Business During Ramadan in Indonesia: Hours, Leave and THR
Business during Ramadan in Indonesia: whether working hours change, when THR falls due, how collective leave works, and when offices and banks close for Idul Fitri.
- Keputusan Menteri Ketenagakerjaan No. 3/2022, Diktum Kelima — collective leave reduces annual leave entitlement in accordance with applicable law and the terms in force at each company. Annual leave itself sits in UU No. 13/2003
- SKB 3 Menteri — the annual joint ministerial decree setting national holidays and collective leave
Running a business during Ramadan in Indonesia changes four things for an employer: a statutory holiday payment falls due, working hours usually shift, leave concentrates into a single week as staff travel home, and around Idul Fitri — Eid al-Fitr, the holiday that ends Ramadan — the offices, banks and government services you depend on close together.
None of that is unmanageable. All of it is expensive to notice late — the dates move about eleven days earlier each year, so a deadline that sat safely in April last year may not next year.
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Agree the hours and publish the leave rule
Decide whether you are shifting the working day and whether you will observe the collective leave days. Both are easier to state once than to negotiate individually forty times.
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Adjusted hours, and a hard stop at sunset
The break of fast falls at sunset, which moves a few minutes daily and differs by city. A recurring late-afternoon meeting that worked last week will not work this week.
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The holiday payment falls due, and leave peaks
The statutory religious holiday allowance is paid in this window, and it lands in the same week as reduced output and requests to travel home.
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The country stops
Public holidays and collective leave days run together. Offices, banks and government services close, and nothing that needs a counterparty moves.
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Backlog, and the gathering
Deferred work restarts against deadlines that did not defer. Many workplaces open with a reconciliation gathering, commonly called halal bihalal.
The holiday allowance is a statutory payment, not a bonus
THR — the religious holiday allowance — is an obligation, not a discretionary gesture, and it falls due in this period. Budget it into the payroll cycle as a fixed cost landing in the same week your output drops and the banking system closes. The calculation, who qualifies, and the deadline are a subject of their own and are not set out here.
The working-hours decision
The source of most confusion is that “flexible hours during Ramadan” describes three different decisions with different costs. Choose deliberately.
| What it means for the employee | What it costs you | What has to be agreed | |
|---|---|---|---|
| Shift the whole day earlier | Same hours, earlier start and finish, home before sunset | Nothing in wages; you lose late-afternoon overlap with anyone abroad | A temporary change to start and finish times, stated in writing |
| Shorten the day by dropping the unpaid break | Leaves roughly an hour earlier; no lunch break they were not taking anyway | An hour a day of coverage | That the break is genuinely unpaid, and how the shortened day is recorded |
| Leave hours as they are, flex individually | Arrangements vary person to person | Least disruption on paper, most on a rota | Nothing formally — which is why it tends to drift into inconsistency |
In our experience the first option causes the fewest arguments, because it treats everyone the same and does not require anyone to explain their own arrangement.
What collective leave actually costs you
This is the part most foreign employers get wrong, and it is worth being precise about because it is a real choice with a price on it.
Each year a joint decree of three ministers — Religious Affairs, Manpower, and Administrative and Bureaucratic Reform — sets the national holidays and the collective leave days (cuti bersama) around them; it is published by the State Secretariat when it is signed. For the public sector those days are simply taken.
For a private employer they are optional. You decide whether to observe them, and the choice has a consequence. If your staff are engaged through an employer of record, that decision sits with the legal employer rather than with you:
Observe it and it normally comes out of their annual leave
Point five of Kepmenaker No. 3/2022 provides that observing collective leave reduces annual leave entitlement — but “in accordance with applicable law and the terms in force at each company.” That qualifier is the part to notice: it is the default position, not an automatic right to dock leave. If your contracts, company regulations or a collective agreement say otherwise, they govern. Where the employer does not observe the collective days at all, staff work normally and nothing is deducted. The underlying entitlement itself sits in the Manpower Law (UU No. 13/2003), which a ministerial decision does not override.
Four things that go wrong
Every leave request lands on the same week. Travelling home for Eid — mudik — is not a preference that spreads across the month. It concentrates. Publish how leave will be allocated before the requests arrive, or you will be choosing between people after they have booked.
A deliverable was dated for the week nobody is working. Not just your team: the counterparty, their bank, and the government office you both need. A date that looks fine in a contract can be structurally impossible. The same applies to a monthly filing deadline — the obligation does not move because the office is shut.
The meeting was put at 12:30, or at 17:30. Mid-morning and early afternoon work. The hour before sunset does not, and a meeting that runs into the break of fast will end whether or not you have finished.
An approval slips a fortnight. A signature needed from a counterparty whose finance team is away does not arrive faster because it was urgent. Where an approval has to happen either side of the holiday, say so in writing early.
Courtesies that are worth getting right
Being asked to iftar
The evening meal that breaks the fast is an ordinary setting for business here, and an invitation is worth accepting. Hosting one for your own team is common and lands better than a gift. The gathering after the holiday, often called halal bihalal, serves a similar purpose.
Somewhere to pray and rest
A quiet room that is genuinely quiet. It costs nothing and is noticed considerably more than a wellbeing programme.
What to say, and what not to say
Selamat berbuka puasa — roughly “enjoy breaking your fast” — at the evening meal. Selamat Idul Fitri or Selamat Lebaran, both meaning “happy Eid”, afterwards. Avoid “happy fasting”, which reads oddly in English and in Indonesian.