employment (amendment) ordinance 2007 passed 13 july 2007 effective from 1 july 2007 copa

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Employment (Amendment) Ordinance 2007

Passed 13 July 2007

Effective from 1 July 2007

COPA

9 July 2011

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E(A)O 2007 - operative since 13 July 2007

• Ensure all components of “wages” as defined under the EO including commission of a contractual nature, however designated or calculated, are included in the calculation of relevant statutory entitlements

• Modified the method of calculating relevant statutory entitlements by reference to 12-month average “wages” earned

• Any periods and “wages” that fall under the Disregarding Provisions shall be excluded

• Applicable to employee on monthly, daily or piece rated

• Extended the period of keeping wages and employment records by employers from 6 to 12 months effected on 13 January 2008

Wages - modified method of calculating statutory entitlements

Wages- components

All remuneration, earnings, allowances, tips and service charges, however designated or calculated, payable to an employee in respect of work done or work to be done

• allowances including traveling allowance, attendance allowances, commission and overtime pay are within the definition of wages

• employee’s entitlement to end of year payment, maternity leave pay, severance payment, long service payment, sickness allowance, holiday pay, annual leave pay and wages in lieu of notice are calculated according to the above definition of wages

• overtime pay is included if

• it is of a constant character, or

• its monthly average over the past 12 months is not less than 20% of the average monthly wages of the employee during the same period

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Wages - components : exclusions

Value of accommodation, education, food, fuel, water, light or medical care provided by the employer

Employer’s contribution to any retirement scheme

Commission, attendance allowance or attendance bonus which is of a gratuitous nature or is payable only at the discretion of the employer

Non-recurrent traveling allowance or the value of any traveling concession or traveling allowance for actual expenses incurred by the employment

Any sum payable to the employee to defray special expenses incurred by him by the nature of his employment

End of year payment, or annual bonus which is of a gratuitous nature or is payable only at the discretion of the employer

Gratuity payable on completion

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Refer to wage payable for :• Holiday (statutory) pay

• Annual leave pay

• Sickness allowance and related provisions

• Maternity leave pay and related provisions

• End of year payment

• Wages in lieu of notice for termination and damages for wrongful termination of contract

• Exclude

• Non statutory awards of leave, i.e. leave awarded by employer, e.g. compassionate leave, study leave, etc.

• Calculation of severance pay or long service pay

Wages - relevant statutory entitlements

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Holiday (statutory) : 12 days per annum• entitlement - irrespective of length of service• pay - employed under a continuous contract for not less than 3 months immediately

preceding a statutory holiday• rate – average daily rate of pay in accordance with E(O)A 2007

Annual leave pay : 7-14 days• entitlement - having been employed under a continuous contract for every 12 months,

take paid annual leave to which he is entitled within the following period of 12 months• rate – average daily rate of pay in accordance with E(A)O 2007

Sickness allowance : 2 days per month during first 12 month service, 4 days per month thereafter, up to a maximum of 120 days

• entitlement – not less than 4 consecutive days, subject to accumulation of sufficient no. of paid sickness days

• rate – 4/5 of the average daily wages in accordance with E(A)O 2007 Maternity leave pay : 10 weeks

• entitlement – employed under a continuous contract immediately before the commencement of maternity leave and notice of pregnancy given

• pay – employed under a continuous contract for not less than 40 weeks immediately before the commencement of scheduled maternity leave

• rate – average daily rate of pay in accordance with E(A)O 2007

Wages - eligibility and payment rate of leave

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Modified the method of calculating relevant statutory entitlements by reference to 12-month average “wages” earned

• Example

• Statutory entitlement “New Year Holiday”, 1 January 2011

is to be determined on

• the 12-month average wages calculated on the basis of the wages earned in the period 1 January 2010 and 31 December 2010

Wages - modified method of calculating statutory entitlements

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No account to be taken of any period where an employee is not paid full wages by reasons of employee taking:

• Statutory holidays (12 days annually)

• Annual leave (7 – 14 days annually)

• Sickness days (statutory entitlement)

• Maternity leave (10 weeks)

• Rest days (1 in 7 days)

• Leave taken with the agreement of the employer (e.g. paternity leave)

• Any period of lay-off

• Leave resulting from a work-related injury (statutory entitlement)

Wages - disregarding provisions

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Wages - example of calculating statutory entitlement

• Example 1

• Statutory entitlement of “New Year Holiday”, 1 January 2011


• the 12-month average wages calculated on the basis of the wages earned in the period 1 January 2010 and 31 December 2010

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Month 　 Calendar Days

　 Wage paid $ 　　　　 Non Full Wage Days 　 Amount $

Jan 2010 　 31 　 27,500.00 　　　　　 2 　　 2,062.00

Feb 　 28 　 25,000.00 　　　　　 1 　　 500.00

Mar 　 31 　 28,500.00 　　　　　　　　　

Apr 　 30 　 30,200.00 　　　　　　　　　

May 　 31 　 27,500.00 　　　　　 1 　　 500.00

Jun 　 30 　 25,000.00 　　　　　 1 　　 500.00

Jul 　 31 　 25,100.00 　　　　　 2 　　 1,000.00

Aug 　 31 　 25,000.00 　　　　　 2 　　 1,500.00

Sep 　 30 　 25,000.00 　　　　　　　　　

Oct 　 31 　 25,000.00 　　　　　　　　　

Nov 　 30 　 25,000.00 　　　　　 1 　　 600.00

Dec 　 31 　 25,000.00 　　　　　 1 　　 650.00

　　 365 　 313,800.00 　　　　　 11 　　 7,312.00

Monthly basic salary of January 2011 = $26,000 Calendar days = 31

Daily wage - calculated based on basic salary / no. of calendar days = $839

Daily wage - calculated based on E(A) 2007 with Disregarding Provision

= ( 313,800.00 - 7,312.00 ) / ( 365 - 11 ) = $866

Adjustment to be made = $866 - $839 = $27

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• Example 2

• Statutory entitlement of “Lunar Year Holiday”, 3-5 February 2011


• the 12-month average wages calculated on the basis of the wages earned in the period 1 February 2010 and 31 January 2011

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Feb 2010 　 28 　 25,000.00 　　　　　 1 　　 500.00

Mar 　 31 　 28,500.00 　　　　　　　　　

Apr 　 30 　 30,200.00 　　　　　　　　　

May 　 31 　 27,500.00 　　　　　 1 　　 500.00

Jun 　 30 　 25,000.00 　　　　　 1 　　 500.00

Jul 　 31 　 25,100.00 　　　　　 2 　　 1,000.00

Aug 　 31 　 25,000.00 　　　　　 2 　　 1,500.00

Sep 　 30 　 25,000.00 　　　　　　　　　

Oct 　 31 　 25,000.00 　　　　　　　　　

Nov 　 30 　 25,000.00 　　　　　 1 　　 600.00

Dec 　 31 　 25,000.00 　　　　　 1 　　 650.00

Jan 2011 　 31 　 26,027.00 　　　　　　　　　

　　 365 　 312,327.00 　　　　　 9 　　 5,250.00

Monthly basic salary of February 2011 = $26,000 Calendar days = 28



= ( 312,327.00 - 5,250.00 ) / ( 365 - 9 ) = $863

Adjustment to be made = $863 - $929 = ($66)

Note :

Remuneration paid in January 2011 = $26,027.00, inclusive of a basic salary increase of $1,000, and $27 top up payment for Statutory Holiday Pay on 1 Jan 2011

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• Example 3

• Statutory entitlement of “Ching Ming Festival” holiday, 5 April 2011


• the 12-month average wages calculated on the basis of the wages earned in the period 1 April 2010 and 31 March 2011

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Apr 2010 　 30 30,200.00 　　　　

May 　 31 　 27,500.00 　　　　　 1 　　 500.00

Jun 　 30 　 25,000.00 　　　　　 1 　　 500.00

Jul 　 31 　 25,100.00 　　　　　 2 　　 1,000.00

Aug 　 31 　 25,000.00 　　　　　 2 　　 1,500.00

Sep 　 30 　 25,000.00 　　　　　　　　　

Oct 　 31 　 25,000.00 　　　　　　　　　

Nov 　 30 　 25,000.00 　　　　　 1 　　 600.00

Dec 　 31 　 25,000.00 　　　　　 1 　　 650.00

Jan 2011 　 31 　 26,027.00 　　　　　　　　　

Feb 　 28 　 26,000.00 　　　　　 5 　　 1,200.00

Mar 　 31 　 26,000.00 　　　　　 1 　　 400.00

　　 365 　 310,827.00 　　　　　 14 　　 6,350.00

Monthly basic salary of April 2011 = $26,000 Calendar days = 30



= ( 310,827.00 - 6,350.00 ) / ( 365 - 14 ) = $867


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• Example 4

• Statutory entitlement of “Labour Day” (replacement statutory holiday)”, 2 May 2011


• the 12-month average wages calculated on the basis of the wages earned in the period 1 May 2010 and 30 April 2011

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May 2010 　 31 　 27,500.00 　　　　　 1 　　 500.00

Jun 　 30 　 25,000.00 　　　　　 1 　　 500.00

Jul 　 31 　 25,100.00 　　　　　 2 　　 1,000.00

Aug 　 31 　 25,000.00 　　　　　 2 　　 1,500.00

Sep 　 30 　 25,000.00 　　　　　　　　　

Oct 　 31 　 25,000.00 　　　　　　　　　

Nov 　 30 　 25,000.00 　　　　　 1 　　 600.00

Dec 　 31 　 25,000.00 　　　　　 1 　　 650.00

Jan 2011 　 31 　 26,027.00 　　　　　　　　　

Feb 　 28 　 26,000.00 　　　　　 5 　　 1,200.00

Mar 　 31 　 26,000.00 　　　　　 1 　　 400.00

Apr 　 30 　 26,000.00 　　　　　 1 　　 400.00

365 306,627.00 15 6,750

Monthly basic salary of May 2011 = $26,000 Calendar days = 30



= ( 306,627.00 - 6,750.00 ) / ( 365 - 15 ) = $857


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• Example 5

• Statutory entitlement of “Ching Ming Festival” holiday , 6 June 2011


• the 12-month average wages calculated on the basis of the wages earned in the period 1 June 2010 and 31 May 2011

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Jun 2010 　 30 　 25,000.00 　　　　　 1 　　 500.00

Jul 　 31 　 25,100.00 　　　　　 2 　　 1,000.00

Aug 　 31 　 25,000.00 　　　　　 2 　　 1,500.00

Sep 　 30 　 25,000.00 　　　　　　　　　

Oct 　 31 　 25,000.00 　　　　　　　　　

Nov 　 30 　 25,000.00 　　　　　 1 　　 600.00

Dec 　 31 　 25,000.00 　　　　　 1 　　 650.00

Jan 2011 　 31 　 26,027.00 　　　　　　　　　

Feb 　 28 　 26,000.00 　　　　　 5 　　 1,200.00

Mar 　 31 　 26,000.00 　　　　　 1 　　 400.00

Apr 　 30 　 26,000.00 　　　　　 1 　　 400.00

May 　 31 　 26,018.00 　　　　　

365 305,145.00 14 6,250

Monthly basic salary of June 2011 = $26,000 Calendar days = 30



= ( 305,164.00 - 6,350.00 ) / ( 365 - 14 ) = $852

Adjustment to be made = $852 - $867 = ($15 )

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Briefing on

Provisions and Applications

Of the

Minimum Wage Ordinance

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a. Minimum wage rules applies to ALL EMPLOYEES

• employees employed in Hong Kong

• employees employed outside Hong Kong

e.g. hotel staff employed by Hong Kong employer are seconded to work outside Hong Kong

• not relevant whether employee is paid on an hourly, daily, weekly, monthly or any other basis

• employees employed on probationary terms

• part-time employees – no minimum hours to be worked

Minimum Wage Ordinance - a recap

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a. Minimum wage rules applies to ALL EMPLOYEES (cont’d)

• not really relevant how much an employee is being paid, what is relevant is the total number of hours that an employee works in any given wage period

e.g. employee who works 14 hours, 7 days a week is entitled to be paid a monthly minimum wage of no less than $12,152

• temporary employees

• non-resident domestic helpers

e.g. drivers, gardeners, boat crew and careers

• employees with disability


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b. Minimum wage rules DO NOT apply to

• self-employed persons

• civil servants

• employees whose employment is not governed by HK law

• resident domestic helpers

• work experience students and student interns

• seamen

• apprentices


Minimum Wage Ordinance- specified education institutes

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c. Minimum wage rules require that employees be paid not less than $28 (on average) for EVERY HOUR WORKED WITHIN A WAGE PERIOD

• total wages paid (or payable) in a wage period divided by total hours worked should not less than $28

• employers are required to “top up” where average hourly rate is less than $28

• top-up of minimum wage must be paid at end of payment period


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d. HOURS WORKED in a wage period include:

• hours actually worked at the place of employment – regardless whether all such hours are paid or unpaid

• hours worked at the place of employment include overtime – regardless whether such overtime hours are paid or unpaid

• part of hours to be counted

• required attendance at the place of employment (even though no work or training provided)

• work-related travel – whether in HK or outside HK

• “place of employment” includes any place where employee works “in accordance with the contract of employment, or with the agreement or at the direction of an employer”

• not clearly defined, capable of being given a wide interpretation


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e. HOURS in wage period DO NOT include:

• hours outside the place of employment where no work undertaken

• e.g. rest days, outside office hours, holidays, period of leave, lunch time breaks, etc. regardless whether such periods are taken on a paid or unpaid basis

• hours where employee voluntarily attends the place of employment where no work is undertaken

• hours traveling from employee’s place of residence to place of employment or vise versa

• exception : overseas travel


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f. Wage period

• is defined by reference to any period of time “in respect of which wages are payable to the employee for work done or to be done under his contract of employment”

• may of any duration agreed by an employer and employee

• where no wage period is agreed between employer and employee then wage period is regarded to be one month


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g. Wages paid or payable during the wage period need to be COUNTED to determine whether an employee has been paid minimum wage

• payments falling within the definition of “wages” under the Employment Ordinance

• e.g. wages and salary, statutory entitlement of certain types of leaves, rental reimbursements, housing allowance, tips, commissions, overtime payments, attendance allowance, etc.

• certain deductions (made in accordance with s.32)

• e.g. repayment of loan, MPF contributions, loss or damage to property, etc.


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h. Wages paid during the wage period are to be DISREGARDED in order to determine whether an employee has been paid minimum wage

• payments falling outside the definition of “wages” under the Employment Ordinance

• payments paid in a wage period for periods not actually worked

• e.g. paid rest days, paid lunch hours, paid holidays, paid annual leave, etc.

• payment of wages in arrears referable to an earlier wage period

• e.g. payment of June 2011 salary due to be paid at end of May not paid until 10 July, 2011

• advance and overpayments of wages

• e.g. employees paid half of half of July 2011 wages together with June 2011 payroll


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1st : 8 hours : regular rest day 2nd : 8 hours : Statutory Holiday ( wage to be calculated in accordance with E(A)O 2007) 3rd - 6th : 40 hours : hours worked 7th : 8 hours : additional day off granted by employer 8th : 8 hours : regular rest day 9th : 8 hours : annual leave (wage to be calculated in accordance with E(A)O 2007) 10th : 8 hours : Statutory Holiday (wage to be calculated in accordance with E(A)O 2007) 11th - 13th : 27 hours : hours worked 14th : 8 hours : additional day off granted by employer 15th : 8 hours : regular rest days 16th - 31st : 96 hours : hours worked 21st, 28th : 16 hours : additional day off granted by employer 22nd, 29th : 16 hours : regular rest days

Remuneration paid in wage period = $7,200 Amount paid for “non hours worked” = $2,688 (96 hours) Remuneration for “hours worked” = $4,512 Statutory minimum wage for “hour worked” = $4,564 (163 hours) Top up amount needed = [($7,200-$2,688) - $4,564] = $52

Minimum Wage Ordinance- calculation of minimum wage : Employee A

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1st : 8 hours : regular rest day 2nd : 8 hours : Statutory Holiday

wage to be calculated in accordance with E(A)O 2007

3rd - 7th, 9th (6 days) : 48 hours : approved annual leave wage to be calculated in accordance with

E(A)O 2007 8th : 8 hours : regular rest day 10th : 8 hours : Statutory Holiday wage to be calculated in accordance with E(A)O 2007 11th - 14th (Sat pm off) : 30 hours : hours worked 15th : 8 hours : regular rest day 16th - 21st : 44 hours : sick leave wage to be calculated in accordance with E(A)O 2007 22nd : 8 hours : regular rest day 23rd - 28th (Sat pm off) : 50 hours : hours worked 29th : 8 hours : regular rest day 30th - 31st : 16 hours : hours worked

Remuneration paid in wage period = $7,200 Amount paid for “non hours worked” = $4,144 (148 hours) Remuneration for “hours worked” = $3,056 Statutory minimum wage for hour worked = $2,688 (96 hours) Top up amount not needed

Minimum Wage Ordinance- calculation of minimum wage : Employee B

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1st : 8 hours : regular rest day 2nd : 8 hours : Statutory Holiday (wage to be calculated in accordance with E(A)O 2007) 3rd – 6th : 35 hours : hours worked 7th : 8 hours : additional day off granted by employer 8th : 8 hours : regular rest day 9th : 8 hours : hours worked 10th : 8 hours : Statutory Holiday (wages to be calculated in accordance with E(A)O

2007) 11th – 13th : 17 hours : hours worked 14th : 8 hours : additional day off granted by employer 15th : 8 hours : regular rest day 16th – 20th : 46 hours : hours worked 21st : 8 hours : additional day off granted by employer 22nd : 8 hours : regular rest day 23rd – 25th : 24 hours : sick leave (wage to be calculated in accordance with E(A)O 2007) 26th – 27th : 16 hours : hours worked 28th : 8 hours : additional day off granted by employer 29th : 8 hours : regular rest day 30 - 31st : 20 hours : hours worked

Remuneration paid in wage period = $7,200 Amount paid for “non hours worked” = $2,800 (112 hours) Remuneration for “hours worked” = $4,400 Statutory minimum wage for hour worked = $3,976 (142 hours) Top up amount not needed

Minimum Wage Ordinance- calculation of minimum wage : Employee C

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i. Records

• hourly time records must be maintained in the case of all employees earning less than $11,500 in a wage period

• wages paid to all employees must be maintained


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j. Contracting out

• every employee has a contract right to be paid a minimum wage

• not possible to reduce employee’s right to be paid a minimum wage even with employee’s consent

• employee’s actual wages or minimum wage (whichever is the greater) to be used for calculating employee’s statutory benefits under the Employment Ordinance

• e.g. (statutory) holiday paid, annual leave pay, sickness leave payment, maternity leave pay, MPF contributions, employees’ compensation payments must be calculated by reference to wages that are not less than the minimum wage

• employee’s actual wages or minimum wage (whichever is the greater) to be used for calculating (i) mandatory MPF contributions and (ii) employees’ compensation payable to an employee


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j. Rest periods

• rest days

• additional day off

• lunch breaks

Minimum Wage Ordinance - issues and concerns

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k. Work related activities

• traveling time to and from on business trips outside HK

• traveling to and from the placement of employment for attending training

• toilet breaks

• fire drills

• employer sponsored events

• on call duties

• after work activities


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l. Reviewing contractual terms

• changes that require consent of employees

• changes that do not require consent of employees


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Hours worked• what hours should be included / excluded?

• attendance record?• clocked in / out time?• approved time sheet?• traveling time to place of employment outside HK?

• how “an hour” is calculated?• minute by minute, total for wage period?• quarterly basis / 30 minutes basis, total on daily basis?• rounding practice?

• overtime work• with pay, and pay in the same or next wage period?• with replacement leave, and clear in the same or next …wage period?

• meal breaks / rest days with pay?

Minimum Wage Ordinance- compliance consideration

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Review operations concerns and people resource deployment needs

Revisit employee’s terms and conditions of employment

Revamp relevant HR policy and procedure

Assess staffing cost implication, e.g. MPF contributions, etc.

Implement attendance system to capture “hours work” and related remuneration

Train all concerned – managers managing own teams and outsourced workers / vendors to ensure compliance

Analyze implementation concerns

Prepare communication plans

Evaluate employees association / union and media interest

Minimum Wage Ordinance- operation and HR policy focus

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Minimum Wage Ordinance

Thank your for your participation!

employment (amendment) ordinance 2007 passed 13 july 2007 effective from 1 july 2007 copa

Documents

annual leave pay

maternity leave pay

holiday pay

statutory awards of

compassionate leave

average monthly wages

components of wages

wages components