There is one month every year when an Indonesian payroll roughly doubles.
The religious holiday allowance, known everywhere as THR, is a statutory payment of up to a full month’s wages for every eligible employee, due before their religious holiday. It is not a bonus and it is not discretionary. Foreign employers new to Indonesia tend to learn about it as a line on a cost model. The ones who handle it well treat it as a cash flow event and a compliance deadline, because that is what it is.
Here is how it works.
Who is entitled
THR is owed to any employee with at least one month of continuous service, on either a permanent or a fixed-term contract. Workers paid by output or by the day are covered too, with their monthly wage worked out from an average.
It is paid once a year, ahead of each employee’s own religious holiday: Eid al-Fitr for Muslim employees, Christmas for Christian employees, Nyepi for Hindu employees, Vesak for Buddhist employees and Chinese New Year for Confucian employees. In a mixed workforce, that can mean THR falls in different months for different people.
How much
| Length of service | THR |
|---|---|
| 12 months or more | One month’s wages |
| 1 month to under 12 months | Months of service divided by 12, multiplied by one month’s wages |
| Under 1 month | Not owed |
One month’s wages means basic salary plus fixed allowances. Allowances that vary with attendance or output are generally left out. For workers paid by output, a month’s wage is the average of the last twelve months.
If an employment contract, company regulation, collective agreement or established practice promises more than the statutory amount, the higher amount is the one that has to be paid.
When, and how
THR must be paid no later than seven days before the religious holiday. The Ministry of Manpower repeats this every year in a circular ahead of Eid, and in 2026 it encouraged employers to pay earlier than the deadline.
It must be paid in full. Instalments are not allowed.
It is taxable income in the month it is paid. Because THR lands on top of normal salary, employees can see a higher withholding in that month, which is worth explaining to staff in advance rather than fielding as complaints afterwards.
Leavers
A permanent employee whose employment ends within thirty days before the religious holiday is still entitled to THR for that year. Final settlements for permanent staff leaving in the weeks before Eid should include it.
What happens if it is late or unpaid
Paying late carries a fine of 5% of the total THR owed, counted from the deadline. The fine does not replace the obligation: the THR itself still has to be paid.
Not paying at all brings administrative sanctions, which escalate from written warnings to restrictions on business activity and, at the far end, suspension of operations.
Enforcement is visible. Each year the Ministry opens consultation and complaint posts, including an online channel, and provincial and city authorities are asked to monitor payment. Employees know where to report a missed THR, and they do.
Why it catches foreign employers out
The cash lands in one month. For a business with a mainly Muslim workforce, most of the THR falls due shortly before Eid. If your clients pay on thirty or sixty day terms, the THR deadline can arrive before the receipts do.
The cost is larger than it looks at senior levels. Because THR is a month of basic salary plus fixed allowances, it scales with pay. For senior hires it is often the single largest statutory cost of the year, which our article on employment costs sets out in figures.
Mixed workforces spread the dates. Christian, Hindu and Buddhist employees are paid ahead of their own holidays, so THR is not always a single March payroll.
Practice becomes obligation. A company that habitually paid more than the statutory amount may find that the higher figure has become the one it owes.
What to do before the next Eid
Budget it as a thirteenth month, not as a bonus pool, and phase the cash for the month it actually falls due.
List each employee’s religious holiday so THR dates are scheduled per person, not assumed.
Check what counts as fixed allowances in your pay structure before you calculate.
Check what you promised. Contracts, company regulations and past practice can set a higher amount than the statute.
Pay early rather than on the last day. The deadline is seven days before the holiday, and a bank holiday or a payroll error close to it leaves no room.
Include THR in final settlements for permanent staff who leave in the thirty days before a holiday.
Where this sits in our work
People Profilers Indonesia runs payroll for employers hiring here through our locally-incorporated Jakarta entity, with THR calculated and scheduled as part of the annual payroll calendar rather than as a scramble in the weeks before Eid.
If you would rather not carry the calculation, the scheduling and the filings in-house, our payroll outsourcing service in Indonesia covers it. For the full statutory cost of an Indonesian hire, including BPJS and THR together, see what it really costs to employ staff in Indonesia.
Sources
Verified October 2026. THR rules are restated each year in a Ministry circular, so confirm the current year’s position before relying on any of this.
- Entitlement after one month of continuous service, the pro rata formula, payment ahead of each employee’s own religious holiday and the list of holidays, the thirty day rule for permanent employees whose employment ends before the holiday, the 5% late payment fine and administrative sanctions for non-payment: Regulation on Religious Holiday Allowance, official English translation, peraturan.go.id, cross-checked against Hukumonline
- The 2026 circular: payment no later than seven days before the holiday, in full and not in instalments, coverage of permanent and fixed-term employees, output-based wages averaged over twelve months, the higher contractual amount prevailing, encouragement to pay early, and the complaint and consultation posts: Bisnis.com, cross-checked against RRI
- One month’s wages as basic salary plus fixed allowances: Jawa Pos
- The forms of administrative sanction: Kompas
- THR taxed as income in the month of payment, and the cash flow effect of a single payroll cycle: ASEAN Briefing
