How to Calculate THR for Employees with Less Than One Year
Tunjangan Hari Raya (THR) is a mandatory religious holiday allowance that employers in Indonesia must provide to their employees. While many companies understand that employees with 12 months or more of service are entitled to one full month’s salary as THR, confusion often arises when calculating THR for employees who have worked for less than one year.
This situation commonly occurs with new hires, contract employees (PKWT), probationary staff, and workers employed through outsourcing or manpower arrangements. Whether you manage your workforce internally or through a service provider, understanding how to calculate proportional THR correctly is essential for compliance and good employee relations.
In this article, we explain the legal basis, formula, and practical examples of THR calculation for employees with less than 12 months of service.
Legal Basis for Pro-Rated THR
THR payments in Indonesia are regulated under Minister of Manpower Regulation (Permenaker) No. 6 of 2016 concerning Religious Holiday Allowances.
According to the regulation:
- Employees who have worked for at least 1 month continuously are entitled to THR.
- Employees with 12 months or more of service receive 1 month’s salary.
- Employees with less than 12 months of service receive THR proportionally.
This means even employees who have only worked for 2, 3, or 6 months still have the right to receive THR, calculated based on their length of service.
THR Formula for Employees Under 12 Months
The formula for calculating THR for employees who have not yet completed one year is:
THR = (Length of Service ÷ 12) × 1 Month Salary
The key components are:
- Length of service (in months, calculated continuously)
- One month salary, which includes:
- Basic salary
- Fixed allowances (if applicable)
Non-fixed allowances such as transportation or meal allowances that depend on attendance are generally not included unless contractually stated otherwise.
Step-by-Step Calculation
Step 1: Determine Length of Service
Count the employee’s continuous working period from the start date until the THR payment date.
Example:
- Employee start date: 1 November 2025
- THR payment: March 2026
- Length of service: 5 months
Step 2: Identify One Month Salary
If the employee earns:
- Basic salary: IDR 6,000,000
- Fixed allowance: IDR 1,000,000
Then total monthly salary = IDR 7,000,000
Step 3: Apply the Formula
THR = (5 ÷ 12) × IDR 7,000,000
THR = 0.4167 × IDR 7,000,000
THR = IDR 2,916,900 (rounded according to company policy)
More Practical Examples
Example 1: Employee with 3 Months of Service
Monthly salary: IDR 5,000,000
Length of service: 3 months
THR = (3 ÷ 12) × IDR 5,000,000
THR = 0.25 × IDR 5,000,000
THR = IDR 1,250,000
Example 2: Employee with 9 Months of Service
Monthly salary: IDR 8,000,000
Length of service: 9 months
THR = (9 ÷ 12) × IDR 8,000,000
THR = 0.75 × IDR 8,000,000
THR = IDR 6,000,000
Important Points Employers Must Consider
- Minimum 1 Month Requirement. Employees must have worked at least one full month continuously to qualify.
- Continuous Employment. Breaks in employment may affect eligibility and calculation.
- Payment Deadline. THR must be paid no later than 7 days before the religious holiday.
- Resigned Employees. If an employee resigns before the THR payment date, eligibility depends on company policy and current labor regulations.
Common Mistakes in THR Calculation
Employers often make these errors:
- Miscalculating length of service
- Excluding fixed allowances incorrectly
- Rounding down excessively
- Assuming probationary employees are not entitled to THR
Non-compliance may lead to administrative sanctions, fines, and reputational risks.
Why Accurate THR Calculation Matters
THR is not only a legal obligation but also a reflection of company integrity. Proper calculation:
- Ensures regulatory compliance
- Prevents disputes
- Maintains employee trust
- Protects company reputation
For companies with large workforces, especially those hiring frequently, manual calculation can increase the risk of payroll errors.
Professional Support for Workforce Compliance
Managing payroll, new hires, and proportional THR calculations requires structured systems and up-to-date regulatory knowledge.
RecruitFirst Indonesia supports businesses with:
- Workforce management solutions
- Payroll administration
- Regulatory compliance guidance
- Recruitment and contract workforce services
With professional support, companies can ensure accurate THR payments while focusing on business growth.
Read more: Planning to Switch Careers? Here’s Where the Opportunities Are
Conclusion
Employees who have worked for less than one year are still entitled to THR on a proportional basis. The formula is straightforward:
(Length of Service ÷ 12) × Monthly Salary
By understanding the regulation and applying the correct calculation method, employers can avoid compliance risks and build stronger employee relationships.
If your company needs assistance managing payroll and ensuring accurate THR calculations, contact RecruitFirst Indonesia for professional consultation tailored to your workforce needs.
