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The provisions of the Employment (Amendment) Ordinance 2007 (Amendment Ordinance) relating to the calculation of six statutory entitlements for employees under the Employment Ordinance will take effect today (July 13).
A spokesman for the Labour Department said these entitlements included holiday pay, annual leave pay, sickness allowance, maternity leave pay, wages in lieu of notice and end of year payment.
"The main objective of the Amendment Ordinance is 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," he said.
The amendments 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".
"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," he said.
To provide a workable, predictable and consistent mode of calculation, the Amendment Ordinance modifies the existing mode of calculation 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.
"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," he said.
For the purposes of 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 record by employers from six months to 12 months will be effective on January 13, 2008.
To assist employers, employees and the public in understanding the law amendments, the Labour Department has published "A Concise Guide to the Employment (Amendment) Ordinance 2007" which is available at http://www.labour.gov.hk/eng/public/wcp/GuideEAO2007.pdf.
Printed copies are also available for distribution at the Labour Department's Offices of the Labour Relations Division and the Home Affairs Department's district offices. Enquiries on the Amendment Ordinance could be made at the enquiry hotline 2717 1771.
Ends/Friday, July 13, 2007
Issued at HKT 11:01
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