Hong Kong statutory leave payments (annual, maternity, and sick leave) are calculated using an employee’s average daily wages over 12 months. This calculation method protects employees by preventing unfair reductions in statutory benefits.
Companies with sales-focused workforces and variable compensation structures (like commissions) should be particularly careful, as they have higher risks of Average Daily Wage calculation errors.
Would you like me to provide specific details about the calculation process?
The 12-month average wage calculation applies to all employees under the Labour Ordinance, regardless of their payment structure (monthly, daily, or piece-rated). This calculation determines payments for:
• Holiday pay
• Annual leave pay
• Sickness allowance
• Maternity leave pay
• Paternity leave pay
• End of year payment
• Payment in lieu of notice
• Compensation for unreasonable or unlawful dismissal cases
The specified dates of the relevant statutory entitlements are:
How to calculate Average Wage?
ADW = (12 Month Total Wage – Wages to be excluded) / (Number of days in the 12 month period – Number of days to be exlcuded)
ADW in NovaHR
In NovaHR, system will calculate automatically every month end after user process month-end settlement cut off.
Operation can be done easily just clicking Process Now every month. All adjustment and corresponding details calculation can check in each payslip.
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