JustLogin’s payroll is fully enhanced to follow Hong Kong’s 713 Ordinance, ensuring alignment with the latest employment regulations.

Key Features of the 713 Ordinance:

Basic Protections for All Employees:

• Wage Protection: Timely payment of wages and restrictions on wage deductions.

• Statutory Holidays: Entitlement to statutory holidays as specified in the ordinance.

• Additional Benefits for Continuous Contract Employees: rest days, paid annual leave, sickness allowance, severance payment and long service payment, etc.

*Note: ADW calculation is only applicable for continuous contract employee

**Continuous contract - An employee is considered to be under a continuous contract if they have been employed by the same employer for 4 weeks or more, with at least 18 hours worked per week.

Is the HK713 Ordinance Mandatory for All Employers?

Yes, the HK713 Ordinance is a mandatory requirement for most employers in Hong Kong, covering key statutory benefits like annual leave pay, sick leave, and termination payments.

However, our JustLogin includes this setting as an option to cater to certain companies that may qualify for specific exemptions, (e.g. foreign companies or wholly-owned subsidiaries), which might have different reporting requirements.

While these exceptions exist, the general rule is that employers in Hong Kong must comply with the HK713 Ordinance unless explicitly exempted.

Pay Element/Statutory Entitlement Requiring ADW

Certain pay elements rely on the Average Daily Wage (ADW) for accurate calculation, including:

• Holiday Pay
• Annual Leave Pay
• Paid Sick Leave Allowance
• Maternity/ Paternity Allowance
• Bonus
• Payment in Lieu of Notice
• Severance/ Long Service Payment

Average Daily Wage

• Regarded wage = Total wage – disregarded wage

• Calculation Period: No. of days in 12 month period

  • Typically based on the preceding 12 months (e.g., if calculating for a holiday in September 2020, use the period from September 2019 to August 2020).

  • Number of Days: Generally 365 days for a full year.

• Disregarded days:Include all periods where disregarded wages were earned, as these are excluded from the total days calculation.

Average Daily Wage - Regarded wage

• For all relevant pay elements, to select the regarded wage check box.

Regarded Wage and Period Considerations

Average Daily Wage - Disregarded days (period)

• Disregarded period: This refers to days when an employee does not receive their full wages or any wages at all.

• The disregarded period may vary based on payroll configuration settings, such as specific pay elements for no pay or partially paid days (e.g., "No Pay Holiday" during the first 3 months).
• It's important to track these disregarded days accurately to ensure proper calculations for pay elements where the disregarded period applies.

Disregarded Wage and Period Considerations

Legislation

Payroll Impact on Leave types and Pay Elements

Part 1: Rest Day

Pay Element: Basic Salary

Pay Element Calculations: 

• The daily wage (pay rate) for Basic Salary is affected by paid & unpaid rest days.
• Disregarded Period: Be sure to account for unpaid rest days as disregarded periods when calculating Average Daily Wage (ADW).

Part 2: Holiday

(For Employees with under 3 Months of Service)

Pay Element: Holiday Pay

• Note: In Hong Kong, employees are entitled to 12 statutory holidays per year.

Legislation Impact on Pay Element:

• If an employee is in their first 3 months of service, they are not entitled to paid holiday leave.

  • Note: "No Pay Holiday" = 0 (Regarded Wage = 0)

• The number of unpaid holidays during the first 3 months of employment should be tracked as disregarded days for the Average Daily Wage (ADW) calculation.

Important Reminder:

• During the pay run, ensure that public holidays are correctly maintained in the system.

• Also, verify the employee’s join date to determine if they fall within their first 3 months of service.

Example A

Assumptions:

• Basic Salary: $2,000

• No. of Days in the Month: 30

• Holidays in the Current Month: 2

• Employee’s Service: Within first 3 months of employment

• payslip details: employee in the first 3 months of employment

ADW Calculation:

• Regarded Wage: 0

• Disregarded Days: 2

(For Employees with Over 3 Months of Service)

Legislation Impact on Pay Element:

• Employees with more than 3 months of employment are entitled to 100% ADW for holiday pay:

  • Holiday Pay = 100% ADW

  • Regarded Wage = 100% ADW

• Note: For statutory holidays on which employees are required to work, they must be given a day off in lieu (Rest Day).

Example B 

Scenario: Pay run for May 2020

Assumptions:

• Employee Join Date: 1/1/2020

• Basic Salary: $5,000

• Total Days in the Month: 30 days

• Rest Days in the Month: 12 days (unpaid)

• Holidays in the Month: 3 days

Payslip Details: Employee rest day is not paid

ADW Calculation for this Example:

Regarded Wage: Basic Salary + Holiday Pay
Disregarded Days: 12 (unpaid rest days)

Calculation of Holiday Pay (ADW)

• Eg. Calculating holiday pay for 1 January 2008

Part 3: Annual Leave Pay

Pay Element: Annual Leave Pay

Legislation Impact on Pay Element:

• Annual Leave Pay = 100% ADW

  • Regarded Wage = 100% ADW

• Note:

  • Employees must have sufficient paid Annual Leave to qualify for this pay.

  • The number of annual leave days an employee is entitled to depends on their years of service

Calculation of Annual Leave Pay (ADW)

Part 4: Sickness Leave

Leave Type: Sick Leave

Pay Element:

• Paid Sick Leave Allowance

• No Pay Sick Leave Allowance

Legislation Impact on Pay Element:

• After an employee applies for sick leave and the leave item is processed, the corresponding pay element will be generated. The amount of sickness allowance will be based on the generated pay element.

Process for Leave Items:

• Paid Sick Leave: 80% ADW

• No Pay Sick Leave: 0

Since neither of these options provides the full wage amount, the allowance is disregarded, and regarded wage = 0.

• Note: The number of sick leave days taken should be tracked as disregarded days for the Average Daily Wage (ADW) calculation.

Example:

Example: Sickness Allowance

Example: Calculating Sickness Leave Allowance

Part 5: Maternity/Paternity Leave

Pay Element: Maternity/Paternity Allowance

Legislation Impact on Pay Element:

• Paid Maternity/Paternity Allowance = 80% ADW

• Note:

  • Track the number of Maternity/Paternity leave days taken as disregarded days for the Average Daily Wage (ADW) calculation.

  • Since Maternity/Paternity Allowance is not the full wage amount, the allowance is disregarded, and regarded wage = 0.

Example: maternity leave

Part 6: Payment in Lieu of Notice

Calculation of payment in Lieu of Notice:

• The calculation depends on the agreed notice period as outlined in the employee's contract (the number of days or months is specified in the contract).

• For eligible cases, the admin should add the appropriate pay element and edit the formula/calculation manually.

  • Note: When the ADW keyword is made available, this process will be automated.

Example: Calculating 1 month payment in lieu of notice

Pay Slip

• Show relevant pay elements for additions and deductions, as per the current system.

• The pay rate for each pay element is calculated based on the per unit rate, multiplied by the number of units (days), respectively.

  • For Pay Elements Where ADW is Relevant: Pay Rate = respective calculated ADW.

  • Additional Note: All other details on the current pay slip should remain unchanged.

Example: Payrun for month of April 2020

Assumptions:

• Employee Join Date: 1/1/2020

• Basic Salary: $5,000

• Total Number of Days in the Month: 30 days

• Fixed OT Allowance: $500 per month

• Public Holidays in the Month: 1 day

• Paid Annual Leave Taken: 2 days

• Total Sick Leave Balance: 2 days

• Total Sick Leave Taken: 4 days

• Paternity Leave Taken: 3 days