Employment Disputes
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4. Wages payable to employee in respect of wage period

The definition of wages for SMW is aligned closely with that under the Employment Ordinance. Unless otherwise specified, the term “wages” in the Employment Ordinance means all remuneration, earnings, allowances including travelling allowances, attendance allowances, commission, overtime pay, tips and service charges, however designated or calculated, capable of being expressed in terms of money, payable to an employee in respect of work done or to be done, subject to certain exclusions (For the exclusions, please refer to Section 2 of the Employment Ordinance).

Since the calculation of minimum wage excludes the time that is not hours worked, payment made to the employee for any time that is not hours worked (e.g. rest day pay, holiday pay, annual leave pay, maternity leave pay, sickness allowance, etc) must not be counted as part of the wages payable to the employee.

What is the ‘wage period’?

The wage period will be the period in respect of which wages are payable to an employee for work done or to be done under his/her contract of employment. Unless provided otherwise, the period must be taken to be one month.

Example 1 (monthly-rated):

Assuming:

  • an employee with monthly salary of $7,500 has worked 24 days in a wage period of 30 days with the total number of hours worked being 204 hours
  • in this wage period, payments made to the employee for time that is not hours worked include rest day pay for 4 days ($250 per day), statutory holiday pay for 1 day ($250) and annual leave pay for 1 day ($250)
  • SMW rate: $28
  • Calculation:

    (1) Minimum wage according to the total number of hours worked for this month:

    204 hours X $28=

    $5,712

    (2) Wages payable to the employee in respect of this month:

    $7,500 - (4 X $250) - $250 - $250=

    $6,000
      → Since (2) is not less than (1), his monthly salary of $7,500 has met the minimum wage requirement.

    Example 2 (monthly-rated):

    Assuming the following employment terms of the contract of employment:

  • remuneration: $7,000 per month with paid rest days on Sundays
  • working hours:
    Monday to Saturday – 9:00 a.m. to 5:00 p.m. including 1-hour paid meal break which is regarded as hours worked as agreed between the employer and the employee. The employee is entitled to an overtime pay of $35 per hour.
  • total number of hours worked in this month: 220 hours (including 4 hours of overtime)
  • SMW rate: $28
  • Calculation:

    (1) Minimum wage according to the total number of hours worked for this month:

    220 hours X $28=

    $6,160

    (2) Wages payable to the employee in respect of this month:

    (overtime work = 4 X $35)
    (rest day pay = $7,000 ÷ 31 days X 4 rest days = $903)

    $7,000 + (4 X $35) – rest day pay of $903=

    $6,237
      → Since (2) is not less than (1), his monthly salary together with overtime pay, totalling $7,140, has met the minimum wage requirement.

    Example 3 (monthly-rated):

    Assuming the following employment terms of the contract of employment:

  • remuneration: $6,500 per month with paid rest days on Sundays
  • working hours:
    Monday to Friday – 9:00 a.m. to 5:00 p.m. excluding 1-hour meal break which is regarded as paid according to the wage calculation method all along adopted by the employer and the employee; Saturday – 9:00 a.m. to 1:00 p.m. (same daily wages for Monday to Saturday)
  • total number of hours worked in this month: 170 hours
  • SMW rate: $28
  • Calculation:

    (1) Minimum wage according to the total number of hours worked for this month:

    170 hours X $28=

    $4,760

    (2) Wages payable to the employee in respect of this month:

    (rest day pay = $6,500 ÷ 30 days X 4 days = $867)
    (payment for meal break = $6,500 ÷ 30 days ÷ 8 hours X 1 hour X 22 meal breaks = $596)

    $6,500 - rest day pay of $867- payment for meal break of $596=

    $5,037
      → Since (2) is not less than (1), his monthly salary of $6,500 has met the minimum wage requirement.

    Example 4 (monthly-rated):

    Assuming the following employment terms of the contract of employment:

  • remuneration: $6,000 per month with no-pay rest days on Sundays
  • working hours:
    6 days per week with 7 working hours per day, excluding a 1-hour no-pay meal break daily
  • total number of hours worked in this month: 189 hours (27 days X 7 hours per day)
  • SMW rate: $28
  • Calculation:

    (1) Minimum wage according to the total number of hours worked for this month:

    189 hours X $28=

    $5,292

    (2) Wages payable to the employee in respect of this month:

    $6,000

      → Since (2) is not less than (1), his monthly salary of $6,000 has met the minimum wage requirement.

    Example 5 (monthly-rated):

    Assuming the following employment terms of the contract of employment:

  • remuneration: $8,000 per month with 1 paid rest day per week
  • working hours:
    6 days per week with 12 working hours per day including 1-hour paid meal break which is regarded as hours worked as agreed between the employer and the employee
  • total number of hours worked in this month: 324 hours (27 days X 12 hours per day)
  • SMW rate: $28
  • Calculation:

    (1) Minimum wage according to the total number of hours worked for this month:

    324 hours X $28=

    $9,072

    (2) Wages payable to the employee in respect of this month:

    (rest day pay = $8,000 ÷ 31 days X 4 days = $1,032)

    $8,000 - rest day pay of $1,032=

    $6,968

    Additional remuneration:

    $2,104
      → Since (2) is less than (1), apart from paying monthly salary of $8,000, the employer has to pay additional remuneration of $2,104 ($9,072 - $6,968), i.e. 10,104 in total, to meet the minimum wage requirement.

    Example 6 (daily-rated):

    Assuming the following employment terms of the contract of employment:

  • remuneration: $250 per day, wage period is a calendar month, with no-pay rest days on Sundays
  • working hours:
    Monday to Saturday – 9:00 a.m. to 5:00 p.m. including 1-hour paid meal break
  • total number of hours worked in this month: 216 hours (27 days X 8 hours)
  • SMW rate: $28
  • Calculation:

    (1) Minimum wage according to the total number of hours worked for this month:

    216 hours X $28=

    $6,048

    (2) Wages payable to the employee in respect of this month:

    27 days X $250 per day =

    $6,750
      → Since (2) is not less than (1), his monthly salary of $6,750 has met the minimum wage requirement.

    Example 7 (piece-rated):

    Assuming the following employment terms of the contract of employment:

  • remuneration: piece-rated at $100 per piece, with no-pay meal break; wage period is a calendar month; total remuneration for this month is $5,500 ($100 X 55 pieces)
  • total number of hours worked in this month: 200.5 hours
  • SMW rate: $28
  • Calculation:

    (1) Minimum wage according to the total number of hours worked for this month:

    200.5 hours X $28=

    $5,614

    (2) Wages payable to the employee in respect of this month:

    $100 X 55 pieces =

    $5,500

    Additional remuneration:

    $114

      → Since (2) is less than (1), apart from paying wages of $5,500, the employer has to pay additional remuneration of $114 ($5,614 - $5,500), i.e. $5,614 in total, to meet the minimum wage requirement.

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