The Employment (Amendment) Ordinance Sept 2007. © 2007 ORACLE CORPORATION 2 Objective of the Amendment Ensure all components of “wages” as defined under

The Employment (Amendment) Ordinance The Employment (Amendment) Ordinance Sept 2007Sept 2007

2© 2007 ORACLE CORPORATION© 2007 ORACLE CORPORATION

Objective of the AmendmentObjective of the AmendmentObjective of the AmendmentObjective of the Amendment

• Ensure all components of “wages” as defined under the Employment Ordinance (including commissions and allowances) are included in the calculation of “relevant statutory entitlements”.

• Standardise the calculation of all relevant statutory entitlements based on the employee’s average monthly or average daily wages earned on the preceding 12 months that gives rise to the statutory payments.

• Effective Date: 13 July, 2007


Relevant Statutory EntitlementsRelevant Statutory EntitlementsRelevant Statutory EntitlementsRelevant Statutory Entitlements

• Statutory Holiday Pay (12 days)

• Annual Leave Pay :

- Basic legal required entitlements from 7-14 days depending years of service

• Payments in lieu of notice

• Sickness Allowance: = or > 4 consecutive days

• Maternity Leave Pay


Definition of WagesDefinition of WagesDefinition of WagesDefinition of Wages

•Commission (Sales) •Overtime Payment (Support )•Allowances :

• Housing allowance• Overseas allowance• Transportation allowance• Car allowance.

•Targeted Bonus

(Presales, OU, Consulting)•Staff Referral Bonus

•Discretionary Bonus (GBP)•Staff Award Bonus•Payment on reimbursement basis

• Wages means all remuneration, earnings, allowances, attendance bonus, commissions, overtime pay, tip and service charges

Applicable to Oracle Not Applicable to Oracle


Example (1)- Calculating Annual Leave / Example (1)- Calculating Annual Leave / Statutory Holiday PaymentStatutory Holiday PaymentExample (1)- Calculating Annual Leave / Example (1)- Calculating Annual Leave / Statutory Holiday PaymentStatutory Holiday Payment

Steven, Account Manager, has taken one day annual leave in Jan, 08. His payment

during leave period is calculated as follows:

Component of Wages from Jan to Dec 07• Monthly Basic Salary: $42,500/month• Commission: $510,000 (assume 100% achievement of target)• Comp. Plan: 50:50

Calculation under new practice

Annual Income (including annual basic

Salary + commission payment in last 12

months) / yearly calendar days X no. of

days of AL

Annual Leave payment

= $1,020,000/365 X 1

= $2,794

Calculation under previous practice

Full month basic pay / monthly calendar

days X no. of days of AL


=$42,500 / 31 X 1

=$1,370

+104%

+$1,424



Annual Income (including basic

salary + commission payment in

last 12 months) = $1,020,000

One-month wages in lieu of notice

= $1,020,000/12

= $85,000



= Last month salary

=$42,500

Example (2)- Calculating 1-month wages Example (2)- Calculating 1-month wages in lieu of notice in lieu of notice Example (2)- Calculating 1-month wages Example (2)- Calculating 1-month wages in lieu of notice in lieu of notice

+100%

+$42500


Example (3)- Calculating Annual Leave / Example (3)- Calculating Annual Leave / Statutory Holiday PaymentStatutory Holiday PaymentExample (3)- Calculating Annual Leave / Example (3)- Calculating Annual Leave / Statutory Holiday PaymentStatutory Holiday Payment

Mark, Senior Sales Consultant, has taken one day annual leave in Jan, 08. His

payment during leave period is calculated as follows:

Component of Wages from Jan to Dec 07• Monthly Basic Salary: $42,500/month• Presales Bonus: $218,571 (assume 100% achievement of target)• Comp. Plan: 70:30


Annual Income (including annual basic

Salary + bonus payment in last 12

months) / yearly calendar days X no. of

days of AL


= $728,571/365 X 1

= $1,996


Full month basic pay / monthly calendar

days X no. of days of AL


=$42500 / 31 X 1

=$1,370

+46%

+$626



Annual Income (including basic

salary + bonus payment in

last 12 months) = $ 728,571


= $ 728,571 /12

= $60,714



= Last month salary

=$42,500

Example (4)- Calculating 1-month wages Example (4)- Calculating 1-month wages in lieu of notice in lieu of notice Example (4)- Calculating 1-month wages Example (4)- Calculating 1-month wages in lieu of notice in lieu of notice

+43%

+$18,214


Table of Cost Comparisons Table of Cost Comparisons Table of Cost Comparisons Table of Cost Comparisons

Comp. Plan Statutory / Annual Leave

Payment in lieu

70/30 46%↑ 43%↑

50/50 104%↑ 100%↑


Leave Entitlements ComparisonLeave Entitlements Comparison

YOS 1 2 3 4 5 6 7 8 9

Oracle HK

16 16 16 18 18 20 20 20 20

HK Legal Requirements

7 7 8 9 10 11 12 13 14


Distributions of YOS Distributions of YOS

Years of Service

Statutory Annual Leave

Requirement Total # of employees

9 yrs & above 14 527 yrs 13 228 yrs 12 276 yrs 11 95 yrs 10 114 yrs 9 253 yrs 8 18Less than 2 yrs 7 142 Total 306


Summary of Additional CostSummary of Additional Cost

Statutory Holidays Payment ( 12 days) in USD

Statutory Annual leave payment in

USD

Actual Annual leave payment in

USD

Total 1,130,872 912,223 1,659,657

Sales 519,600 394,958 744,077

Presales 181,582 159,950 275,253

Consulting 195,227 162,650 290,740

Support 89,020 66,321 127,784

OU 16,546 12,953 23,956

Others 128,897 115,391 197,847


Impacts of the AmendmentImpacts of the AmendmentImpacts of the AmendmentImpacts of the Amendment

Financial impact• Higher cost on paying the statutory entitlements (statutory holiday, annual

leave, payments in lieu of notice, etc.) for staffs with high variable pay including OT payment, allowances, commission, etc.

Administration Impact

• Record Keeping- Past 12 months records of annual leave, sick leave, maternity leave and

wage records have to kept accurately and timely

• Payroll Administration- Current payroll system can’t support the changes


Action ItemsAction ItemsAction ItemsAction Items

• Updated SMT on the changes and advise them our preparation and actions to follow

• Discussed with Finance on the EO amendments and they need a payroll system to support the changes

• Contacted Kevin Ng from HK OCS and Bird Yip for their inputs for how they advise our corporate HRMS users on this EO changes and see if any resources can be leveraged to us.

• Finance are acknowledged for the feasible short term and long term solutions from HK OCS and they will get proper approval or will contact OCS to change their current payroll system to reflect the changes by the end of this year.


Action Items – Cont’Action Items – Cont’Action Items – Cont’Action Items – Cont’

• Inform all employees on the progress of implementing the EO amendment

• Statutory holiday payment will be deferred until payroll is ready but the deadline will be end of this year.

• All changes must start to be reflected in Jan 08 payroll

• Analysis of the pros and cons on the current leave policy and submit HR recommendations to AP HR management by the end of Oct

• Educate the EO amendment and the revised leave policy to the managers and employees


Questions ????Questions ????

Documents

The Employment (Amendment) Ordinance Sept 2007. © 2007 ORACLE CORPORATION 2 Objective of the Amendment Ensure all components of “wages” as defined under