HR Let's Get Ready for THR Season

The holy month has commenced. Many people are starting to look forward for the upcoming Eid Al-Fitr holiday. What are your employees waiting for before the Eid Al-Fitr holiday arrives? Obviously THR aka Hari Raya Allowance!

All organizations, including companies, are starting to prepare their special benefits that only occur once a year, namely the Hari Raya Allowance (THR). As an HR, it is natural to calculate this allowance before the time set by the government has passed. Because there are consequences waiting if a company is late in issuing the THR.

The definition of Hari Raya Allowance (THR) according to the Ministry of Manpower in its regulations is: “Non-wage income that must be paid by Employers to Workers/Laborers or their families prior to Religious Holidays.”

According to the Ministry of Manpower’s regulation No. 6/2016, THR must be given no later than seven days before Eid in order to provide flexibility for workers to enjoy it with their families. Later, if the company is late in paying the THR, it will be penalized. According to the regulations, companies who are late in paying the THR to the workers/laborers will be subject to a fine of 5% (five percent) of the total THR that must be paid since the expiration of the deadline for the Employer's obligation to pay.

Sanctions can also be imposed on companies if they refuse to pay the THR. Employers who do not pay religious THR to workers within the stipulated time may result in these administrative sanctions:

HR Let's Get Ready for THR Season

1. Fines in the form of nominal money, amounting to 5% of the total THR that must be paid since the expiration of the time limit.

2. Administrative sanctions in the form of:
    a. Written warning
    b. Restrictions on business activities
    c. Temporary suspension of part/all of the means of production
    d. Suspension of business

In Indonesia, there are various work status ranging from PKWTT (uncertain time work agreement) and various types of PKWT (certain time work agreement). All levels of workforce are entitled to THR, but with different amount provisions.

Every employee who has a working period of 1 (one) month or more continuously is entitled to receive THR, no matter the status of the employee whether he/she has become a permanent employee, contract employee or part-time employee.

So, let’s prepare all the THR well. Do not let the company receive sanctions for being late in paying or for not paying the employee's THR at all. Having a hard time in managing your organization’s payroll? Check out KPSG services to ease your day and ensure smooth running of payroll!

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