HR best practice: Update your HRMS with 713 Ordinance compliance

July 10, 2018

IPL HRMS understands that keeping abreast of the latest regulations and ensuring accuracy of payroll calculation have caused a headache to many HR practitioners. The good news is you can rely on today’s information technology to automate your payroll processes with precision and minimized time cost, enabling you to keep the best HR practice with various regulations, such as the 713 Ordinance, in mind and confidently take care of your employees' rights.

As we all know, the Employment Ordinance enacted in 1968 is the main piece of legislation governing conditions of employment in Hong Kong. To respond to ever-changing labor market, the benefits provided for under the Ordinance have also been substantially improved. The Employment (Amendment) Ordinance 2007 which has come into effect since July 13, 2007, thus also known as the 713 Ordinance, states that an employee's relevant statutory entitlements should be calculated on the basis of the employee's 12-month daily average wage (DAW) and its calculation should exclude those days and wages when the employee is not paid or not fully paid. These changes affect the calculation of many important statutory entitlements:

  • Holiday pay
  • Annual leave pay
  • Sickness allowance
  • Maternity leave pay
  • Paternity leave pay
  • End of year payment
  • Wages in lieu of notice

To make sure these payments are correctly and timely rendered for the rights of your employees and integrity of your business, the proper, sustainable solution is to implement the new formula of DAW calculation into your existing IPL HRMS system. A glance at the general steps:

1. Update parameters of payment codes & payroll formula

2. Input/ import last 12-month wages into the system

3. Perform steps for normal payroll cycle

4. Run DAW Utility (if applicable)

5. Verify result with standard DAW report

Click here to contact us and our experienced team of implementation and customization services can go through the whole process with you for a system adaption that fits your company's specific wage components and minimizes your HR and IT efforts.