Understanding labour costs & minimum wage in Hong Kong.

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Understanding labour costs & minimum wage in Hong Kong

The minimum wage is the lowest wage allowed by the law, and the Minimum Wage Ordinance governs the minimum wage in Hong Kong. We have put together an overview of the minimum wage in Hong Kong.

Let’s dive into more details.

What is considered wages in Hong Kong?

According to the Employment Ordinance, wages include the following:

  • All remuneration
  • Earnings
  • Allowances, such as travelling allowances
  • Tips
  • Commission
  • Overtime payment

Wages exclude the following:

  • The value of accommodation, fuel, water, food or education provided by the employer
  • The employer’s contribution to a retirement scheme
  • Bonus payments, end of year payments and gratuity payments

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What is the statutory minimum wage in Hong Kong?

Hong Kong’s Minimum Wage Ordinance established a Statutory Minimum Wage (SMW) legislation to set a wage floor and protect employees with low-paid jobs and maintain Hong Kong’s economic growth.

The minimum hourly wage for 2021 in Hong Kong is HKD 37.50.

The average working week in Hong Kong is 44 hours, which the minimum monthly wage is approximately HKD 7,425.

The current SMW will remain the same until 30 April 2023, and a review by the Minimum Wage Commission will be conducted in October 2022.

How to calculate the minimum monthly wage?

The monthly minimum wage is calculated by multiplying the total number of hours that the employee worked by the minimum hourly wage rate.

What factors determine the statutory minimum wage?

To determine the SMW rate, there are certain factors that should be considered, which are:

  • General economic conditions
  • Labour market conditions
  • Social inclusion
  • The public and stakeholder’s views

Who is protected by the statutory minimum wage in Hong Kong?

The SMW legislation applies to all employees, which include:

  • Employed under any type of wage payment period:
    • Monthly-rated
    • Weekly-rated
    • Daily rated
    • Hourly-rated
    • Piece-rated
  • Employed under any type of employment contract:
    • Permanent
    • Full-time
    • Part-time
    • Casual

Can an employee’s wage be less than the minimum wage?

It is important that employers know that the Minimum Wages Ordinance does not allow for employers to pay employees less than the minimum wage.

If wages paid to an employee are less than the minimum wage, the employee is entitled to receive the additional remuneration so that the wage will not be less than the minimum wage.

Penalties for paying less than the minimum wage

According to the Employment Ordinance, an employer who fails to pay minimum wages and fails to pay wages to an employee when it is due will be liable to a fine of HKD 350,000 and imprisonment for three years.

Conclusion

Employers must pay employees’ salaries according to the statutory minimum wage as set out by the Minimum Wage Commission. The current minimum wage in Hong Kong is HKD 37.50 per hour. If you have any further enquiries, do not hesitate to contact Acclime.

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