The Employment (Amendment) Ordinance Sept 2007

© 2007 ORACLE CORPORATION 2 Objective of the Amendment Ensure all components of “wages” as defined under the Employment Ordinance (including commissions and allowances) are included in the calculation of “relevant statutory entitlements”. Standardise the calculation of all relevant statutory entitlements based on the employee’s average monthly or average daily wages earned on the preceding 12 months that gives rise to the statutory payments. Effective Date: 13 July, 2007

© 2007 ORACLE CORPORATION 3 Relevant Statutory Entitlements Statutory Holiday Pay (12 days) Annual Leave Pay : -Basic legal required entitlements from 7-14 days depending years of service Payments in lieu of notice Sickness Allowance: = or > 4 consecutive days Maternity Leave Pay

© 2007 ORACLE CORPORATION 4 Definition of Wages Commission (Sales) Overtime Payment (Support ) Allowances : Housing allowance Overseas allowance Transportation allowance Car allowance. Targeted Bonus (Presales, OU, Consulting) Staff Referral Bonus Discretionary Bonus (GBP) Staff Award Bonus Payment on reimbursement basis Wages means all remuneration, earnings, allowances, attendance bonus, commissions, overtime pay, tip and service charges Applicable to OracleNot Applicable to Oracle

© 2007 ORACLE CORPORATION 5 Example (1)- Calculating Annual Leave / Statutory Holiday Payment Steven, Account Manager, has taken one day annual leave in Jan, 08. His payment during leave period is calculated as follows: Component of Wages from Jan to Dec 07 Monthly Basic Salary: $42,500/month Commission: $510,000 (assume 100% achievement of target) Comp. Plan: 50:50 Calculation under new practice Annual Income (including annual basic Salary + commission payment in last 12 months) / yearly calendar days X no. of days of AL Annual Leave payment = $1,020,000/365 X 1 = $2,794 Calculation under previous practice Full month basic pay / monthly calendar days X no. of days of AL Annual Leave payment =$42,500 / 31 X 1 =$1, % +$1,424

© 2007 ORACLE CORPORATION 6 Calculation under new practice Annual Income (including basic salary + commission payment in last 12 months) = $1,020,000 One-month wages in lieu of notice = $1,020,000/12 = $85,000 Calculation under previous practice One-month wages in lieu of notice = Last month salary =$42,500 Example (2)- Calculating 1-month wages in lieu of notice +100% +$42500

© 2007 ORACLE CORPORATION 7 Example (3)- Calculating Annual Leave / Statutory Holiday Payment Mark, Senior Sales Consultant, has taken one day annual leave in Jan, 08. His payment during leave period is calculated as follows: Component of Wages from Jan to Dec 07 Monthly Basic Salary: $42,500/month Presales Bonus: $218,571 (assume 100% achievement of target) Comp. Plan: 70:30 Calculation under new practice Annual Income (including annual basic Salary + bonus payment in last 12 months) / yearly calendar days X no. of days of AL Annual Leave payment = $728,571/365 X 1 = $1,996 Calculation under previous practice Full month basic pay / monthly calendar days X no. of days of AL Annual Leave payment =$42500 / 31 X 1 =$1, % +$626

© 2007 ORACLE CORPORATION 8 Calculation under new practice Annual Income (including basic salary + bonus payment in last 12 months) = $ 728,571 One-month wages in lieu of notice = $ 728,571 /12 = $60,714 Calculation under previous practice One-month wages in lieu of notice = Last month salary =$42,500 Example (4)- Calculating 1-month wages in lieu of notice +43% +$18,214

© 2007 ORACLE CORPORATION 9 Table of Cost Comparisons Comp. PlanStatutory / Annual Leave Payment in lieu 70/3046%↑43%↑ 50/50104%↑100%↑

© 2007 ORACLE CORPORATION 10 Leave Entitlements Comparison YOS Oracle HK HK Legal Require ments

© 2007 ORACLE CORPORATION 11 Distributions of YOS

© 2007 ORACLE CORPORATION 12 Summary of Additional Cost

© 2007 ORACLE CORPORATION 13 Impacts of the Amendment Financial impact Higher cost on paying the statutory entitlements (statutory holiday, annual leave, payments in lieu of notice, etc.) for staffs with high variable pay including OT payment, allowances, commission, etc. Administration Impact Record Keeping -Past 12 months records of annual leave, sick leave, maternity leave and wage records have to kept accurately and timely Payroll Administration -Current payroll system can’t support the changes

© 2007 ORACLE CORPORATION 14 Action Items Updated SMT on the changes and advise them our preparation and actions to follow Discussed with Finance on the EO amendments and they need a payroll system to support the changes Contacted Kevin Ng from HK OCS and Bird Yip for their inputs for how they advise our corporate HRMS users on this EO changes and see if any resources can be leveraged to us. Finance are acknowledged for the feasible short term and long term solutions from HK OCS and they will get proper approval or will contact OCS to change their current payroll system to reflect the changes by the end of this year.

© 2007 ORACLE CORPORATION 15 Action Items – Cont’ Inform all employees on the progress of implementing the EO amendment Statutory holiday payment will be deferred until payroll is ready but the deadline will be end of this year. All changes must start to be reflected in Jan 08 payroll Analysis of the pros and cons on the current leave policy and submit HR recommendations to AP HR management by the end of Oct Educate the EO amendment and the revised leave policy to the managers and employees

© 2007 ORACLE CORPORATION 16 Questions ????