JustLogin’s payroll is fully enhanced to follow Hong Kong’s 713 Ordinance. Details of this ordinance are below:
- All employees covered by the Employment Ordinance are entitled to basic protection which includes payment of wages, restrictions on wages deductions and the granting of statutory holidays, etc.
- Employees who are employed under a continuous contract are further entitled to benefits such as 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 who has been employed continuously by the same employer for four weeks or more, with at least 18 hours worked in each week is regarded as being employed under a continuous contract.
A video guide regarding HK713 is available through this link: HK713 Ordinance Video Guide
Pay Element/Statutory Entitlement
Pay elements that require ADW:
- 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
Regarded wage = Total wage – disregarded wage
-
No. of days in preceding 12-month period
Note: value is generally 365 days
Note: Preceding 12-month period
(Eg. Calculate for holiday in Sep 2020, 12 months preceding, to be from Sep 2019-Aug 2020)
- Disregarded days
Note: To include periods of all disregarded wages
Average Daily Wage - Regarded wage
- For all relevant pay elements, to select the regarded wage check box.
Regarded Wage/Period
Average Daily Wage- Disregarded days (period)
- Disregarded period: Days in which employee is not paid his wages or his full wages.
- Depending on payroll configuration setting for no pay or partially paid pay elements (eg. No pay holiday for first 3 month)
- To keep track of the number of days for pay elements where disregarded period is relevant
Disregarded Wage/Period
Legislation
- Rest day:
>Entitled to not less than 1 rest day in every period of seven days
>Whether rest day is paid or not is to be agreed by employer and employee
>Note: Affects basic salary daily rate - Statutory Holiday:
>Paid Holiday entitled only after first 3 months of employment
>Note: Thus first 3 month of employment, all Holiday are considered as disregarded
>Daily rate for Paid Holiday = 100%ADW (regarded wage) - Annual Leave:
>Daily rate for Paid Annual Leave =100%ADW (regarded wage) - Sickness Leave: (disregarded)
>Paid Sickness Leave entitlement only for ≥ 4 consecutive days of leave taken (Exception)
>Daily rate for Paid Sickness Leave = 80%ADW
>Daily rate for No Pay Sickness Leave = 0 - Maternity/Paternity Leave: (disregarded)
>Daily rate for Paid Maternity/Paternity Leave = 80%ADW - Payment in Lieu of Notice:
>Calculation of payment in Lieu of notice depends on agreed period of notice
Payroll impact - Rest Day
Pay Element:
- Basic Salary
Pay element calculations:
- Paid/unpaid rest day affects Basic Salary daily wage (Pay rate)
- Note the number of no pay rest day as disregarded period (for ADW calculation)
Payroll impact- Holiday
Pay Element:
- Holiday Pay
Note: For HK, 12 statutory Holiday in a year
Legislation impact on Pay element:
- For employee is in the first 3 month of service, no pay holiday
Note: No pay holiday = 0
(Regarded wage = 0) - Note the number of unpaid holidays as disregarded days (for ADW calculation)
(During employee first 3 month of employment)
Payroll impact - Holiday
Legislation impact on Pay element:
- For Employee with more than 3 months of employment,
> Holiday Pay = 100%ADW
> Regarded wage = 100%ADW
> Note: For Statutory Holiday in which employee is required to work, employee to be given off-in lieu
Example Rest Day & Holiday
Example
> Pay run for month of May 2020
Assumption:
> Employee Join Date = 1/1/2020
> Basic Salary = $5000
> Total number of days in the month = 30 days
> No. of Rest Day in the month = 12 days
> 3 Holiday in the month
Pay Slip details:
> Eg. Employee rest day is not paid
Calculation of Holiday Pay (ADW)
- Eg. Calculating holiday pay for 1 January 2008
Payroll impact- Annual Leave Pay
Pay Element:
- Annual Leave Pay
Legislation impact on Pay element:
- Annual Leave Pay = 100%ADW
> Regarded wage = 100%ADW
> Note: Employee has sufficient paid Annual Leave
Calculation of Annual Leave Pay (ADW)
- Eg. Calculating Annual Leave Allowance
Sickness Leave
Leave type:
- Sick Leave
Pay element:
- Paid Sick Leave Allowance
- No pay Sick Leave Allowance
Legislation impact on Pay element:
After employee’s application of leave and leave item is processed, pay element will be generated accordingly, thus the amount of sickness allowance will be based on the generated pay element.
- Process Leave items
>Paid Sick Leave = 80%ADW
>No Pay Sick leave = 0
- Since both are not full wage amount, allowance is disregarded, regarded wage = 0
- Note the number of sick leave taken = disregarded days (to be used for ADW calculation)
Sickness Leave
Example: Sickness Allowance
Calculation of Sickness Allowance (ADW)
- Eg. Calculating Sickness Leave Allowance
Payroll impact- Maternity/Paternity Leave
Pay Element:
- Maternity/Paternity Allowance
Legislation impact on Pay element:
- Paid Maternity/ Paternity Allowance = 80%ADW
> Note the number of Maternity/Paternity leave days taken as disregarded days
> Note: Maternity/Paternity allowance is not full wage amount, thus allowance is disregarded, regarded wage = 0
Example: Maternity Allowance
Payment in Lieu of Notice
Calculation of payment in Lieu of Notice depends on the agreed period of notice as shown in contract. (no. of days/ months determined by contract)
For cases of eligibility, admin to add pay element and edit formula/calculation accordingly. (Manual entry)
Note: When keyword ADW is made available, the above will be catered for.
Calculation of Payment in Lieu of Notice (ADW)
•Eg. Calculating 1 month payment in lieu of notice
Pay Slip
- Show relevant pay element for addition and deduction (current system)
- Pay Rate of each pay element base on per unit multiply by number of unit (days) respectively
> Note: For pay element where ADW is relevant,
> Pay Rate = respective calculated ADW
> Note: All other details in current pay slip to remain
Example: To do pay run for month of April 2020
Assumptions:
> Employee join date = 1/1/2020
> Basic Salary = $5000
> Total number of days in the month = 30 days
> Fixed OT allowance of $500 per month
> 1 Holiday in the month
> 2 days paid Annual Leave taken
> Total no. of paid sick leave balance = 2 days
> Total no. of sick leave taken = 4 days
> 3 days Paternity Leave taken
