Administering the Minimum Wage Ordinance

This chapter provides an understanding section on the minimum wage ordinance and discusses how to implement the minimum wage ordinance.

Click to jump to parent topicUnderstanding the Minimum Wage Ordinance

The Minimum Wage Ordinance (MWO) aims to establish a Statutory Minimum Wage (SMW) regime which strikes an appropriate balance between forestalling excessively low wages and minimizing the loss of low-paid jobs while sustaining Hong Kong’s economic growth and competitiveness.

The SMW rate becomes effective the first of May 2011. The initial SMW rate has been set at 28 HKD per hour.

PeopleSoft HCM Global Payroll for Hong Kong is providing the resolution to comply with MWO.

Click to jump to parent topicImplementing the Minimum Wage Ordinance

This section discusses how to:

Note. The pages shown is this chapter are documented in the PeopleSoft Global Payroll 9.1 PeopleBook.

Click to jump to top of pageClick to jump to parent topicDefining Applicable Payees and Pay Groups

This section discusses how to:

Tracking the Applicable Attribution on the Payee or Pay Group Level

PeopleSoft delivers a variable element (MW VR SMW CHECK). To track the applicable attribution on the payee level or the pay group level. access the Variable Name page (Set Up HRMS, Product Related, Global Payroll & Absence Management, Elements, Supporting Elements, Variables, Definition).

Definition page showing the definition for the SMW Eligibility Check element

The system sets the default for the Value field to Y for MW VR SMW CHECK.

Excluding the Whole Pay Group from the SMW Calculation

To exclude the whole pay group from the SMW calculation on the pay group level, access the Supporting Element Overrides page (Set Up HRMS, Product Related, Global Payroll & Absence Management, Framework, Organizational, Pay Groups, Supporting Element Overrides).

Supporting Element Overrides page showing an override for the MW VR SMW CHECK element

Enter N in the Character Value field for MW VR SMW CHECK element.

Overriding the Value on the Payee Level

To override the value for the MW VR SMW CHECK element on the payee level, access the Supporting Elements page (Global Payroll & Absence Management, Payee Data, Create Overrides, Supporting Elements).

Supporting Elements page showing the override for an employee

Enter N in the Character Valuefield for the MW VR SMW CHECK element on the payee level.

Click to jump to top of pageClick to jump to parent topicCounting Total Hours Worked

The system counts the total hours worked based on the schedule. The system automatically counts rest days and excludes these hours from the total hours worked. The system also counts off schedule and public holidays, but these hours are not counted for HKG statutory holidays.

Defining the Schedule ID for a Pay Group

To define the schedule ID for a pay group, access the Definition and Schedule Shifts pages (Set Up HRMS, Product Related, Global Payroll & Absence Management, Schedules, Definitions).

Definition page showing an Elapsed 8 Hour Day Definition schedule

Schedule Shifts page showing the shift details for the Elapsed 8 Hour Day Definition schedule

Use these pages to define the schedule ID for a pay group. Payees in the pay group can have the default schedule. You can use this schedule to capture the default working hours.

Overriding and Adjusting Hours for Payees

To override or adjust hours:

Click to jump to top of pageClick to jump to parent topicDefining Wages Payable to Employees

To track the wages that are used by the system to pay employees, PeopleSoft provides these two accumulators:

Access the Members page (Set Up HRMS, Product Related, Global Payroll & Absence Management, Elements, Supporting Elements, Accumulators, Members).

Members page displaying the members for the Segment Wages for SMW element

PeopleSoft delivers the MW AC TOT WAGES and MW AC TOT SEG WAGE accumulators with some earnings as sample data. You can add or delete any earning elements as needed.

Note. Adjustment for Payment for Rest Days

Some earnings include payment for the rest days. The payment for rest days has to be excluded from the wage. To exclude the payment for rest days from the accumulator for Total Wages, use the variable, MW VR ADJ WAGES.

Click to jump to top of pageClick to jump to parent topicCalculating Minimum Wage

To calculate minimum wage, PeopleSoft delivers the MW VR RATE variable element. The initial SMW rate has been set at 28 HKD per hour. This minimum wage rate is expected to be reviewed once every two years.

To change the rate, access the Definition page (Set Up HRMS, Product Related, Global Payroll & Absence Management, Elements, Supporting Elements, Variables, Definition).

Definition page showing the minimum wage set to 28 HKD

Once a new SMW rate is announced, PeopleSoft will not provide any new solutions. You need to insert a new row on the Definition page, then enter the new rate value for the MW VR RATE element.

As of the 1st of May 2011 minimum wage for payees is calculated using this formula:

Minimum Wage = Total Hours Worked * SMW Rate (28 HKD)

Click to jump to top of pageClick to jump to parent topicPaying Additional Remuneration

In determining whether the wages meet the minimum wage, the system considers the following factors:

  1. Minimum wage

  2. Wages payable

  3. Additional Remuneration

If 2 is NOT less than 1, the minimum wage requirement is met.

If 2 is less than 1, the employer has to pay additional remuneration.

Additional Remuneration = Minimum Wage – Wages Payable,

Note. To implement the minimum wage ordinance, PeopleSoft added a new earning called ADD REMUN (SMW Additional Remuneration). To access the Earnings component go to Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Earnings.

Minimum Wage Calculation Example

Assume that the following employment terms exist according to the contract of employment:

Calculation

  1. Minimum wage for the month is 6,048 HKD (216 hours multiplied by 28 HKD)

  2. Wages payable to the employee for this month is 6,097 HKD.

    Rest day pay for the month is 903 HKD. Rest day pay is the payment made to the employee for time that is not worked. Rest day pay for 4 Sundays is 7,000 HKD divided by 31 days multiplied by 4 days = 903 HKD.

For illustration purpose, figures are rounded to the nearest integers in these examples. Since 2 is not less than 1, the minimum wage requirement is met.

Retroactive Payments and Segmentations

Here is some additional information for retroactive payments and segmentations:

Click to jump to top of pageClick to jump to parent topicExporting the Total Hours of Work

You can use Query Manager to extract a record of total hours of work for each payee.