The Minimum Wage Ordinance, Cap. 608

Computing statutory entitlements

Q1 :

If an employer hires his employees at an hourly rate, does it mean that he needs not pay them other statutory entitlements (e.g. holiday pay, annual leave pay)?

A1 :

All employees covered by the Employment Ordinance, irrespective of their hours of work, are entitled to basic protection under the Ordinance including payment of wages, restrictions on wages deductions and the granting of statutory holidays, etc.

Employees who are employed under a continuous contract are entitled to additional benefits such as rest days ^(Note), holiday pay, paid annual leave, maternity leave pay, paternity leave pay, sickness allowance, severance payment and long service payment, etc. 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.

Hence, regardless of their wage payment mode (i.e. monthly-rated, weekly-rated, daily-rated, hourly-rated, piece-rated, commission-based, etc), employers must comply with the Employment Ordinance in granting statutory entitlements to employees.

Note : Neither the Minimum Wage Ordinance nor the Employment Ordinance prescribes that rest days should be paid. Whether rest days are with pay or otherwise and the calculation method of rest day pay (including whether rest days are remunerated at the SMW rate) are employment terms in accordance with the employment contract or agreement between employers and employees.

Q2 :

Should statutory entitlements such as holiday pay or annual leave pay under the Employment Ordinance be calculated at not less than the SMW rate?

A2 :

The major provisions of the Minimum Wage Ordinance are aligned as closely as possible with those of the Employment Ordinance to ensure consistency and effective enforcement, avoid confusion to employers and employees and minimise the compliance cost for employers. Hence, the Minimum Wage Ordinance does not change the calculation method of statutory entitlements currently under the Employment Ordinance. For details of the calculation of these statutory entitlements, please refer to A Concise Guide to the Employment Ordinance published by the Labour Department.

According to the Minimum Wage Ordinance, if wages payable to the employee in respect of the wage period are less than the minimum wage, he is entitled to be paid the difference (i.e. “additional remuneration”). The contract of employment of the employee must be taken to provide that the employee is entitled to additional remuneration in respect of that wage period.

Since additional remuneration is part of wages payable to employees under the Employment Ordinance, and statutory entitlements under the Employment Ordinance (e.g. holiday pay, annual leave pay, sickness allowance, maternity leave pay, paternity leave pay, severance payment, long service payment, wages in lieu of notice, etc.) are calculated according to the definition of wages, the amount of these statutory entitlements should also take into account the additional remuneration (where applicable).