1 Employment (Amendment) Ordinance 2007 Passed 13 July 2007 Effective from 1 July 2007 COPA 9 July 2011

2 E(A)O operative since 13 July 2007 Ensure all components of “wages” as defined under the EO including commission of a contractual nature, however designated or calculated, are included in the calculation of relevant statutory entitlements Modified the method of calculating relevant statutory entitlements by reference to 12-month average “wages” earned Any periods and “wages” that fall under the Disregarding Provisions shall be excluded Applicable to employee on monthly, daily or piece rated Extended the period of keeping wages and employment records by employers from 6 to 12 months effected on 13 January 2008 Wages - modified method of calculating statutory entitlements

Wages - components All remuneration, earnings, allowances, tips and service charges, however designated or calculated, payable to an employee in respect of work done or work to be done allowances including traveling allowance, attendance allowances, commission and overtime pay are within the definition of wages employee’s entitlement to end of year payment, maternity leave pay, severance payment, long service payment, sickness allowance, holiday pay, annual leave pay and wages in lieu of notice are calculated according to the above definition of wages overtime pay is included if it is of a constant character, or its monthly average over the past 12 months is not less than 20% of the average monthly wages of the employee during the same period 3

Wages - components : exclusions Value of accommodation, education, food, fuel, water, light or medical care provided by the employer Employer’s contribution to any retirement scheme Commission, attendance allowance or attendance bonus which is of a gratuitous nature or is payable only at the discretion of the employer Non-recurrent traveling allowance or the value of any traveling concession or traveling allowance for actual expenses incurred by the employment Any sum payable to the employee to defray special expenses incurred by him by the nature of his employment End of year payment, or annual bonus which is of a gratuitous nature or is payable only at the discretion of the employer Gratuity payable on completion 4

5 Refer to wage payable for : Holiday (statutory) pay Annual leave pay Sickness allowance and related provisions Maternity leave pay and related provisions End of year payment Wages in lieu of notice for termination and damages for wrongful termination of contract Exclude Non statutory awards of leave, i.e. leave awarded by employer, e.g. compassionate leave, study leave, etc. Calculation of severance pay or long service pay Wages - relevant statutory entitlements

6 Holiday (statutory) : 12 days per annum entitlement - irrespective of length of service pay - employed under a continuous contract for not less than 3 months immediately preceding a statutory holiday rate – average daily rate of pay in accordance with E(O)A 2007 Annual leave pay : 7-14 days entitlement - having been employed under a continuous contract for every 12 months, take paid annual leave to which he is entitled within the following period of 12 months rate – average daily rate of pay in accordance with E(A)O 2007 Sickness allowance : 2 days per month during first 12 month service, 4 days per month thereafter, up to a maximum of 120 days entitlement – not less than 4 consecutive days, subject to accumulation of sufficient no. of paid sickness days rate – 4/5 of the average daily wages in accordance with E(A)O 2007 Maternity leave pay : 10 weeks entitlement – employed under a continuous contract immediately before the commencement of maternity leave and notice of pregnancy given pay – employed under a continuous contract for not less than 40 weeks immediately before the commencement of scheduled maternity leave rate – average daily rate of pay in accordance with E(A)O 2007 Wages - eligibility and payment rate of leave

7 Modified the method of calculating relevant statutory entitlements by reference to 12-month average “wages” earned Example Statutory entitlement “New Year Holiday”, 1 January 2011 is to be determined on the 12-month average wages calculated on the basis of the wages earned in the period 1 January 2010 and 31 December 2010 Wages - modified method of calculating statutory entitlements

8 No account to be taken of any period where an employee is not paid full wages by reasons of employee taking: Statutory holidays (12 days annually) Annual leave (7 – 14 days annually) Sickness days (statutory entitlement) Maternity leave (10 weeks) Rest days (1 in 7 days) Leave taken with the agreement of the employer (e.g. paternity leave) Any period of lay-off Leave resulting from a work-related injury (statutory entitlement) Wages - disregarding provisions

9 Wages - example of calculating statutory entitlement Example 1 Statutory entitlement of “New Year Holiday”, 1 January 2011 is to be determined on the 12-month average wages calculated on the basis of the wages earned in the period 1 January 2010 and 31 December 2010

10 Wages - example of calculating statutory entitlement Month Calendar Days Wage paid $ Non Full Wage Days Amount $ Jan , , Feb 28 25, Mar 31 28, Apr 30 30, May 31 27, Jun 30 25, Jul 31 25, , Aug 31 25, , Sep 30 25, Oct 31 25, Nov 30 25, Dec 31 25, , , Monthly basic salary of January 2011 = $26,000 Calendar days = 31 Daily wage - calculated based on basic salary / no. of calendar days=$839 Daily wage - calculated based on E(A) 2007 with Disregarding Provision =(313, ,312.00)/(365-11)=$866 Adjustment to be made =$866-$839=$27

11 Wages - example of calculating statutory entitlement Example 2 Statutory entitlement of “Lunar Year Holiday”, 3-5 February 2011 is to be determined on the 12-month average wages calculated on the basis of the wages earned in the period 1 February 2010 and 31 January 2011

12 Wages - example of calculating statutory entitlement Month Calendar Days Wage paid $ Non Full Wage Days Amount $ Feb , Mar 31 28, Apr 30 30, May 31 27, Jun 30 25, Jul 31 25, , Aug 31 25, , Sep 30 25, Oct 31 25, Nov 30 25, Dec 31 25, Jan , , , Monthly basic salary of February 2011 = $26,000 Calendar days = 28 Daily wage - calculated based on basic salary / no. of calendar days=$929 Daily wage - calculated based on E(A) 2007 with Disregarding Provision =(312, ,250.00)/(365-9)=$863 Adjustment to be made =$863-$929=($66) Note : Remuneration paid in January 2011 = $26,027.00, inclusive of a basic salary increase of $1,000, and $27 top up payment for Statutory Holiday Pay on 1 Jan 2011

13 Wages - example of calculating statutory entitlement Example 3 Statutory entitlement of “Ching Ming Festival” holiday, 5 April 2011 is to be determined on the 12-month average wages calculated on the basis of the wages earned in the period 1 April 2010 and 31 March 2011

14 Wages - example of calculating statutory entitlement Month Calendar Days Wage paid $ Non Full Wage Days Amount $ Apr , May 31 27, Jun 30 25, Jul 31 25, , Aug 31 25, , Sep 30 25, Oct 31 25, Nov 30 25, Dec 31 25, Jan , Feb 28 26, , Mar 31 26, , , Monthly basic salary of April 2011 = $26,000 Calendar days = 30 Daily wage - calculated based on basic salary / no. of calendar days=$867 Daily wage - calculated based on E(A) 2007 with Disregarding Provision =(310, ,350.00)/(365-14)=$867 Adjustment to be made =$867- =$0

15 Wages - example of calculating statutory entitlement Example 4 Statutory entitlement of “Labour Day” (replacement statutory holiday)”, 2 May 2011 is to be determined on the 12-month average wages calculated on the basis of the wages earned in the period 1 May 2010 and 30 April 2011

16 Wages - example of calculating statutory entitlement Month Calendar Days Wage paid $ Non Full Wage Days Amount $ May , Jun 30 25, Jul 31 25, , Aug 31 25, , Sep 30 25, Oct 31 25, Nov 30 25, Dec 31 25, Jan , Feb 28 26, , Mar 31 26, Apr 30 26, , ,750 Monthly basic salary of May 2011 = $26,000 Calendar days = 30 Daily wage - calculated based on basic salary / no. of calendar days=$839 Daily wage - calculated based on E(A) 2007 with Disregarding Provision =(306, ,750.00)/(365-15)=$857 Adjustment to be made =$857-$839=$18

17 Wages - example of calculating statutory entitlement Example 5 Statutory entitlement of “Ching Ming Festival” holiday, 6 June 2011 is to be determined on the 12-month average wages calculated on the basis of the wages earned in the period 1 June 2010 and 31 May 2011

18 Wages - example of calculating statutory entitlement Month Calendar Days Wage paid $ Non Full Wage Days Amount $ Jun , Jul 31 25, , Aug 31 25, , Sep 30 25, Oct 31 25, Nov 30 25, Dec 31 25, Jan , Feb 28 26, , Mar 31 26, Apr 30 26, May 31 26, , ,250 Monthly basic salary of June 2011 = $26,000 Calendar days = 30 Daily wage - calculated based on basic salary / no. of calendar days=$867 Daily wage - calculated based on E(A) 2007 with Disregarding Provision =(305, ,350.00)/(365-14)=$852 Adjustment to be made =$852-$867=($15 )

19 Briefing on Provisions and Applications Of the Minimum Wage Ordinance

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21 a. Minimum wage rules applies to ALL EMPLOYEES employees employed in Hong Kong employees employed outside Hong Kong e.g. hotel staff employed by Hong Kong employer are seconded to work outside Hong Kong not relevant whether employee is paid on an hourly, daily, weekly, monthly or any other basis employees employed on probationary terms part-time employees – no minimum hours to be worked Minimum Wage Ordinance - a recap

22 a. Minimum wage rules applies to ALL EMPLOYEES (cont’d) not really relevant how much an employee is being paid, what is relevant is the total number of hours that an employee works in any given wage period e.g. employee who works 14 hours, 7 days a week is entitled to be paid a monthly minimum wage of no less than $12,152 temporary employees non-resident domestic helpers e.g. drivers, gardeners, boat crew and careers employees with disability Minimum Wage Ordinance - a recap

23 b. Minimum wage rules DO NOT apply to self-employed persons civil servants employees whose employment is not governed by HK law resident domestic helpers work experience students and student interns seamen apprentices Minimum Wage Ordinance - a recap

Minimum Wage Ordinance - specified education institutes 24

25 c. Minimum wage rules require that employees be paid not less than $28 (on average) for EVERY HOUR WORKED WITHIN A WAGE PERIOD total wages paid (or payable) in a wage period divided by total hours worked should not less than $28 employers are required to “top up” where average hourly rate is less than $28 top-up of minimum wage must be paid at end of payment period Minimum Wage Ordinance - a recap

26 d. HOURS WORKED in a wage period include: hours actually worked at the place of employment – regardless whether all such hours are paid or unpaid hours worked at the place of employment include overtime – regardless whether such overtime hours are paid or unpaid part of hours to be counted required attendance at the place of employment (even though no work or training provided) work-related travel – whether in HK or outside HK “place of employment” includes any place where employee works “in accordance with the contract of employment, or with the agreement or at the direction of an employer” not clearly defined, capable of being given a wide interpretation Minimum Wage Ordinance - a recap

27 e. HOURS in wage period DO NOT include: hours outside the place of employment where no work undertaken e.g. rest days, outside office hours, holidays, period of leave, lunch time breaks, etc. regardless whether such periods are taken on a paid or unpaid basis hours where employee voluntarily attends the place of employment where no work is undertaken hours traveling from employee’s place of residence to place of employment or vise versa exception : overseas travel Minimum Wage Ordinance - a recap

28 f. Wage period is defined by reference to any period of time “in respect of which wages are payable to the employee for work done or to be done under his contract of employment” may of any duration agreed by an employer and employee where no wage period is agreed between employer and employee then wage period is regarded to be one month Minimum Wage Ordinance - a recap

29 g. Wages paid or payable during the wage period need to be COUNTED to determine whether an employee has been paid minimum wage payments falling within the definition of “wages” under the Employment Ordinance e.g. wages and salary, statutory entitlement of certain types of leaves, rental reimbursements, housing allowance, tips, commissions, overtime payments, attendance allowance, etc. certain deductions (made in accordance with s.32) e.g. repayment of loan, MPF contributions, loss or damage to property, etc. Minimum Wage Ordinance - a recap

30 h. Wages paid during the wage period are to be DISREGARDED in order to determine whether an employee has been paid minimum wage payments falling outside the definition of “wages” under the Employment Ordinance payments paid in a wage period for periods not actually worked e.g. paid rest days, paid lunch hours, paid holidays, paid annual leave, etc. payment of wages in arrears referable to an earlier wage period e.g. payment of June 2011 salary due to be paid at end of May not paid until 10 July, 2011 advance and overpayments of wages e.g. employees paid half of half of July 2011 wages together with June 2011 payroll Minimum Wage Ordinance - a recap

31 1st : 8 hours: regular rest day 2nd : 8 hours : Statutory Holiday ( wage to be calculated in accordance with E(A)O 2007) 3rd - 6th: 40 hours: hours worked 7th: 8 hours: additional day off granted by employer 8th : 8 hours: regular rest day  9th: 8 hours : annual leave (wage to be calculated in accordance with E(A)O 2007) 10th: 8 hours: Statutory Holiday (wage to be calculated in accordance with E(A)O 2007) 11th - 13th: 27 hours: hours worked 14th: 8 hours: additional day off granted by employer 15th: 8 hours: regular rest days 16th - 31st: 96 hours: hours worked 21st, 28th: 16 hours: additional day off granted by employer 22nd, 29th: 16 hours: regular rest days Remuneration paid in wage period= $7,200 Amount paid for “non hours worked”=$2,688 (96 hours) Remuneration for “hours worked”=$4,512 Statutory minimum wage for “hour worked”=$4,564 (163 hours) Top up amount needed=[($7,200-$2,688) - $4,564] = $52 Minimum Wage Ordinance - calculation of minimum wage : Employee A

32 1st : 8 hours: regular rest day 2nd : 8 hours : Statutory Holiday wage to be calculated in accordance with E(A)O 2007  3rd - 7th, 9th (6 days) : 48 hours : approved annual leave wage to be calculated in accordance with E(A)O th: 8 hours: regular rest day 10th: 8 hours: Statutory Holiday wage to be calculated in accordance with E(A)O th - 14th (Sat pm off): 30 hours: hours worked 15th: 8 hours: regular rest day 16th - 21st: 44 hours: sick leave wage to be calculated in accordance with E(A)O nd: 8 hours: regular rest day 23rd - 28th (Sat pm off): 50 hours: hours worked 29th: 8 hours: regular rest day 30th - 31st: 16 hours: hours worked Remuneration paid in wage period= $7,200 Amount paid for “non hours worked”=$4,144 (148 hours) Remuneration for “hours worked”=$3,056 Statutory minimum wage for hour worked=$2,688 (96 hours) Top up amount not needed Minimum Wage Ordinance - calculation of minimum wage : Employee B

33 1st : 8 hours: regular rest day 2nd : 8 hours : Statutory Holiday (wage to be calculated in accordance with E(A)O 2007)  3rd – 6th: 35 hours : hours worked 7th: 8 hours: additional day off granted by employer 8th: 8 hours: regular rest day 9th : 8 hours: hours worked 10th: 8 hours: Statutory Holiday (wages to be calculated in accordance with E(A)O 2007) 11th – 13th: 17 hours: hours worked 14th: 8 hours: additional day off granted by employer 15th: 8 hours: regular rest day 16th – 20th: 46 hours: hours worked 21st: 8 hours: additional day off granted by employer 22nd: 8 hours: regular rest day 23rd – 25th: 24 hours: sick leave (wage to be calculated in accordance with E(A)O 2007) 26th – 27th: 16 hours: hours worked 28th: 8 hours: additional day off granted by employer 29th : 8 hours: regular rest day st: 20 hours: hours worked Remuneration paid in wage period= $7,200 Amount paid for “non hours worked”=$2,800 (112 hours) Remuneration for “hours worked”=$4,400 Statutory minimum wage for hour worked=$3,976 (142 hours) Top up amount not needed Minimum Wage Ordinance - calculation of minimum wage : Employee C

34 i. Records hourly time records must be maintained in the case of all employees earning less than $11,500 in a wage period wages paid to all employees must be maintained Minimum Wage Ordinance - a recap

35 j. Contracting out every employee has a contract right to be paid a minimum wage not possible to reduce employee’s right to be paid a minimum wage even with employee’s consent employee’s actual wages or minimum wage (whichever is the greater) to be used for calculating employee’s statutory benefits under the Employment Ordinance e.g. (statutory) holiday paid, annual leave pay, sickness leave payment, maternity leave pay, MPF contributions, employees’ compensation payments must be calculated by reference to wages that are not less than the minimum wage employee’s actual wages or minimum wage (whichever is the greater) to be used for calculating (i) mandatory MPF contributions and (ii) employees’ compensation payable to an employee Minimum Wage Ordinance - a recap

36 j. Rest periods rest days additional day off lunch breaks Minimum Wage Ordinance - issues and concerns

37 k. Work related activities traveling time to and from on business trips outside HK traveling to and from the placement of employment for attending training toilet breaks fire drills employer sponsored events on call duties after work activities Minimum Wage Ordinance - issues and concerns

38 l. Reviewing contractual terms changes that require consent of employees changes that do not require consent of employees Minimum Wage Ordinance - issues and concerns

39 Hours worked what hours should be included / excluded? attendance record? clocked in / out time? approved time sheet? traveling time to place of employment outside HK? how “an hour” is calculated? minute by minute, total for wage period? quarterly basis / 30 minutes basis, total on daily basis? rounding practice? overtime work with pay, and pay in the same or next wage period? with replacement leave, and clear in the same or next …wage period? meal breaks / rest days with pay? Minimum Wage Ordinance - compliance consideration

40 Review operations concerns and people resource deployment needs Revisit employee’s terms and conditions of employment Revamp relevant HR policy and procedure Assess staffing cost implication, e.g. MPF contributions, etc. Implement attendance system to capture “hours work” and related remuneration Train all concerned – managers managing own teams and outsourced workers / vendors to ensure compliance Analyze implementation concerns Prepare communication plans Evaluate employees association / union and media interest Minimum Wage Ordinance - operation and HR policy focus

41 Minimum Wage Ordinance Thank your for your participation!