Law revisions to the Employment Ordinance have taken effect, offering a workable, predictable and consistent mode of calculating six statutory entitlements for employees, the Labour Department says.

The entitlements include holiday pay, annual leave pay, sickness allowance, maternity leave pay, wages in lieu of notice and end of year payment.

The amendments aim to ensure that all components of wages as defined under the ordinance, including commission of a contractual nature, however designated or calculated, are to be included in the calculation of relevant statutory entitlements.

The revisions have arisen from the Court of Final Appeal's ruling in a labour case last year that commission accrued and calculated on a monthly basis was not to be reckoned in the calculation of holiday pay and annual leave pay because the ordinance did not provide for a "workable mode of calculation.

Workable mode

As the ordinance provisions for sickness allowance, maternity leave pay, wages in lieu of notice and end of year payment have a construction similar to that of holiday pay and annual leave pay, it is also necessary to amend the ordinance to ensure that a "workable mode of calculation" is available for the calculation of these statutory entitlements. 

To provide a workable, predictable and consistent mode of calculation, the existing mode of calculation is modified by making reference to the average wages earned by an employee during a 12-month period, or such lesser period when the employee is under the employment of the concerned employer.

Longer reference

The use of a longer reference period of 12 months would avoid over-reliance on recent achievements at the expense of performance over time. This addresses the concerns of both employers and employees about the fluctuating nature of certain components of wages including commission.

For calculating statutory entitlements and safeguarding rights and benefits, employers and employees should keep proper records in relation to employees' attendance, leave and wages.

The provision which extends the period of keeping wage and employment records by employers from six months to 12 months will take effect on January 13 next year.

More details on the law amendments are available here. For enquiries, call 2717 1771.