Update on payment of Tunjangan Hari Raya (13th-month salary).

On 6 May 2020, the Ministry of Manpower (MoM) in Indonesia issued a circular in relation to the Tunjangan Hari Raya (“THR”) or the 13th-month salary concerning COVID-19.

Below summarised the main points of the circular:

  • Reiteration that all companies must pay THR to employees in accordance with the relevant regulations.
  • If any companies are not able to pay THR as per the relevant regulations, open communication between employer and employee is required. The communication shall be performed in a non-hostile manner, supported by transparent internal financial reports and goodwill, which aim at forming a mutual agreement when the deferred THR can be paid. The communication should include:
    1. If the company is not able to pay THR in full, the company should consider an instalment schedule.
    2. If the company is not able to pay THR at all, both parties should agree on a specific timeline for the company to postpone THR payment.
    3. An agreed timeline and penalty (which is 5% of THR payable) for the delay in THR payment.
  • The mutual agreement between the employer and the employee as stated above, must be registered with the MoM local office (“Disnaker”)
  • The mutual agreement between the employer and the employee does not eliminate the obligation of the employer to pay the THR as stipulated in the relevant regulations. The deadline to execute is on or before 31 December 2020.

Click here to view the copy of the circular.

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