| A Concise Guide to the Employment Ordinance |
| Chapter
7: End of Year Payment |
| Application |
| The provisions
concerning end of year payment apply to an employee employed under a continuous
contract who, in accordance with a term of his contract (including agreement
made orally or in writing, in express or implied term), is entitled to an
end of year payment from his employer. |
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| Definition |
| End of
year payment means any annual payment (including double pay, 13th month
payment, end of year bonus) of a contractual nature. It does not include
any payment which is of a gratuitous nature or which is payable at the discretion
of the employer. |
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| Presumption |
| For every
employment contract made after 27 June 1997, it is presumed that an annual
payment or annual bonus is not of a gratuitous nature and is not payable
only at the discretion of the employer unless a written term or condition
in the contract expresses intention to the contrary. |
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| Eligibility for End of Year Payment |
| An employee
is eligible for an end of year payment if he has been employed under a continuous
contract for a whole payment period. The payment period shall be the period
specified in the employment contract, or a lunar year if it is not specified.
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| Amount
of End of Year Payment |
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The
amount as specified in the employment contract. |
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If it is not specified, a sum equivalent to a full month's wages (for
monthly rated employees) or in any other case, 26 days' wages based
on the average daily wages earned by the employee during every complete
wage period, comprising not less than 28 days and not more than 31
days, immediately preceding or expiring on the day on which the end
of year payment becomes due. |
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| Proportion of End of Year Payment |
| An employee
is eligible for a pro rata end of year payment if he has been employed under
a continuous contract for not less than three months in a payment period
and: |
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continues
to be employed after the expiry of the payment period; or |
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is dismissed by the employer (except in cases of summary dismissal
due to the employee's serious misconduct). |
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| Any probation
period, subject to a maximum of three months, is excluded from the calculation
of the qualifying service for pro rata end of year payment. However, excluding
the probation period, if an employee has fulfilled the eligibility requirement
of the three month's employment in a payment period, then the whole employment
period(including the probation period) shall be taken into account in calculating
the pro rata end of year payment. |
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| Time of Payment |
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On
the day specified in the employment contract. |
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If a day is not specified, payment should be made on the last day
of the payment period or within seven days after that day. |
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If the employment contract is terminated before the payment period
expires and the employee is eligible for pro rata end of year payment,
payment should be made on the day the contract is terminated or within
seven days after that day. |
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If the end of year payment is to be calculated by reference to any
profits of the employer, payment should be made on the day the profits
are ascertained or within seven days after that day. |
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| Offence
and Penalties |
| An employer
who fails to pay an end of year payment to an eligible employee is liable
to prosecution and, upon conviction, to a fine of $50,000. |
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