New THR Regulation

In March 2016, the Ministry of Labor released the Ministry of Labor Regulation no 6 2016 that changed the added benefits for Festive Allowance (also more commonly known as Tunjangan Hari Raya (THR)). This regulation has not been revised since 1994. The main change is that employees who work for a full month are able to obtain a proportional amount of benefit based on their salaries and other fixed incomes (work period in month/ 12x basic salary and fixed allowance). In the previous regulation, employers are obliged to give a proportional THR to employees only after their employee has worked for 3 months which is the same as a probation period. This regulation will be relevant for companies that will pay THR for this Eid al Fitr.