http://www.labour.gov.hk/public/pdf/wcp/GuideEAO2007.pdf The main objective of the Employment (Amendment) Ordinance 2007 (EAO2007) 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. 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 in HRPro 4.0 1. Define Wages and Enable “Payroll compliant with Employment (Amendment) Ordinance 2007” Pay Types with Wage checked is the wages that will included to calculate the average wages (i.e. the Regarded Wages). 2. Define Leave Type with “Not Full Paid” The Leave Nature “Maternity Leave”, “No Pay Leave” and “Others (Not Full Pay)”, the leave days that the employee taken will be disregarded to calculate the average wage.
3. Define Statutory Holiday 4. Calculate Average Daily Wage and Average Monthly Wage based on past 12-months wages.
Example 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 l Wages of $90,300 for working 301 days l 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
ERPro 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 = (Regarded Wages / Regarded Days) Where Regarded Wages = Last 12-month wage – Disregarded Wages Regarded Days = 365 – Disregarded Period Disregarded Wages are the Pay Amount of that Pay Type that the Wage checkbox is not checked Disregarded Period is the Leaves Taken that the Leave Nature is either “No Pay Leave”, “Maternity Leave” or “Other (Not Full Pay)”
Average Monthly Wages = (Regarded Wages / Regarded Months) Where Regarded Wages = Last 12-month wage – Disregarded Wages Regarded Months = (365 – Disregarded Period) / 365 x 12 Disregarded Wages are the Pay Amount of that Pay Type that the Wage checkbox is not checked Disregarded Period is the Leaves Taken that the Leave Nature is either “No Pay Leave”, “Maternity Leave” or “Other (Not Full Pay)”
When generating Payroll Batch, HRPro will calculate the Holiday Pay, Annual Leave Pay, Sickness Allowance and Maternity Leave Pay based on l The Leave Entries inputted in Leave Module l The Average Daily Wages The Daily Rate of Salary will based on l The prorated Salary Setting in HRPRo Setup
This example show the Employee that her basic salary is $10,000 and she taken 2 days Annual Leave in August 2007 and her Average Daily Wage based on past 12 month wage is ($10,000 x 12 + $10,000 (OT Pay)) / 365= $356.16. After applying EO2007 Rules her Gross Salary becomes $10,067.14.
Applied to: HRPro 4.0.1 or above
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