Ramadan is the most important month of the Islamic calendar during which Muslims fast from dawn to dusk. Indonesia has the largest Muslim population in the world and consequently, with approximately 225 million adherents. Starting May 15th the country begins to celebrate Ramadan and this carries implications for multinational firms.
1. Work Can Be stop During Ramadan
One of the most common misbeliefs about doing business in Indonesia is that work stops for a whole month during Ramadan. It is simply not true.
Its work environment is not affected by Ramadan as much as in other parts of Indonesia. However, even in the rest of Indonesia, work doesn’t stop. Only the public sector slows down during Ramadan, but everything else generally works as usual.
Therefore, employers don’t have to shut down the office for Ramadan or shorten the working hours for all employees.
In Java and other cities in Indonesia, some of the Muslim-owned local restaurants (warungs) close during the day.
2. Businesses will be close for one week
The end of Ramadan is celebrated with Hari Raya Idul Fitri. Throughout Indonesia, there will be two public holidays to celebrate it. Additionally, the government will also publish a collective leave (Cuti Bersama) for two extra days. This period of holidays is known as Lebaran.
It is essential to distinguish collective leave and public holidays. As most authorities in Bali operate by the same principles as in Jakarta, immigration and other public offices will be closed in Bali during the collective leave.
However, note that the government only recommends the collective leave; it is not mandatory by law. Therefore, private companies in Indonesia don’t have to give their employees a full week off during Lebaran.
If you decide to implement the collective leave, it is mandatory for all your employees, and these days will be deducted from the employee’s annual leave balance. If you don’t use collective leave, you will allow your employees to take their leaves when they want.
Also, consider that keeping your business open during the collective leave can be a competitive advantage.
3. Changes in working hours
As Muslims begin fasting, their daily routine changes, and many will request to change their working hours accordingly. Employers are strongly advised to provide a flexible working environment to the Muslim employees as a sign of inclusiveness.
Human resource departments should engage with employees to construct the best working hours structure. For example, many companies the option of removing their lunch break, letting them leave work an hour early in return.
4. Employees may request for flexible working days
At the end of Ramadan some employees will travel to their hometown for a day of celebrations. Employers are encouraged to be flexible and let them do this wherever possible. This may require a temporary loosening of HR policies such as flexible working, or work-from-home allowances. Companies may also need to consider being more generous being when considering simultaneous annual leave requests.
This flexibility requires forward-planning. Some companies will have to tweak their annual cycle to ensure periods of extreme busyness fall outside this days; alternatively firms can reallocate work, or draft in temporary cover.
5. Expat employees must also receive extra 1 month salary
The law obliges employers in Indonesia to pay an annual religious holiday allowance THR to their permanent employees. The THR payment, also known as the 13th salary, is due one week before the most extended religious holidays of the employee’s religion.
However, this is not the case with expatriate employees. Expats in Indonesia are not entitled to receive the THR payment unless it is agreed with their employer in advance.
Therefore, to avoid any confusion from arising, it is better to regulate whether the THR will be paid out or not in their employment contract.