What is the “713 Ordinance”?
The "713 Ordinance" refers to the Employment (Amendment) Ordinance 2007, which took effect on July 13, 2007, hence it is commonly regarded as "713". This ordinance mainly aims to safeguard the rights and benefits of employees in Hong Kong, particularly in relation to statutory holidays, annual leave, and sick leave, by setting out minimum employment standards. It ensures that employees receive fair and reasonable compensation during these periods, thereby promoting equitable treatment in the workplace. For more comprehensive information regarding the ordinance, please refer to: https://www.labour.gov.hk/eng/public/wcp/ConciseGuide/Appendix1.pdf
How to Calculate 12-Month Average Wage?
The "713 Ordinance" requires that the wage calculations for all employees must be based on the average wage over the past 12 months (Average Daily Wage). This means that regardless of whether an employee is monthly, daily, or piece rated, his relevant statutory entitlements must be calculated on the basis of his 12-month average wages.
When computing average wage, HR must exclude any periods and wages that fall under the “disregarding provisions” , which refers to special circumstances where no wages were paid or where partial wages were paid, such as during sick leave and maternity leave periods where only 4 / 5 wages shall be paid to employees.
What is Included in Statutory Entitlements？
According to the definition in the Employment (Amendment) Ordinance 2007, statutory entitlements include:
Holiday pay
Annual leave pay
Sickness allowance
Maternity leave pay
Paternity leave pay
End of Year Payment
Payment in Lieu of Notice
Further Sum (e.g. Severance Pay and Long Service Pay)
How to Effectively Handle Average Wage Over 12 Months?
Calculating the average wage can be quite complex. HR must clarify the statutory entitlements as well as the periods and wage items to be excluded. If a company completes wages manually, HR needs to consolidate and manage a huge amount of payroll-related data, such as leave and attendance records. This is particularly challenging in industries that employ a significant number of full-time and part-time workers, as they often require substantial manpower, resources and time to process payroll. This increases the risk of late payments or calculation errors, which can lead to legal violations and labor disputes.
BridgeBuilder HRMS offers a comprehensive payroll management module and provides professional payroll outsourcing services, assisting you in handling all payroll-related matters without a fuss, enhancing HR efficiency and reducing labor costs . The system is regularly updated to ensure compliance with labor laws. Additionally, BridgeBuilder HRMS provides a wide range of essential and advanced modules such as employee profile management, payroll management, time & attendance, roster planning, expense claims, overtime claims, recruitment onboarding and performance appraisal. The platform also features an employee self-service (ESS) web portal and a ESS mobile app to help alleviate HR workload while enhancing employee experience, allowing businesses to refocus on their core business and growth.
Notably, BridgeBuilder HRMS was awarded the “HR Vendors of the Year Award 2022: Best Payroll Software (Gold Award) 2022”" presented by Human Resources Online in 2022, demonstrating its undeniable strength in the field.
If you are interested in learning more about the features of BridgeBuilder HRMS or would like to schedule a free system consultation with our consultants, please feel free to contact us.
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