THR (Tunjangan Hari Raya) is Indonesia's statutory religious holiday allowance. Every employee with at least one month of continuous service is owed it once a year, on a fixed-term or a permanent contract: one month's wage after twelve months of service, pro-rated below that. It must be paid in full, in rupiah, no later than seven days before the employee's own religious holiday. For Muslim employees in 2027 that deadline is 3 March.
For a foreign employer, THR is the payroll cost most likely to arrive unbudgeted: a full extra month's wage, due a week before the holiday. This guide covers who qualifies, how to calculate it, when each deadline falls, what late payment costs, and how THR changes the month's income tax withholding.
THR at a glance
| Question | Rule | Source |
|---|---|---|
| Who qualifies | Employees with 1 month or more of continuous service, on PKWT (fixed-term) or PKWTT (permanent) contracts | Permenaker 6/2016, Art. 2 |
| Amount, 12 months or more | 1 month's wage | Permenaker 6/2016, Art. 3(1)(a) |
| Amount, 1 to 11 months | Months of service ÷ 12 × 1 month's wage | Permenaker 6/2016, Art. 3(1)(b) |
| Wage basis | Clean wage, or basic wage plus fixed allowances | Permenaker 6/2016, Art. 3(2) |
| Deadline | 7 days before the employee's religious holiday | Permenaker 6/2016, Art. 5(4) |
| Form | Money (not goods), in rupiah, paid in full (no instalments) | Permenaker 6/2016, Art. 6; Minister's Circular M/3/HK.04.00/III/2026 |
| Late payment | Fine of 5% of the total THR owed, on top of the THR itself | PP 36/2021, Art. 62 |
| Tax | Taxable income under PPh 21 in the month it is paid | PMK 168/2023, Art. 5(3)(b) |
Who is entitled to THR
The test is service length and an employment relationship. Contract type does not matter. Minister of Manpower Regulation 6 of 2016 (Permenaker 6/2016) requires THR for every employee who has worked for you continuously for one month or more, and Article 2(2) names both contract types: permanent (PKWTT) and fixed-term (PKWT). A software engineer three months into a one-year PKWT is owed THR exactly as a permanent employee is.
Three situations catch foreign employers out:
- Termination shortly before the holiday. A permanent employee whose employment you end within 30 days before their religious holiday is still entitled to that year's THR (Art. 7(1) and 7(2)). A fixed-term contract that expires before the holiday carries no THR for that holiday (Art. 7(3)).
- Transfers. An employee moved to another company with continuous service is owed THR by the new company if the old one has not paid it (Art. 8).
- Contractors. THR belongs to employees. A genuinely independent contractor is not owed it. But if the arrangement works like employment, with fixed hours, ongoing supervision and a monthly fee, it is employment under Indonesian law whatever the contract says, and THR comes with it. Our guide to the legal risks of hiring directly in Indonesia covers how that reclassification happens.
How to calculate THR
An employee with twelve months or more of continuous service receives one month's wage. Below twelve months, THR is pro-rated: months of service divided by 12, multiplied by one month's wage (Art. 3(1)).
"One month's wage" means either the clean wage, if your pay structure has no allowances, or the basic wage plus fixed allowances (Art. 3(2)). Fixed allowances are the ones paid regardless of attendance, such as a fixed housing or position allowance. Variable allowances tied to attendance, overtime pay and bonuses are not part of the THR base.
Two further rules set the floor and the ceiling. If the employment contract, company regulation, collective agreement or established practice promises more than the statutory amount, the higher amount applies (Art. 4). For daily workers, one month's wage is the average monthly wage over the last twelve months before the holiday, or over the whole period worked if that is shorter (Art. 3(3)).
Worked examples
Using RainTech's starting salary tiers, and USD at IDR 17,900:
| Employee | Monthly wage | Service at Eid al-Fitr 2027 | THR owed |
|---|---|---|---|
| Tier 1, entry level | IDR 14,320,000 ($800) | 12 months or more | IDR 14,320,000 ($800) |
| Tier 2, mid level | IDR 21,480,000 ($1,200) | 12 months or more | IDR 21,480,000 ($1,200) |
| Tier 2, joined 1 November 2026 | IDR 21,480,000 ($1,200) | 4 full months | 4 ÷ 12 × 21,480,000 = IDR 7,160,000 ($400) |
| Tier 3, senior | IDR 35,800,000 ($2,000) | 12 months or more | IDR 35,800,000 ($2,000) |
| Any tier, joined 15 February 2027 | Any | Under 1 month | Not yet entitled |
THR deadlines for 2027
THR is paid once a year, for each employee's own religious holiday (Art. 5(1)): Eid al-Fitr for Muslim employees, Christmas for Christian employees, Nyepi for Hindu employees, Vesak for Buddhist employees and Lunar New Year for Confucian employees. The deadline is seven days before that holiday (Art. 5(4)). The dates below come from the 2027 national holiday decree, listed in our Indonesia public holidays calendar.
| Employee's religion | Holiday | 2027 date | Pay THR by |
|---|---|---|---|
| Confucian | Lunar New Year | Saturday 6 February | Saturday 30 January |
| Hindu | Nyepi | Monday 8 March | Monday 1 March |
| Muslim | Eid al-Fitr | Wednesday 10 March | Wednesday 3 March |
| Buddhist | Vesak | Thursday 20 May | Thursday 13 May |
| Christian (Catholic and Protestant) | Christmas | Saturday 25 December | Saturday 18 December |
The government confirms the Eid al-Fitr date shortly before the holiday. If it moves, the THR deadline moves with it.
Paying everyone on one date is allowed. Article 5(3) lets the employer and employee agree a different payment date in the employment contract, company regulation or collective agreement, so a mixed team can receive THR together before Eid al-Fitr, as long as the contract says so. Without that clause, each employee's deadline follows their own holiday.
The payment must be made in money, not goods, and in rupiah (Art. 6), and the Minister of Manpower's circular for 2026, M/3/HK.04.00/III/2026, repeated that THR must be paid in full rather than in instalments. Paying an Indonesian employee's THR in USD, or splitting it across two payrolls, does not meet the rule.
What late or unpaid THR costs
An employer who pays THR late owes a fine of 5% of the total THR payable, counted from the deadline (Government Regulation 36 of 2021 on Wages, Art. 62(1)). The fine is added to the THR. It does not replace it (Art. 62(2)).
For a team of five Tier 2 engineers, THR totals IDR 107,400,000 ($6,000). Missing the 3 March deadline adds a fine of IDR 5,370,000 ($300).
An employer who does not pay THR at all faces administrative sanctions under Article 79 of the same regulation, applied in stages: a written warning, then restrictions on business activity, then temporary suspension of part or all of the means of production, then a freeze on business activity. The THR still has to be paid, and so does the late fine.
How THR affects PPh 21 withholding
THR is taxable employment income. Finance Minister Regulation 168 of 2023 lists it with bonuses as part of an employee's gross income (Art. 5(3)(b)). Under the monthly TER method, THR is added to the gross pay of the month it is paid, which usually pushes that month into a much higher rate band.
For a single Tier 2 engineer (tax status TK/0), a normal month's gross income, including employer-paid BPJS premiums, is IDR 22,075,992 and falls in the 9% band: IDR 1,986,839 withheld. In the month THR is paid, gross income is IDR 43,555,992 and the rate is 16%: IDR 6,968,959 withheld. The December recalculation corrects the annual total, so the tax is withheld earlier, not charged twice. Our PPh 21 guide for employers walks through the full year.
Tell employees before their first THR payslip why the withholding jumps that month, or the payslip will look like a mistake.
Budgeting THR as a foreign employer
Treat THR as a thirteenth month of wages and accrue it monthly: one twelfth of the monthly wage. For a Tier 2 engineer that is IDR 1,790,000, about $100 a month. In 2027 the Eid al-Fitr payment falls due on 3 March, so for most teams it goes out with February payroll.
THR sits alongside the other statutory costs of an Indonesian employee: BPJS contributions, PPh 21 withholding, and severance if the employment ends. None of them is optional for a foreign company, and none of them changes because the engineer works remotely.
If you hire through an Employer of Record, the EOR is the legal employer. It calculates THR, pays it by the deadline and bills it to you. RainTech bills THR at cost, with no service fee on top, on the invoice just before Eid al-Fitr, so setting aside the monthly accrual above means that invoice holds no surprise. Our guide to Indonesia EOR pricing lists the other line items to check.
FAQs
Is THR mandatory for fixed-term (PKWT) employees?
Yes. Permenaker 6/2016 Article 2(2) applies THR to employees on fixed-term (PKWT) and permanent (PKWTT) contracts alike, once they have one month of continuous service. The only PKWT exception is a contract that has already ended before the holiday.
Can we pay THR in instalments or in US dollars?
No. THR must be paid in money, in rupiah (Permenaker 6/2016 Article 6), and in full. The Minister of Manpower's 2026 circular stated that it may not be paid in instalments.
Does a year-end bonus count as THR?
No. THR is a statutory entitlement with its own amount, deadline and late fine. A discretionary bonus paid at another time of year does not discharge it. If your contract promises a THR larger than one month's wage, the contractual amount applies.
What if we end someone's employment just before Eid?
A permanent employee whose employment you end within 30 days before their religious holiday is still owed that year's THR (Permenaker 6/2016 Article 7). A fixed-term contract that expires before the holiday carries no THR for that holiday. Termination has its own payments on top; see our guide to severance and termination in Indonesia.
Do contractors get THR?
A genuinely independent contractor does not. A "contractor" who works fixed hours under your direction for a monthly fee is likely to be treated as an employee, and THR is one of the entitlements that follow from that.
Sources
- Minister of Manpower Regulation No. 6 of 2016 on Religious Holiday Allowance (Permenaker 6/2016), Articles 2 to 8: JDIH Kemnaker
- Minister of Manpower Circular No. M/3/HK.04.00/III/2026 on THR for 2026: Ministry of State Secretariat
- Government Regulation No. 36 of 2021 on Wages (PP 36/2021), Articles 62 and 79: JDIH BPK
- Finance Minister Regulation No. 168 of 2023 on PPh 21 withholding (PMK 168/2023), Article 5(3): JDIH BPK
- 2027 national holidays and collective leave: RainTech's 2027 holiday calendar
Figures reflect regulations in force in September 2026. USD amounts are converted at IDR 17,900. This guide is general information for employers, not legal advice for a specific case.