Indonesian statutory provisions, through the Minister of Manpower Regulation No. 6 of 2016 concerning Religious Holiday Allowances for Employee/Labor in Companies, obligates employers to provide Tunjangan Hari Raya ("THR") to employees/laborers, ahead of religious holidays (Eid al-Fitri, Christmas, Hari Raya Nyepi, Vesak Day, Chinese New Year). Those who are entitled to get THR are employees/laborers who are employed by an indefinite term employment agreement (PKWTT) or a fixed term employment agreement (PKWT), who has worked for a period of 1 (one) month continuously or more. The amount of THR payment is 1 (one) month wage for employees/laborers who have 12 (twelve) months or more work periods continuously, while for those who worked less than 12 (twelve) months, the THR amount is proportionally calculated according to their working period (number of months work period/12 x monthly wages).

The THR payment must be made no later than 7 (seven) days before the religious holiday. If the THR payments cannot be made on time, the employer is imposed with a 5% (five percent) penalty of the THR which should have been paid by the employer, without despising the employees’ THR payment obligation.

However, as instructed in the Minister of Manpower Circular Letter No. M/6/HI.00.01/V/2020 concerning the Implementation of Providing Tunjangan Hari Raya in Companies during the 2019 Corona Virus Disease 2019 (COVID-19) Pandemic, in response to the current impact of COVID-19 situation, it is possible for the companies to reach an agreement with the workers that the payment of THR is done in stages and postponed for a certain period (but must still be paid in 2020) if the company is unable to pay the THR on time in accordance with statutory provisions. The agreement between the company and the employee must be based on good faith, conducted through a dialogue process that is carried out based on transparent internal company financial statements.

The agreement regarding the payment of the THR must include the time and procedure of THR payment, as well as the fine regulation imposed to the company in the event they do not grant the THR payment in accordance with the agreed time. This agreement between the company and the worker is then must be submitted to the local Governmental Office that organizes the employment affairs.

Therefore, the payment of THR is an obligation for employers to their workers as stipulated in the related regulations, but in response to the current COVID-19 situation, if the company cannot provide the THR payment within the time specified in the legislation, it is possible for employers and workers to reach an agreement on the time and method of payment of THR in 2020.

This article is not intended to be a comprehensive legal review. The Reader must consult for legal advice from an advocate before applying the information presented above.