Failure to Pay Holiday Allowance Could Result in Fines, Sanctions: Indonesian Minister

JAKARTA, KOMPAS.com - Indonesia imposes fines and sanctions on employers who fail to pay full annual religious holiday allowance, or locally known as THR, within the allotted time mentioned in the regulations.

"Employers who delay the payment of holiday allowance to workers or laborers are subject to a fine of five percent of the total allowance that must be paid," Minister of Manpower Ida Fauziyah said in a virtual press conference Monday, April 12.

As for the sanctions, Ida explained that companies that fail to pay the holiday allowance seven days before the religious day will be subject to administrative sanctions based on Government Regulation No. 36/2021 on wages.

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"The administrative sanctions are in the form of written warnings, restrictions on business activities, temporary suspension of part or all of the means of production, and freezing of business activities," Ida added.

Despite the unprecedented economic uncertainty amid the Covid-19, the government previously required employers to pay holiday allowance for their employees in full, not in installments. This was mentioned in the recent Manpower Ministry circular M/6/HK.04/IV/2021, considering the government's various forms of support to entrepreneurs to overcome the economic impact of Covid-19.

The new regulation was based on discussions with the national tripartite cooperation institution, the National Wage Council working group, as well as building intense communication with employers, trade unions and labor unions on the religious holiday allowance in 2021.

Even so, for employers who cannot fulfill the obligation within the time specified in the statutory regulations, Ida called on the governor and regent or mayor to conduct a dialog between employers and workers to reach an agreement.

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"The agreement must be in writing and state the date for the payment of the holiday allowance. It must be paid no later than the religious day observed by the worker," Ida asserted.

"Companies that make agreements with workers or laborers should report the results of the agreement to the local government agency in charge of manpower affairs," she added.

Ida also asked the company to prove the inability to pay holiday allowance based on the company's internal financial statements in a transparent manner.

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However, if the company is still unable to pay the holiday allowance under the applicable regulations, the company will be fined. 

To supervise the company’s compliance, the Ministry of Manpower has formed a Task Force for Consultation and Law Enforcement Services for the Implementation of Holiday Allowance Payments in 2021.

(Writer Kiki Safitri | Editor: Yoga Sukmana)

Sources: https://money.kompas.com/read/2021/04/12/113111126/ini-denda-dan-sanksi-bagi-perusahaan-yang-telat-bayar-thr-2021

https://money.kompas.com/read/2021/04/12/102733226/pengusaha-wajib-bayar-penuh-thr-2021-ini-jadwal-pencairannya