Many office employees are happy to welcome the coming of Ramadan and Eid al-Fitr. Apart from fasting, holiday allowance is one reason to make them happy. But do you know how to calculate employee holiday allowance? This article will discuss the holiday allowance calculation.
Holidays allowance, is non-wage income that must be given to employees by the company before holidays, such as Eid al-Fitr and Christmas. This is a common practice in Indonesia. Although the government acknowledged 6 religions in Indonesia, companies usually give holiday allowance on Eid al-Fitr.
Employees who have worked for at least 1 month are entitled to get an allowance. The employee allowance is usually given proportionally. The following is the basic allowance calculation based on article 3 paragraph 1 of the Indonesian Minister of Manpower and Transmigration Regulation no. 6 of 2016:
- Employees have the right to receive an allowance equals one month salary if the said employee already works on the company for 12 months straight.
- For those who have not, the allowance will be calculated as follows: salary x 1 month your salary.
- But if the company has an agreement with employees regarding the allowance nominal that is different from the government, then the allowance that must be paid follows the company agreement.
Examples of THR calculations
The explanation above still confuses you? Let’s look at the example below to make it easier to understand.
Budi has worked at PT. Angin Ribut for 2 years. Budi’s basic salary is 4 million rupiahs. Budi also receives other benefits such as children allowance for 500 thousand rupiahs and transportation allowance for 500 thousand rupiahs.
According to government regulations, Budi who has worked for more than 12 months has the right to get an allowance equals one month salary, which consists of the basic salary and the fixed benefits. Because transportation allowances are not fixed benefits, this is not included in Budi’s allowance calculation.
4.500.000 x 12 : 12 = 4.500.000
Andi has just worked at PT. Bangun Sejahtera for 4 months. Until now, Andi has received a basic salary of 3 million rupiahs, along with an office allowance of 1 million rupiahs and transportation allowance of 500 thousand rupiahs.
Unlike Budi, Andi, who hasn’t work in his company for 12 months consecutively, is not entitled to get an allowance as much as Budi. Andi allowance calculations are as follows:
3.000.000 x 4 : 12 = 1.000.000
Included in Andi allowance calculations are basic salary and office allowance only. Just like Budi, transportation allowances are not permanent benefits because the amount depends on the presence of Andi in the office.
Corporate sanctions do not pay THR
If you found your company refusing to pay for your holiday allowance, you can report them to the government. In accordance with article 17, Law Number 14 of 1969, companies that violate this rule can be subject to the following sanctions:
- Written warning
- Restrictions on business activities
- Temporary suspension of some or all of the production equipment
- Company termination
Termination sanction is the main reason why most companies in Indonesia abide by this rule. But if you find a company that doesn’t want to carry out their obligations, don’t hesitate to report it.
The time your company should pay your holiday allowance is also regulated by law. According to Article 4 Paragraph 2 Permenaker No. PER-04/MEN/1994, companies must pay holiday allowance to their employees no later than 7 days before the holiday.
Approximately, two weeks before the payment deadline is the busiest days for HR staff. It is because they have to finish the holiday allowance calculations. The process will less troublesome if the number of employees is not too much or most of the employees have worked for more than 1 year.
But for new companies or the ones with more than a thousand employees, the holiday allowance calculation is terribly stressful. That is why companies with a large number of employees no longer calculate holiday allowance manually. They rely on the HRIS system to perform the calculations.
Besides the convenience in calculating holiday allowance, the system is also useful for eliminating the miscalculations. For other reading about the HRIS system, you can click the following link.