Hong Kong recently updated it’s labour laws, increasing the minimum wage to $37.5 per hour with effect from 1 May 2019. Here’s the top 5 questions regarding the basic principles to calculating minimum wage in Hong Kong.
For more in-depth information of the legislation, please visit the Hong Kong Labour Department website.
1. How is minimum wage calculated in Hong Kong?
Regardless of the wage period, the wages payable should not be less than the amount of minimum wage calculated as follows:
Minimum wage = Total working hours in a wage period x Statutory Minimum Wage ($37.5 per hour)
2. Does an employer need to pay wages for each and every hour worked by employees? Does the statutory minimum wage rate apply for each hour?
Minimum wage for an employee for any wage period is the amount derived by multiplying the total number of hours worked by the statutory minimum wage rate of $37.5, according to the Minimum Wage Ordinance. Employees should be paid no less than this amount as calculated.
The basic principle regarding the minimum wage in Hong Kong is that when averaged over the total number of hours worked, the wages payable to an employee with respect to the wage period should be no less than the statutory minimum wage rate. It is not stated in the Minimum Wage Ordinance that payment must be met for each and every hour worked or that wages for each hour must meet the statutory minimum wage rate.
3. Do employers and employees need to change their wage payment from a monthly/ daily to hourly rated mode in accordance with the SMW rate that is expressed?
The purpose of the Minimum Wage Ordinance is to provide a wage floor for employees. It does not change the employment and/ or wage payment mode that is formulated in accordance to the employers and employees’ employment contracts and the Employment Ordinance.
According to the basic principle of the statutory minimum wage, the wages payable should be no less than the SMW rate when averaged over the total number of hours worked in the wage period. In the eyes of the Minimum Wage Ordinance, it doesn’t matter which modes of employment and wage payment is adopted, as long as the amount of wages payable is no less than the calculated minimum wage.
4. Do employers only need to pay the minimum wage to employees in order to comply to the law?
The statutory minimum wage provided in the Minimum Wage Ordinance is not the only requirement concerning the employers. On top of this wage floor, employers are still required to comply with the Employment Ordinance, terms specified in employer contract, as well as other statutory and contractual entitlements.
5. Is it legal for the employer and employee to mutually make an agreement for a pay less than the minimum wage?
Agreements that reduces the right, benefit or protection on the employee by the Minimum Wage Ordinance is voided. This means an employer and employee are not legally eligible to reduce the employee’s entitlement to the statutory minimum wage by agreement.
Keep up-to-date with the latest legislation changes
Employers need to make sure that they keep updated on the latest legislation. A quick and easy way to do this is through our Links Legislation page covering the employment laws of different locations.
Ensure your employment agreement complies
Hong Kong’s statutory minimum wage has continuously been on the rise over the years. Other locations such as Vietnam has even been updated their minimum wage annually, as a business and part of your corporate branding, it is important that you oblige to these regulations.
Get on top of things with professional payroll outsourcing services
An easy way to keep on top of legislation updates is by outsourcing your payroll to professional payroll processing service providers. By signing on to a trusted payroll service, not only will you get a payroll audit upon transition, you can also rest easy that you will be notified of the latest legislative updates so that your accounts comply to the latest labour laws.
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