COVID-19 and Employee Holiday Allowance Payment Postponement

The COVID-19 pandemic extended to all sectors, including the business and production sectors. Business and production activities are disrupted, thus companies must perform mitigation efforts to avoid collapse. Strengthening capital and tightening expenditures must be done to maintain the sustainability of the company. One form of tightening is restructuring, which often results in salary reduction and even termination of employment.

At this time Eid al-Fitr is getting closer. Generally, companies give Holiday Allowance on Eid, following the majority of employees. Under normal circumstances, the Holiday Allowance has been prepared by the company long before. However, with the COVID-19 pandemic and its impact, both because of restrictions by government regulations and adaptation efforts by companies that erode their financial reserves, the company may experience financial incapacity that affects its ability to provide Holiday Allowance.

Holiday Allowance Payment Terms

That Holiday Allowance is mandatory is undeniable. This is regulated under Republic of Indonesia Government Regulation (PP) Number 78 of 2015 regarding Wages; Regulation of the Minister of Manpower Republic of Indonesia Number 6 of 2016 regarding Allowance for Religious Holidays for Workers/Laborers in the Company; and Regulation of the Minister of Manpower of the Republic of Indonesia Number 20 of 2016 regarding Procedures for Granting Administrative Sanctions, as well as Government Regulation Number 78 of 2015 regarding Wages.

The minimum amount of Holiday Allowance is in accordance with the amount of wages per month, that is, the basic salary/salary per month is added with fixed benefits received by the employees every month. If the Company Regulation, Work Agreement, or Collective Labor Agreement (PKB) contains company policy to provide Holiday Allowance with a better amount than the minimum amount set by the government, then the company is required to pay Holiday Allowance according to PP, Work Agreement, or Collective Labor Agreement (PKB). If an employee based on an Indefinite Time Work Agreement (PKWTT) is laid off 30 days before the holiday or after, the company is still obliged to pay the Holiday Allowance.

Postponement of Holiday Allowance Payment

The timing of payment of Holiday Allowance for companies is regulated in Regulation of the Minister of Manpower (Permenaker) No.6 of 2016, Article 5 paragraph 4 which states that the payment of Holiday Allowance at the latest is H-7 Hari Raya.

If the Holiday Allowance payment is postponed, the company must pay a fine of 5% of the amount of the Holiday Allowance that should be paid. Payment of the fine does not eliminate the obligation to pay the employee’s Holiday Allowance, so the Holiday Allowance must still be paid along with the payment of the fine.

Postponement due to COVID-19 Pandemic

The Ministry of Manpower (Kemenaker) emphasized that the Holiday Allowance (Holiday Allowance) was still paid to workers and laborers, despite the current COVID-19 pandemic. Therefore, the Ministry of Manpower (Kemenaker) has issued a Circular of the Minister of Manpower number M/6/HI.00.01/V/2020 regarding the Implementation of the Providing of Religious Holidays Allowances in 2020 in Companies During the Covid-19 Pendemi Period. Holiday Allowanceough the letter, the Menaker requested that the Governor ensure the company to pay religious Holiday Allowance to employees in accordance with statutory provisions.

However, if the company is unable to pay the religious Holiday Allowance at the specified time, the Menaker requests that a solution be found, where the solution is obtained through dialogue between the company and employees. The dialogue process is carried out in a family atmosphere, based on transparent internal company financial statements and good faith to reach an agreement.

Important points in the Circular of the Minister of Manpower number M/6/HI.00.01/V/2020 are listed in point 2 letter a and letter b, namely:

1. if the company is unable to pay the full Holiday Allowance at the time determined in accordance with statutory provisions, the payment of the Holiday Allowance can be done in stages, and
2. if the company is unable to pay the Holiday Allowance at all the time specified in accordance with statutory provisions, the payment of the Holiday Allowance can be postponed up to a specified period of time.

Agreements regarding postponements between employers and employees have been reported by the company to the agency that conducts government affairs in the field of local employment. Agreement on the time and procedure for payment of religious Holiday Allowance and fines does not eliminate the obligation of employers to pay religious Holiday Allowance and fines to employee representatives with the amount of statutory provisions, and are paid in 2020.

Conclusion

Holiday Allowance is the company’s obligations and the COVID-19 pandemic and its impact does not eliminate the company’s obligation to pay Holiday Allowance in accordance with statutory provisions. The Holiday Allowance in the COVID-19 pandemic is regulated in the Minister of Manpower Circular number M/6/HI.00.01/V/2020 where Holiday Allowance payments can be postponed or paid in accordance with the agreement with employees with a deadline not exceeding 2020.

At times like this, dialogue between employers and employees is very important. Employees can understand the condition of the company and volunteer to share the burden with employers for the survival of the company if employers are honest in dialogue with their employees. Employees must share in the ownership of the company as their source of income and understand that without such tightening, they will lose their income.

Author: D. P. Cahyadi