Calculating the Thirteen Month Pay
It is common in Hong Kong to pay employees an extra month of basic salary. The system pays the basic salary as of the last period of the last calendar year. The 13MTHPAY earning element is payable only on the Chinese New Year. For example, the Chinese New Year off-cycle run is during either January or February, but basic salary is paid as of December of the last calendar year.
The calculation rule is Base × Percent:
Base is set by the formula OE FM 13MTH BASE (base pay).
Percent is 100.
This section discusses the 13th month pay proration.
Proration applies to 13th month pay. The proration calculates the total days of service for the employee divided by the number of days in a calendar year.
If the hire date of the employee is before the start of the last calendar year, then no proration occurs. If the hire date of the employee is after the start of the last calendar year, proration is calculated as follows:
The following system parameters are considered in the payment calculation:
Prorated 13th month pay is paid if the permanent employee has worked fewer than twelve months. The following system parameters are considered in the payment calculation:
Factor: 100 percent of basic salary.
Salary day: December 31, 2000.
Cut off day: November 1, 2000.
Proration rule: (Service period in year) / (Calendar days in year) × basic salary.
Example 1: Receiving the Full Factor
An employee is hired on February 2, 1999. Their basic salary as of December 31, 2000 is 12000 HKD. The 13th month pay for the employee = 12000 HKD.
Example 2: Employee Joins After Cut-off Day
An employee is hired on November 1, 2000. Their basic salary as of December 31, 2000 is 20000 HKD. The 13th month pay for the employee is zero.
Example 3: Proration Rule Applied
An employee is hired on January 10, 2000. Their basic salary as of December 31, 2000 is 30000 HKD. The 13th month pay for the employee is calculated as:
(357 / 366) × 30000 = 29262.30
Note: Terminated employees are eligible for prorated 13th month pay only if they have completed their probation period.
Generation control OE GC 13MTH PAY is used to resolve the earnings based on the cut-off date. The cut-off date is entered at the pay group override level. The earnings are paid through earning assignment with begin and end dates so that they are paid once during the Chinese New Year.