New Ministry of Employment Regulation on Religious Festivity Allowance
On 8 March 2016 the Minister of Employment issued Regulation No. 6 of 2016 on Religious Festivity Allowance for Employees in Companies (Regulation 6). Regulation 6 replaces Regulation No. PER-04/MEN/1994 of 1994 on the same matter (Regulation 4).
Regulation 6 regulates the Religious Festivity Allowance (i.e., Tunjangan Hari Raya or as it is commonly known THR). THR is a mandatory benefit that must be provided to all employees in conjunction with the religious holiday observed by the employee (based on the employee's religion).
Similar to Regulation 4, Regulation 6 states that:
- all employees (i.e., both definite period and indefinite period employees) are entitled to THR; and
- THR is not paid to a definite period employee if the definite period employment agreement ends prior to the date the THR is payable to the employee.
Changes and New Matters
Changes and new matters of note under Regulation 6 are:
- Chinese New Year (Imlek) is now included as one of the recognized
religious holidays under Regulation 6. The 4 other recognized religious
holidays remain, i.e.:
- Idul Fitri (end of the fasting month of Ramadhan) for Muslims
- Christmas for Christian Protestants and Catholics
- Seclusion (Nyepi) for Hindus
- Vesak (Waisak) for Buddhists
- All employers are now obliged to provide THR to employees who have
worked continuously for 1 month. Under Regulation 4, the period was 3
The amount of THR to be paid remains the same as it was in Regulation 4, i.e., based on the employee's service period as follows:
- An employee with a service period of 12 continuous months or more is entitled to THR in an amount equal to 1 month's salary.
- An employee with a service period of 1 month or more but less than 12 months is entitled to a prorated amount of THR calculated using the following formula: (service period/12) x 1 month's salary
- For daily freelance workers, the 1 month's salary is determined as
- For those who have worked for 12 months continuously or more, the 1 month's salary is calculated based on the average salary for the past 12 months.
- For those have worked for less than 12 months, the 1 month's salary is calculated based on the average salary received each month during employment.
- THR must be provided in the form of money in Indonesian Rupiah. Under Regulation 4, as long as an employee had agreed, up to 25% of the THR could be provided in forms other than money.
- If an employee's religious holiday occurs more than once in the same calendar year, the employee will be entitled to THR for each occurrence.
- Employers who are late in providing THR will be fined 5% of the THR amount. The fine will be managed and utilized for the employees' welfare in accordance with the company regulations or the collective labor agreement of the employer. This sanction does not waive an employer's obligation to provide THR to its employees.
- Employers who do not provide THR for their employees will be subject to
the administrative sanctions under prevailing laws and regulations. Regulation 6 does not state what these administrative sanctions are. However, under Government Regulation No. 78 of 2015 on Wages
(Regulation 78), the administrative sanctions that can be imposed on an employer who does not provide THR for their employees may be in
the following forms:
- Written warning
- Restriction of business activities
- Temporary or permanent suspension of some or all production facilities
- Suspension of business activities
It is not clear from Regulation 6 and Regulation 78 exactly how these administrative sanctions will be imposed, e.g., whether a number of written warnings will be issued or just 1, whether the sanctions will only be imposed in the order above, etc. However, typically these sanctions are imposed in the order above, e.g., at least 1 warning letter is issued before business activities are restricted or a suspension imposed.
Unlike Regulation 4, Regulation 6 no longer allows an employer who is unable to provide THR to apply for a deviation from the amount of THR to the Ministry of Employment.
Transition Period and Implementation
There is no “transition period” under Regulation 6. Regulation 6 became effective on the date it was issued, i.e., 8 March 2016.