How HRPro compliant with Employment (Amendment) Ordinance 2007

How HRPro compliant with the Employment (Amendment) Ordinance 2007 (a.k.a 713 or EAO2007)?

http://www.labour.gov.hk/eng/public/wcp/GuideEAO2007.pdf

http://www.labour.gov.hk/tc/public/pdf/wcp/GuideEAO2007.pdf (中文)

The main objective of the Amendment Ordinance is to ensure that all components of wages as defined under the EO (including commission and allowance, etc) are included in the calculation of relevant statutory entitlements.

Six Relevant Statutory Entitlements:

Upon commencement of the Amendment Ordinance, regardless of whether an employee is monthly, daily or piece rated, his relevant statutory entitlements shall be calculated on the basis of his 12-month average wages; and in computing his average wages, any periods and wages that fall under the “disregarding provision” shall be excluded.

In order to simply the Human Resource Officer to calculate the average wages, the following enhancements are made 

1.       Define Full Pay Wages

Pay Types with Full Pay Wage checked is the wages that will be included to calculate the average wages (i.e. the Regarded Wages).

2.       Leave Type with “Not Full Paid” 

By default, the leave days and payment with Leave Nature No Pay Leave, Others (Not Full Pay), Day off (Not Full Pay), Rest Day (Not Full Pay) are disregarded when calculating the average wage.

3.       Calculate Average Daily Wage and Average Monthly Wage based on past 12-months wages.

Examples on Calculation of Relevant Statutory Entitlements

Example 1

Calculating holiday pay for 1 January 2008

Assumptions

Remuneration: Daily-rated at $300 with no-pay rest days

12-month wages earned in 2007: $92,700

Calculating holiday pay on the basis of the 12-month average

(92,700 – 0 ($)) / (301 + 8) = $300

HRPro will calculate the Average Daily Wages if the worker is Daily Salary basis 

Example 2

Calculating sickness allowance for 4 sickness days

Assumptions

Remuneration: Monthly-rated at $10,000 with paid rest days

12-month wages earned before the first sickness day: $120,000 including wages for services rendered and payments for leave 

Periods and wages to be disregarded 

No period and sum have to be excluded because the employee is not paid less than his full wages for the leave taken in the 12-month period. 

Calculating sickness allowance on the basis of the 12-month average 

Calculating the average daily wages earned in the 12-month period: (120,000 – 0) / (365 – 0) = $328.76

1-day sickness allowance: $328.76 x 4/5 = $263

HRPro will calculate the Daily Sickness Allowance automatically 

Example 3

Calculating 7-day annual leave pay

Assumptions

Remuneration: Monthly-rated at $9,000 with paid rest days

12-month wages earned before the first day of annual leave: $108,000 including wages for services rendered and payments for leave. 

Periods and wages to be disregarded 

No period and sum have to be excluded because the employee is not paid less than his full wages for the leave taken in the 12-month period. 

Calculating annual leave pay on the basis of the 12-month average 

Calculating the average daily wages earned in the 12-month period: (108000 – 0) / (365 – 0) = $296

7-day annual leave pay: $296 x 7 = $2072

HRPro calculated the Average Daily Wages automatically. 

Example 4

Calculating 1-month wages in lieu of notice

Assumptions

Remuneration: 

Basic pay at $6,000 per month 

Contractual commission accrued and calculated on a monthly basis according to a sliding scale 

12-month wages earned before the date on which notice of termination is given: $600,000 including basic pay and commission

Leave taken with less than full wages in the 12-month period: 15 days of half-pay study leave (i.e. 50% of basic pay) at $1,500

Period and wages to be disregarded

15 day of study leave with half pay at $1,500

Calculating 1-month wages in lieu of notice on the basis of the 12-month average 

Calculating the average monthly wages earned in the 12-month period:

(a)     (365 – 15) / 365 x 12 = 11.5 months

(b)     The average monthly wages: (600,000 – 1,500) / (11.5 Months) = $52,043

1-month wages in lieu of notice: $52,043

HRPro calculated the Average Monthly Wages automatically. 

In Summary

Average Daily Wages (ADW) = (Regarded Wages / Regarded Days)

where           

Regarded Wages = Last 12-month Payments – Disregarded Wages

Regarded Days = Last 12-month calendar days (usually 365 or 366) – Disregarded Days

Last 12-month Payments are the total payment that pays to the employee for the last 12 months. 

Disregarded Wages are the Pay Amount of that Pay Type that the Wage checkbox is not checked.

365 is the Total Pay Days of the year (when Daily Salary is based on Calendar Days), and it will be 366 when across the leap year. 

Disregarded Days is 

Average Monthly Wages (AMW) = (Regarded Wages / Regarded Months)       

where           

Regarded Wages = Last 12-month Payments – Disregarded Wages

Regarded Months = (365 – Disregarded Days) / 365 x 12

Last 12-month Payments are the total payment that pays to the employee for the last 12 months. 

Disregarded Wages are the Pay Amount of that Pay Type that the Wage checkbox is not checked

365 is the Total Pay Days of the year (when Daily Salary is based on Calendar Days), and it will be 366 when across the leap year. 

Disregarded Days is 

When generating Payroll Batch, HRPro will calculate the Holiday Pay, Annual Leave Pay, Sickness Allowance and Maternity Leave Pay based on

The Daily Rate of Salary wibe ll based on