.

Example 2: Proportional THR for New Employees
Siti joined PT Teknologi Maju as a software developer four months before Christmas. With a monthly salary of IDR 12 million, her THR is calculated proportionally: IDR 12 million × (4 months ÷ 12 months) = IDR 4 million. The company’s HR team explains the calculation to Siti during her onboarding and reminds her of the upcoming proportional THR as the holiday approaches, ensuring transparency in the process.

Example 3: THR for Different Religious Holidays
PT Multi Budaya has a diverse workforce including Muslims, Christians, Hindus, and Buddhists. The company’s attendance management system includes religious affiliation data (with employee consent) to track which employees should receive THR for which religious holidays. The HR department creates a calendar of THR disbursement dates throughout the year, ensuring each employee receives their allowance before their respective religious holiday, while maintaining smooth cash flow for the business.

How HRMS platforms like Asanify support Tunjangan Hari Raya (THR)

Modern Human Resource Management Systems (HRMS) offer several features that streamline and enhance THR administration:

Automated Calculations: HRMS platforms can automatically calculate THR amounts based on employees’ length of service, salary components, and applicable regulations. This automation reduces manual calculation errors and ensures compliance with the latest THR formulas.

Religious Holiday Tracking: Advanced HRMS solutions allow companies to record employees’ religious affiliations (with appropriate privacy controls) and automatically generate THR payment schedules aligned with different religious holidays throughout the year.

Payroll Integration: THR payments can be seamlessly integrated with regular payroll systems, ensuring proper tax treatment, accurate record-keeping, and consistency with other compensation components.

Reporting and Documentation: HRMS platforms generate comprehensive THR reports that can be submitted to regulatory authorities as needed, while also maintaining an audit trail of all THR-related calculations and disbursements.

Employee Self-Service: Through employee portals, staff can view their THR entitlements, calculation methods, and payment dates, increasing transparency and reducing inquiries to the HR department during holiday seasons.

Forecasting and Budgeting: HRMS solutions enable finance and HR teams to forecast THR obligations throughout the fiscal year, allowing for better cash flow management and budgetary planning.

Compliance Updates: As THR regulations evolve, modern HRMS platforms provide system updates to reflect the latest legal requirements, helping organizations remain compliant without constant manual monitoring of regulatory changes.

By leveraging these capabilities, organizations can transform THR from a complex administrative burden into a well-managed process that enhances both compliance and employee satisfaction.

FAQs about Tunjangan Hari Raya (THR)

When exactly must THR be paid to employees?

THR must be paid no later than seven days before the relevant religious holiday. For Muslim employees, this means seven days before Idul Fitri; for Christians, seven days before Christmas; for Hindus, seven days before Nyepi; and for Buddhists, seven days before Vesak Day. Many employers opt to pay earlier than the minimum requirement to allow employees time to use the funds for holiday preparations.

Are contract or temporary workers entitled to THR?

Yes, all employees—regardless of their employment status—are entitled to THR if they have worked for at least one month. This includes permanent employees, fixed-term contract workers, part-time staff, and even daily workers. For temporary workers, THR is calculated proportionally based on their duration of service, using the same formula applied to permanent employees who have worked less than 12 months.

What components of salary should be included in THR calculations?

THR calculations should include the employee’s basic salary plus fixed allowances that are regularly received each month. This typically includes fixed components like transportation allowances, meal allowances, and housing allowances. Variable components such as overtime pay, performance bonuses, or reimbursements are generally not included in THR calculations unless specified otherwise in the employment contract or company policies.

What are the penalties for companies that fail to pay THR?

Companies that fail to pay THR can face administrative sanctions starting with written warnings and potentially escalating to business license suspension. Additionally, employees can file complaints with the Ministry of Manpower, which may conduct inspections and impose penalties. Beyond legal consequences, failure to pay THR can damage employee relations, company reputation, and may trigger labor disputes or strikes, particularly around holiday seasons.

How is THR handled for employees who resign before the holiday?

Employees who resign before their religious holiday are still entitled to THR if they were employed for at least one month during the 12-month period preceding the holiday. The THR amount is calculated proportionally based on their months of service. However, employees who are terminated due to serious misconduct may forfeit their THR entitlement, depending on the specific circumstances and company policies aligned with labor regulations.