How HRPro compliant with Employment (Amendment) Ordinance 2007
How HRPro compliant with Employment (Amendment) Ordinance 2007 (a.k.a 713) ?
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:
Holiday pay
Annual leave pay
Sickness allowance
Maternity leave pay
End of year payment
Wages in lieu of notice
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 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
Wages of $90,300 for working 301 days
Payments of $2,400 for 8 statutory holidays
Calculating holiday pay on the basis of the 12-month average
(92,700 – 0 ($)) / (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 pay 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 Based on Calendar Days), and it will be 366 when across leap year .
Disregarded Days is
No Pay Leave Days in Payroll Record that No Pay Leave Deduction is not zero
Sickness Allowance Days in Payroll Record that is not full pay (Wage checkbox is not checked)
Maternity Pay Days in Payroll Record that is not full pay (Wage checkbox is not checked)
Annual Leave Days in Payroll Record that is not full pay (Wage checkbox is not checked)
Leave Days with Nature Other (Not Full Pay), Day off (Not Full Pay) or Rest Day (Not Full Pay) in Leave Record
Statutory Holiday Days in Payroll Record that is no pay (e.g. First 3 months employment)
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 pay 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 Based on Calendar Days), and it will be 366 when across leap year
Disregarded Days is
No Pay Leave Days in Payroll Record that No Pay Leave Deduction is not zero
Sickness Allowance Days in Payroll Record that is not full pay (Wage checkbox is not checked)
Maternity Pay Days in Payroll Record that is not full pay (Wage checkbox is not checked)
Annual Leave Days in Payroll Record that is not full pay (Wage checkbox is not checked)
Leave Days with Nature Other (Not Full Pay), Day off (Not Full Pay) or Rest Day (Not Full Pay) in Leave Record
Statutory Holiday Days in Payroll Record that is no pay (e.g. First 3 months employment)
When generating Payroll Batch, HRPro will calculate the Holiday Pay, Annual Leave Pay, Sickness Allowance and Maternity Leave Pay based on
The Leave Entries inputted in Leave Module
The Average Daily Wages
The Daily Rate of Salary will based on
The Daily Salary based on option in Payroll Module Setup, Payroll tab.