Tunjangan Hari Raya allowance (“THR”) is a mandatory holiday allowance in Indonesia. THR is given to employees before major religious holidays, such as Eid al-Fitr and Christmas. THR has been a motivation to hang on for the majority of employees in this holy month of Ramadan. 

It could be said that even employers generally see THR as a positive thing for several reasons. They include: 1) THR can lead to increased loyalty and better job performance, which can ultimately benefit employers; 2) Providing THR can help employers attract and retain employees in a competitive job market; 3) THR can help employers build goodwill with their employees and create a positive relationship between the two, which can lead to a more collaborative and productive work environment; and 4) THR can be seen as an opportunity to build a positive workplace culture and create a sense of goodwill and loyalty among their workforce.

On 27 March 2023, the Minister of Manpower (“MOM”) issued Circular Letter No. M/2/HK.04.00/III/2023. This Letter stipulates that employers are required to pay full THR to their employees, no later than 7 (seven) days before the religious holidays, supposedly starting from 21 April. This Letter is addressed to governors across Indonesia to coordinate with their respective regional employment affair offices in encouraging employers to comply. 

Any employers failing to pay full THR as stipulated by the Circular Letter,  may be sanctioned. These sanctions vary from fine amounted to 5% (five percent) of the THR amount of each employee not receiving their THR, to administrative sanctions as stipulated in the prevailing laws and regulations.

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