Payment in lieu of untaken annual leave Report

Under the Employment Ordinance, an employee is entitled to paid annual leave after having been employed under a   continuous contract for every 12 months. When terminating employment contract, the employee is entitled to payment in lieu of untaken annual leave.

The daily rate of annual leave pay is a sum equivalent to the average daily wages earned by an employee in the 12-month period preceding the "date of termination of contract". In calculating the average daily wages, an employer has to exclude (i) the periods for which an employee is not paid his/her wages or full wages, including rest day, statutory holiday, annual leave, sickness day, maternity leave, sick leave due to work injuries or leave taken with the agreement of the employer, and any normal working day on which the employee is not provided by the employer with work; together with (ii) the sum paid to the employee for such periods.

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