Understanding the 13th Month Salary in Indonesia: A Guide for Employers

In Indonesia, the 13th month salary, commonly referred to as "Tunjangan Hari Raya (THR)," is a mandatory benefit that employers must provide to their employees. This financial incentive is not only a boost for employee morals but also a vital part of the annual compensation that workers anticipate. In this port, we'll explore what the 13th month salary is, how it is calculated, and the regulations surrounding its payment.

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What is the 13th Month Salary?

The 13th month salary in Indonesia is a mandatory payment required by law, intended to help employees cover the expenses during religious festivals, particularly Idul Fitri (Eid al-Fitr). This payment is over and above the regular monthly salary and is often perceived as a form of bonus or a gift from the employer to the employees.

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Legal Framework

The obligation to pay the 13th month salary is stipulated under the Minister of Manpower Regulation No. 6 of 2016. According to the regulation, all employers in Indonesia, irrespective of the sector, are required to pay this salary to their employees who have worked for at least one month. The payment must be made at least seven days before religious festival.

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Calculation of the 13th Month Salary

The 13th month salary is generally equivalent to one month's wage. The calculation is based on the employees latest salary and includes fixed allowances. For employees who have not completed a full year of service, the 13th month salary is prorated based on the number of months worked.

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Payment Guidelines

1. Timing: As per the regulation, the 13th month salary should be paid at least seven days before the religious festival. This timing ensures that employees can utilise the funds for festival expenditures.
2. Eligibility: All employees who have completed a minimum of one month of service are eligible for this payment. This includes part-time, temporary, and permanent employees.
3. Proportional Payment: For those who have not been employed for the entire year, the payment will be proportional to the length of service within the year.

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Implications for Employers

For businesses, particularly those in the process of setting up operations like startups, understanding the requirement of the 13th month salary is crucial. It not only impacts budgeting but also employee satisfaction and retention. Employers need to ensure that they are compliant with the regulations to avoid legal issues and maintain good relationships with their employees. We take this calculation into account when providing you quotes for hiring. Once we have onboarded an employee, we will handle the 13th month salary along with when its paid and the amounts.

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The 13th month salary is an integral part of Indonesia's employment landscape, reflecting the country's cultural emphasis on supporting workers during major religious celebrations. For employers, timely and correct payments of this salary can enhance employee morale and contribute to a positive workplace environment. For employees, it provides financial support to celebrate significant cultural events with their loved ones.