Defining Absence Rules

This chapter provides overviews of absence rules for Hong Kong, delivered absence primary elements and discusses how to:

• Calculate annual leave.

• Calculate absence entitlements on termination.

• Calculate sick leave.

• Calculate maternity leave.

• Calculate leave without pay (LWOP).

• Calculate other leave.

Understanding Absence Rules for Hong Kong

This section discusses absence rules for Hong Kong.

Global Payroll for Hong Kong delivers predefined rules for processing absence payments, such as annual leave, long service leave, sick leave, maternity leave, and jury leave. Rules are also delivered to calculate absence entitlements on termination, including rules for the payment of unused annual leave, 13th month payment, outstanding deduction recovery, severance, and long service.

PeopleSoft designed these rules in accordance with Hong Kong statutory requirements. You can modify many of these rules to reflect absence and termination policies that are specific to your organisation or to labor agreements with your employees.

To demonstrate how Global Payroll can process typical absence requirements in Hong Kong, PeopleSoft provides 8 absence entitlement elements and 10 absence take elements. After the table of primary elements—the absence and take elements—we describe the interaction of each element with supporting elements.

Note. For the customary data discussed in this chapter, two categories of employees are identified: Statutory and General. Each category has its own customary data (absence entitlement, take rules, and accrual rules).

See Also

Entering and Processing Absences

Defining Absence Elements

Understanding Absence Management

Common Elements Used in This Chapter

Understanding Delivered Absence Primary Elements

This section discusses the delivered absence elements.

Primary absence elements are absence entitlements—entitlement or proration and absence takes. In the following tables, we cross-reference entitlements to takes and takes to entitlements in the description column. After the following tables, we discuss each element in detail.

This section discusses:

• Absence entitlements elements.

• Absence take elements.

Absence Entitlements Elements

The following table lists the Absence Entitlement elements for Hong Kong.

See Also

Entering and Processing Absences

Defining Absence Elements

Understanding Absence Management

Absence Take Elements

The following table lists the Absence Take elements for Hong Kong.

Note. For Hong Kong, the unit for absence entitlement, take, and accrual is day. While half-day absence is allowed, a quarter day or the hours of absence are generally not accepted. All absence types except maternity leave can take half-day leave. The service date is used as the default base for the absence accrual process. The anniversary date for absence and termination is derived from the service date.

Note. Female payees are eligible for statutory maternity leave. If your organization or location, however, has a policy to provide leave benefits for male employees whose wives have just given birth, it is possible to provide them with maternity leave benefits as the system does not check the payee's gender.

See Also

Entering and Processing Absences

Defining Absence Elements

Understanding Absence Management

Viewing Delivered Elements

The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for Hong Kong. Instructions for running the query are provided in the PeopleSoft Global Payroll 9.1 PeopleBook.

See Also

Understanding How to View Delivered Elements

Calculating Annual Leave

An employee is entitled to annual leave after working 12 months for one employer, and then for each succeeding 12 month period. The following annual leave rules are delivered for general and statutory employees.

This section provides overviews on absence forfeiture, leave accrual, and discusses how to:

• Calculate annual leave for general employees.

• Calculate annual leave for statutory employees.

See Also

Calculating Annual Leave Instead of Annual Leave Entitlement

Understanding Absence Forfeiture

This section provides an overview on absence forfeiture.

Annual leave can be carried forward to the next 24 months and compensation is not paid for forfeited annual leave. There is no limitation for statutory employees; the annual leave balance is always carried over to the next year. However, for general employees, the annual leave balance can be carried forward only to the next 24 months.

Understanding Leave Accrual

This section discusses leave accrual.

The accrual process for annual leave occurs once per month. Run this process before pay calculation. For general employees, prorated entitlement is added to the entitlement balance after the monthly accrual process is finished.

For example, an employee is hired on April 15, 2006 and is entitled to 12 days of annual leave per year. The annual leave entitlement at the end of the first month is:

16 / 30 × 12 / 12

If the entitlement increases after a set number of years of service, such as an additional one day, annual leave is awarded when finishing the first year of service. In this case, the employee in the anniversary period gains:

(14 / 30 × 12 / 12) last years entitlement plus (16 / 30 × 13 / 12) new entitlement (effective from the first anniversary day).

For statutory employees, absence accrual runs annually during the anniversary month. For example, if an employee is hired in January 2006, then the first annual absence accrual process is January 2007. After the first accrual, the employee earns seven days of entitlement.

Calculating Annual Leave for General Employees

The annual leave entitlement ALV GENL ENT, using formula ALV FM GENL ENT, returns the monthly annual leave entitlement during the monthly accrual process. Use the annual leave in lieu earning ANN LIEU to pay unused annual leave for termination or payment.

The ALV FM GENL ENT formula resolves as follows:

1. The annual leave entitlement value is retrieved from bracket ALV BR GENL ENT.

   The yearly entitlement is deannualised whenever the entitlement has not been changed during the pay period. If the entitlement has been changed, the partial entitlements before and after the anniversary date are added and returned.

2. The current year's annual leave entitlement variable CM VR CUR ENT stores the current deannualised annual leave entitlement.

   The previous year's annual leave entitlement variable CM VR PRV ENT stores the previous deannualised annual leave entitlement.

3. The duration CM DR YR OF SERV returns the employee's years of service (number of years between the service date SERVICE DT and the pay period end date PERIOD END DATE).

4. The formula ALV FM PREV ACCM returns the previous year's balance (system variable PREV VALUE ACCM) and is used in the accumulator initialize rule.

5. The annual leave balance accumulator ALV GENL ENT_BAL is carried forward to the new annual leave accumulator.

   Whenever the accumulator begins, the previous accumulator balance is brought to the current balance (new accumulator period).

6. The variables, CM VR ANNIV MTH (begin month) and CM VR ANNIV DY (begin day) specify the begin date of the accumulators.

   All accumulator periods are year to date (YTD) and begin to accumulate from the employee's hire date.

7. The formula ALV FM GENL FORFEIT returns the forfeited units that are eventually reduced from the annual leave balance accumulator.

   The formula ALV FM GENL ADJUST returns the forfeiture unit. This formula checks the current year's entitlement plus last year's entitlement and forms a forfeiture level. For example, an employee is entitled to 7 days in the first year, 8 days in the second, and 9 days in the third year. During the second year of service, the employee's annual leave balance cannot exceed 15 days, and it cannot exceed 17 days during the third year of service.

Calculating Annual Leave for Statutory Employees

The accrual process runs once for every 12 month period from the employee's hire date. The annual leave entitlement ALV STAT ENT, using formula ALV FM STAT ENT, returns the annual leave entitlement for statutory employees, only when their anniversary dates occur in the current pay period. The formula also returns annual leave entitlement from the employee's last anniversary date to the termination date only when the employee is terminated in the current pay period.

The ALV FM STAT ENT formula resolves as follows:

1. The annual leave entitlement value is retrieved from bracket ALV BR STAT ENT.

2. The current year's annual leave entitlement variable CM VR CUR ENT stores the current deannualised annual leave entitlement.

   The previous year's annual leave entitlement variable CM VR PRV ENT stores the previous deannualised annual leave entitlement.

3. The duration CM DR YR OF SERV returns the years of service (number of years between the service date SERVICE DT and the pay period end date PERIOD END DATE).

4. The formula ALV FM PREV ACCM returns the previous year's balance (system variable PREV VALUE ACCM) and is used in the accumulator initialize rule.

5. The annual leave balance accumulator ALV STAT ENT_BAL is carried forward to the new annual leave accumulator.

   Whenever the accumulator begins, the previous accumulator balance is brought to the current balance (new accumulator period).

6. The formula ALV FM STAT FORFEIT returns the forfeited units that are eventually reduced from the annual leave balance accumulator.

7. The generation control ALV GC ANNIV MTH controls the entitlement by resolving only when the employee's anniversary month equals the pay period month.

8. The formula ALV FM ANNIV MTH resolves when GP PRD END DATE MO (variable that stores the mm part of the pay period end date) equals CM VR ANNIVMTH (variable that stores the payee's mm part of the hire date) and the employee is not hired in the current pay period.

9. The variables CM VR ANNIV MTH and CM VR ANNIV DT specify the accumulator's begin date.

   All accumulator periods are YTD and begin to accumulate from the employee's hire date.

Calculating Absence Entitlements on Termination

PeopleSoft delivers a set of predefined rules for processing absences due to termination. PeopleSoft designed these rules in accordance with Hong Kong statutory requirements.

This section discusses how to:

• Calculate unused annual leave.

• Calculate 13th month payment.

• Calculate severance and long service leave payments.

• Pay outstanding deduction recovery upon termination.

Note. The system element TERMINATION DT in the employment record is populated when you select an action reason of either Retirement or Termination on the Job page. They are both considered termination. Action Termination with a reason of Redundancy or Layoff is considered job redundancy. If the employee is terminated with one these reasons and has worked more than two years, then the employee is entitled to severance payment.

See Also

Calculating Absence and Termination Earnings

Calculating Unused Annual Leave

When general and statutory employees are terminated after three months of continuous service, they are entitled to a payment for their prorated unused annual leave. The earning element ANN LIEU is the payment in lieu of annual leave entitlement. The calculation of the unused annual leave amount is Unit × Rate:

• Unit is set by the unused annual leave balance in days formula: TER FM ALV BAL.

• Rate is set by the average daily rate formula: CM FM DAILY RATE.

  (Average Daily Rate) = (Average Monthly Earning) / 30

Note. The constant 30 represents the number of days in a month and is also used in February (28 or 29 days) or March (31 days).

The TER FM ALV BAL and CM FM DAILY RATE formulas resolves as follows:

1. The system checks the service date system element TER DATE to determine whether the terminated payee is eligible to receive a payment instead of unused annual leave.

   The date CM DT PROBATION is three months after the service date.

2. The actual annual leave balance for termination calculation is returned by formula TER FM ALV BAL, using ALV GENL ENT_BAL for general employees and ALV STAT ENT_BAL + current year (up to the termination date) balance.

3. The value is returned to the earning element ANN LIEU and is then multiplied by the average daily rate calculated by CM FM DAILY RATE.

Use ANN LIEU to pay employees when they accept payments from their employer to offset part of the annual leave. This is a positive input and the unit of ANN LIEU is overridden by the number of adjusted days from the annual leave balance. ANN LIEU is a taxable earning element. Therefore, it contributes to the annual taxable accumulator.

Note. An employee can have a negative annual leave balance when processing unused leave during the termination process. The outstanding balance should be converted to monetary value and paid back to the employer. The calculation of the outstanding annual leave is the same as the unused annual leave.

See Also

Calculating Annual Leave Instead of Annual Leave Entitlement

Calculating 13th Month Payment

Regular 13th month payment is an additional payment of basic salary (normally 100 percent of regular) paid to employees a few days before the Chinese New Year. If the employee is eligible for 13th month pay and is terminated, then prorated payment is paid even if the employee was hired on or after the cut-off date (assuming that the employee has completed the probation period of three months of service). Some organisations set the cut-off period to stop current yearly 13th month pay if the employee was hired on or after the previous year's cut-off date.

To pay 13th month payments, use the TER 13TH PAY earning element attached to the TER SE MAIN section. The 13th month payment is calculated as Base × Percent:

• Base is set by the formula TER FM 13TH PAY.

• Percent is 100.

The TER FM 13TH PAY formula resolves as follows:

1. If the employee is hired and terminated in the same year (when variable CM VR SERV YR equals variable OE VR CAL YEAR) or if the employee is hired on or after the previous year's cut-off date and terminated in the current year (when the SERVICE DT is on or after the variable OE VR CUT OFF DT), then the following specific elements are included in the calculation:

   • A: Duration from hire date to termination date (using duration TER DR DY IN SERV).

   • B: Calendar days in termination year—either 365 or 366 (using duration OE DR DAYS IN YR).

   • C: Basic salary as of termination date (using MONTHLY RT).

2. The prorated 13th month pay is calculated as A / B × C.

3. If the employee is hired before the previous year's cut-off date and is terminated in the current year, the following additional element is incorporated into the preceding calculation:

   D: Duration from January 1 of the termination year to the employee's termination date (using duration TER DR DY LAST YR).

4. The prorated 13th month pay is calculated as D / B × C.

The duration TER DR MTH IN SERV determines the total number of service months between the employee's hire date and termination date. If this is fewer than three months, no payment is made. The date OE DT CAL YEAR extracts the current calendar year.

The service date must be on or after the 13th month pay cut-off date OE VR CUT OFF DT.

See Also

Calculating the Thirteen Month Pay

Calculating 13th Month Payment on Termination

Calculating Severance and Long Service Leave Payments

An employer should pay severance payment when an employee who has been employed under a continuous contract for not less than 24 months is dismissed by reason of redundancy. Customary data with the following rules pays severance payments when:

• The employee has worked for the company for more than 24 months.

• The termination action is redundancy (terminated with benefit).

The calculation rule for both severance and long service payments is the same. Employees can receive only severance payment or long service payment, but not both. An employer should pay long service payment to an employee who is employed not less than five years under a continuous contract, and who:

• Is not dismissed due to serious misconduct.

• Dies.

• Resigns due to ill health.

• Retires early or at age 65 or above.

The formula TER FM LSP PAYMT (severance and LSP amount) returns the severance payment or long service payment, depending on the employee's year of service and the termination action reason.

The TER FM LSP PAYMT formula resolves as follows:

1. The years of service and maximum claim amount for the terminated employee are retrieved from bracket TER BR LSP ENT.

   The formula TER FM LSP PERIOD is used as the search key for the bracket.

2. The variable TER VR MAX LSP stores the maximum claimable LSP amounts that are stored in the bracket TER BR LSP ENT.

   The variable TER VR LSP CEILING stores the maximum ceiling of average wages (currently 15000 HKD).

3. The duration CM DR MTH OF SERV returns the number of months between the service date SERVICE DT and the pay period end date GP PRD END DT plus one.

   The duration CM YR OF SERV NDEC returns the years of service with no decimals.

4. The variable OE VR ROLL UNIT is needed before it calls the formula OE FM ROLL AVG.

5. The formula OE FM ROLL AVG obtains the employee's average earning and calculates the employee's payment using the following formula:

   LSP = (Average Earning × 2/3) × (Reckonable Years of Service)

The factor 2/3 is a constant factor defined by the Hong Kong Labor Department. The formula first checks the monthly average earning and multiplies it by 2/3 (0.67). The result cannot be greater than the maximum ceiling of 15000 HKD, which is also defined by the Labor Department. The total is then multiplied by the employee's reckonable years of service stored in the bracket TER BR LSP ENT. If it exceeds 15000 HKD, then 15000 HKD is returned and multiplied by the employee's reckonable years of service.

See Also

Calculating Severance and Long Service Payments

Paying Outstanding Deduction Recovery Upon Termination

The earning element CASHADV is a cash advance that is paid in advance to an employee. The total amount of the advance must then be paid back to the organisation in several installments. The outstanding cash advance balance is stored in the goal amount (balance) accumulator. When the termination occurs, the system checks the goal amount accumulator and resolves the whole goal amount during the last pay period.

The CASHADVR recovery deduction is always 20 percent of the CASHADV, and the recovery ceases to resolve when the cash advance goal balance accumulator CM AC GOAL BAL equals zero.

When the employee is terminated, the whole cash advance goal balance should be recovered in the last pay period, so the deduction amount of the CASHADVR is overridden by the cash advance goal balance accumulator. A negative net balance is allowed when the net amount is not enough to recover the whole goal balance.

See Also

Calculating Cash Advances

Calculating Cash Advance Recovery

Calculating Sick Leave

This section provides an overview of sick leave and discusses how to calculate sick leave payments.

Understanding Sick Leave

One sick leave entitlement SLV SICK ENT (formula SLV FM ENT) for both general and statutory employees is delivered as customary data. The sick leave balance is always carried over to the next period, but the balance cannot exceed 120 days.

Statutory Employees

The employer should pay statutory employees sickness allowance if the employee takes sick leave of no less than four consecutive days. Only a percentage of the employee's daily wage is paid. Uncertified sick leave or zero balance sick entitlement is considered LWOP. To pay sick leave for statutory employees, also use the DY WAGE 80 earning element and take SLV STAT TKE.

General Employees

Employees can take half or more days of paid sickness only when they have enough balance. For an approved sickness, they receive 100 percent of their normal daily wages. Uncertified sick leave or zero balance sick entitlement is considered LWOP. To pay sick leave for general employees, also use the take SLV GENL TKE.

Calculating Sick Leave Payments

The formula SLV FM ENT returns sick leave entitlement if the employee is not terminated during the pay period. When the employee is terminated during the pay period, the formula returns either zero or the SLV BR ENT bracket value, which eventually returns the monthly sick entitlement (two or four days) to the terminated employee.

The SLV FM ENT formula resolves as follows:

1. The bracket SLV BR ENT stores the monthly sick entitlement.

   The system checks the bracket and attempts to resolve the sick entitlement. The prorated entitlement is not returned, but the lower is returned from the bracket. For example, 1.9 months of service returns 2 from the bracket. Sick leave accrual is run on each pay period and during the accrual process.

2. The adjustment formula SLV FM ADJUST adjusts the exceeded sick leave balance when it reaches 120 days.

   It evaluates the system element ABS END ENTL BAL if it is greater than 120, then returns the exceeded unit to offset the sick leave balance.

3. The formula SLV FM PREV ACCM returns the system element PREV VALUE ACCM, which stores the value of the old accumulator.

   This formula is used in the accumulator initialization to bring the old balance to the new accumulator.

4. The formula SLV FM ENT returns sick leave entitlement if the employee is not terminated during the pay period.

   When termination occurs during the pay period, the formula returns either zero or the SLV BR ENT bracket value, which eventually returns the monthly sick entitlement (two or four days) to the terminated employee.

5. The absence day formula CM FM TKE UNIT evaluates each day of the absence event.

   The required entitlement units (either 1 or 1/2) of each absence date are returned and compared with the beginning entitlement balance to calculate the paid and unpaid units. If PARTIAL HOURS is greater than half of SCHED HRS, it is treated as a one-day leave of absence.

6. For statutory employees, take SLV STAT TKE generates the earning element DY WAGE 80 for every paid sick leave, which calculates 80 percent of the employee's average earning.

   The earning element uses formula CM FM DAILY WAGE to return the employee's daily wage, which is calculated by the formula OE FM ROLL AVG.

Calculating Maternity Leave

This section provides an overview of maternity leave and discusses how to calculate maternity leave.

Understanding Maternity Leave

The following rules are delivered as customary data for maternity leave:

• Employees are eligible if they worked no less than 40 weeks.

• A maximum of 10 weeks of paid maternity leave is granted, if eligible.

  Alternative holiday is not granted if statutory or public holidays occur during the maternity period.

• Statutory employees receive 80 percent of the average earning, and general employees receive 100 percent of the basic salary.

• Employees cannot take a half-day of maternity leave.

Calculating Maternity Leave

The maternity leave entitlement MLV MAT ENT is delivered for all employees and is granted when the leave occurs (per absence). The PAID maternity period is 70 days from the maternity commencement date. Absence periods longer than 70 days are considered LWOP.

The maternity leave calculation resolves as follows, using the MLV FM MAT ENT and MLV FM RESOLVE ENT formulas:

1. The date MLV DT ELIG (maternity eligible date), in conjunction with the ABSENCE DATE, specifies the date that must be reached before the maternity absence can be paid.

   The date is 40 weeks after the hire date (service date SERVICE DT). If the date of the absence is earlier than the maternity eligible date, no payment is made.

2. The formula MLV FM MAT ENT returns 1 if the employee has reached the maternity eligible date.

3. The conditional resolution formula MLV FM RESOLVE ENT resolves if the absence date is fewer than 70 days and does not resolve to use the existing entitlement balance.

   The formula returns one SCHED HRS entitlement for each absence date.

   Because there is always no entitlement balance for maternity, the required entitlement units of maternity leave longer than 70 days are considered LWOP.

4. The formula MLV FM RESOLVE ENT uses duration MLV DR MAT to determine the duration in days between the absence begin date and absence date.

   It determines if the maternity absence date is paid or unpaid.

5. The take MLV STAT TKE generates the earning element DY WAGE 80 for statutory employees, which calculates 80 percent of the employee's average earning.

   The earning element uses formula CM FM DAILY WAGE to return the employee's daily wage, which is calculated by the formula OE FM ROLL AVG. For general employees, MLV GENL TKE, no positive input is generated because the employees are paid 100 percent of basic salary.

6. The absence day formula CM FM TKE UNIT evaluates each day of the absence event.

   The required entitlement units (either 1 or 1/2) of each absence date are returned and compared with the beginning entitlement balance to calculate the paid and unpaid units. If PARTIAL HOURS is greater than half of SCHED HRS, it is treated as a one-day leave of absence.

Calculating Leave Without Pay

This section provides an overview of leave without pay and discusses how to calculate leave with pay.

Understanding Leave Without Pay

There are no entitlement and accruals associated with LWOP. The following rules are delivered:

• LWOP can be taken from the employee's hire date.

• One daily rate (Annual Basic Salary / 365) is deducted from monthly pay for every single LWOP taken during the pay period.

  Note. The LWOP2 earning element is used for leave without pay for hourly rates (for weekly employees—as it uses an hourly rate).

• A half-day can be taken.

Statutory Employees

Annual leave cannot be taken if the employee has not earned it. When the accrual balance for annual leave is not enough to cover the whole duration of annual leave, the difference is considered LWOP.

General Employees

Annual leave can be taken if the employee has not earned it.

See Also

Calculating Leave Without Pay (LWOP)

Calculating Leave Without Pay (LWOP2)

Calculating Leave Without Pay

The NPL LWOP ENT (no paid leave entitlement) is delivered for both general and statutory employees. LWOP can be taken anytime during the servicing period. One daily basic rate is deducted from the employee's salary for every single day of LWOP. The value of one daily basic rate equals the annual salary divided by 365 (even in a leap year).

The LWOP calculation is Unit × Rate:

• Unit is set at the payee level.

• Rate is the system variable DAILY RT (daily rate).

LWOP pay is calculated as follows:

1. The system element DAY COUNT UPD notifies the system to generate earnings for the UNPAID unit only.

   The total amount is subtracted from the employee's basic salary when the employee takes the LWOP (per absence). A zero entitlement is granted when the LWOP occurs.

2. The take NPL LWOP TKE uses the day formula CM FM TKE UNIT to determine if the absence date requires entitlement.

3. The earning element LWOP is generated for each day of LWOP using the conditional resolution formula CM FM RESOLVE ENT.

   This returns one SCHED HRS entitlement for each absence date.

Calculating Other Leave

This section provides an overview of other leave and discusses how to calculate other leave.

Understanding Other Leave

Three types of other leave are delivered as customary data for Hong Kong:

• Jury.

• Compassion.

• Marriage.

Note. Examination leave and study leave are considered LWOP.

Calculating Other Leave

There are no entitlements for other leave types and no accruals are associated with them. Employees are paid when the absences occur. Although jury, compassion, and marriage leave have similar entitlement and take setup, marriage leave requires completion of an eligibility period of three months. To handle this, a date CM DT PROBATION is defined, which is three months after the service date. The formula OLV FM MARR ENT resolves if the employee has finished the probationary period and returns zero if the employee is under probation.

Other leave is calculated as follows:

1. The variables CM VR ANNIV MTH and CM VR ANNIV DT notify the system when the accumulators should start to accumulate.

   During the initialization session, the payee's hire date is retrieved and the ddmm part of the date is extracted and assigned to these variables.

2. The date element CM DT HIRE stores the payee's hire date, then passes the mm part of the date to CM VR ANNIV MTH and the dd part of the date to CM VR ANNIV DT during the absence initialization.

3. A day formula CM FM TKE UNIT determines each absence date from the absence event (if it is a rest day or a working day).

   The formula returns zero for rest days and returns one or half-day if the absence date is a working day.

4. The system uses a conditional resolution formula CM FM RESOLVE ENT that resolves if it is a working day and doesn't resolve if it is a rest day.

   No further conditions are required before the entitlement is resolved for all other leave types.

5. Although the entitlement setup for all other leave types is identical, each leave type has its own set of accumulators.

   The entitlement formulas OLV FM ENT or OLV FM MARR ENT pay one or half-days of entitlement, which are then resolved whenever the absence occurs. All accumulator periods are YTD accumulators and begin to accumulate from the employee's hire date.

6. The takes for each of the other leave types use the day formula CM FM TKE UNIT to determine whether the absence date requires entitlement.

   Only the date CM DT PROBATION is used to specify the eligibility date for marriage leave.