Implemented on July 13, 2007, the Employment (Amendment) Ordinance is a set of legal guidelines that determine a specific employee’s statutory entitlements in Hong Kong. The name 713 Ordinance comes from the date the ordinance came into effect – July 13, 2007. The ordinance covers eight key statutory entitlements for employees that ensure they are compensated properly for their work across a variety of circumstances.
In this article, we will break down the 713 Ordinance, and how you can ensure that your Hong Kong company stays compliant with the help of a professional team.
What You Will Learn:
- What Are The 8 Key Statutory Entitlements?
- How To Calculate 12-Month Average Wage
- Are There Exceptions To 713 Ordinance Wages?
- What Are The Penalties Of Not Holding To The 713 Ordinance?
- Stay Compliant With The 713 Ordinance With Fastlane
1. What Are The 8 Key Statutory Entitlements?
The 713 Ordinance ensure that Hong Kong employees receive eight key statutory entitlements:
- Holiday pay
- Annual leave pay
- Sickness allowance
- Maternity leave pay
- Paternity leave pay
- End of year payment
- Payment in lieu of notice
- Amounts for non-compliance with an order of reinstatement due to unreasonable and unlawful dismissal
The amounts due to employees based on these statutory entitlements can vary depending on one’s wages. With various employees making different wages, it can be easy to find yourself with incorrect statutory entitlement calculations for employees.
2. How To Calculate 12-Month Average Wage?
To ensure that your HK business is following the 713 Ordinance entitlements, it is important to properly calculate your employee’s 12-month average wage. The Average Daily Wage (ADW) can then be used to calculate statutory entitlements.
To calculate ADW:
((Total wages earned in a 12-month period) – (Total earnings for days with less than full wages))
_________________________________________________________________
(Days in the 12-month period) – (Days with less than full wage)
By calculating this amount for every employee, and then taking into account the eight statutory entitlements for each, you can ensure that you are paying and providing for each employee in such a way that you are compliant with the 713 Ordinance.
3. Are There Exceptions To 713 Ordinance Wages?
There are exceptions to what can be considered wages – and therefore fall under 713 Ordinance entitlement:
- Retirement scheme contributions
- Discretionary bonuses
- Directly reimbursable travel expenses
- Employer-provided accommodation, education, food, or medical care
4. What Are The Penalties Of Not Holding To The 713 Ordinance?
Hong Kong companies that do not follow the guidelines set forth in the 713 Ordinance can face legal scrutiny, public embarrassment, and potential litigation.
Stay Compliant With The 713 Ordinance With Fastlane
The process of staying compliant with the 713 Ordinance is incredibly important for Hong Kong companies. While the calculations can be relatively simple, ensuring that all aspects of your business are following the ordinance properly can be exhaustive.
The key to ensuring that your company is following the 713 Ordinance and staying legally compliant is to partner with a financial expert. At Fastlane, our team of Hong Kong financial experts are experienced at helping companies follow employee statutory guidelines for pay.
The solutions provided by Fastlane can help your business automate your payment systems to stay compliant with the 713 Ordinance. By helping your employees maintain proper protections under the eight statutory entitlements can save you time, money, and growth potential.
FastLane HR can also ensure that your HK company is EAO compliant – helping you upgrade your systems to provide accurate pay and withholdings for employees. With Fastlane, you can ensure that your employees are protected and paid properly – and ensure that your business avoids costly penalties and damage to your reputation.
To learn more about Fastlane’s 713 Ordinance compliance services – and host of other HK business services – contact our team today.