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The Right Way to Calculate Holiday Benefits (THR)
Employees on permanent or contract status who have worked for at least one month are eligible for the allowance which companies must pay to their employee.

The Right Way to Calculate Holiday Benefits (THR)

April 2023

How to calculate annual THR (holiday allowance) is often part of business discussions in Indonesia just before Eid al-Fitr or Christmas holidays when the allowance is usually distributed.

Employees on permanent or contract status who have worked for at least one month are eligible for the allowance which companies must pay to their employee. Here is how it is calculated:
 

Basic Regulations Concerning the Giving of the Religious Holiday Allowance (THR)

The amount of the Holiday Allowance (THR) as stipulated in article 3 paragraph 1 of the Minister of Manpower and Transmigration Regulation No. 6 of 2016 concerning Religious Holiday Allowances for Workers/Workers in Companies (Permenaker 6/2016) is stipulated as follows:

  1. Workers who have worked continuously for 12 (twelve) months or more, are given 1 (one) month's wages.
  2. Workers who have worked for 1 (one) month continuously but less than 12 (twelve) months are given proportionally according to years of service, with the calculation: length of work/12 x 1 (one) month of wages.
  3. Meanwhile, employees who have had 1 month continuously, but less than 12 months, are given benefits on a pro-rated basis according to the calculation of the length of service divided by 12 months and then multiplied by 1 month's wages.
  4. Finally, for workers or laborers who have worked for less than 12 months, 1 month's wages are calculated based on the average wage received each month during the working period.

Each worker receives a different nominal amount if the employer calculates it in accordance with the guidelines outlined above.

However, if the company wants to give a nominal amount that is more than the predetermined calculation method, that's fine too. The thing to remember is that the calculation regulated by law is the minimum amount that you must receive.

Employees who have worked for less than one year will not receive the full holiday allowance or one month's wages because it is prorated, in accordance with the length of service. Employees who have worked for 12 months or more are entitled to a holiday allowance of one month's wages. The simple calculation is as follows:


FORMULA:

(1 month's salary ÷ 12 months) x Length of working period

 

  1. An example of how to calculate THR for an employee with 6 months of service with a salary of, for example: IDR 5,600,000 per month.

    (IDR 5,600,000 ÷ 12) = IDR 467,000 x 6 months = IDR 2,802,000.
    That is, employees who have worked for 6 months will receive THR of IDR 2,802,000.
     

  2. An example of how to calculate THR for employees with a working period of 12 months or more and a salary of, for example, IDR 6,000,000 per month

    (IDR 6,000,000 ÷ 12) = IDR 500,000 x 12 months = IDR 6,000,000
     

Sanctions for Companies that Do Not Pay Holiday Allowances

According to article 5 paragraph 4 of the Minister of Manpower and Transmigration Regulation (Permenaker No. 6/2016), THR must be given no later than seven days (H-7) before the employee's holy day, to provide flexibility for them to enjoy it with their families.

This provision is also emphasized in Article 9 Paragraph 2 of PP Number 36 of 2021 and Ministry of Manpower Circular Letter No. M/6/HK.04/IV/2021 concerning the Implementation of 2021 THR Religious Holiday Allowances for Workers and Laborers in Companies.
 

Holiday Allowances are calculated more easily with the help of Moores Rowland Payroll Services.

For HR departments that are still managing their administration manually, calculating holiday allowances (THR) for each employee takes up a lot of time, especially if the number of employees is in the hundreds or even thousands.

If a company is late paying THR, it will be subject to sanctions. According to Regulation of the Minister of Manpower and Transmigration No. 6/2016, Article 10, employers who are late in paying THR to workers/laborers will be subject to a fine of 5% (five percent) of the total holiday allowance (THR) that must be paid.

That's why Moores Rowland Indonesia offers a Payroll Service, which makes it easier for a Human Resources departments to calculate monthly salaries, overtime pay, and holiday allowances, in a detailed and precise manner. Consult your company's payroll needs now and email us for a consultation:

contact-jakarta@moores-rowland.com or contact-bali@moores-rowland.com.

**By: Stefani W. Anggraeni — Marketing Communications Manager & Social Media Specialist