How Do Employers Calculate Holiday Pay for Employees?

The Mid-Autumn Festival is coming soon. Some specific industries, especially catering, hotel and other services, often face the difficulty of staff shortage and temporary payroll calculation during holidays. For employees in different forms of employment, such as full-time and part-time, do they need to be treated differently in the calculation of holiday pay? This article will guide you specifically to this question.

What is a statutory holiday?

All employees, irrespective of their length of service, are entitled to the following 13 statutory holidays :

• the first day of January
• Lunar New Year’s Day
• the second day of Lunar New Year
• the third day of Lunar New Year
• Ching Ming Festival
• Labour Day, being the first day of May
• the Birthday of the Buddha (newly added from 2022)*
• Tuen Ng Festival
• Hong Kong Special Administrative Region Establishment Day, being the first day of July
• the day following the Chinese Mid-Autumn Festival
• Chung Yeung Festival
• National Day, being the first day of October
• Chinese Winter Solstice Festival or Christmas Day (at the option of the employer)

How to calculate & when to make statutory holiday pay?

The daily rate of statutory holiday pay is equal to the average daily wage earned by an employee during the 12 months preceding the statutory holiday day or the first statutory holiday day if there are more than one statutory holiday day in succession. If the employment period of the employee is less than 12 months, the shorter period will be counted.

In calculating the average daily wages, the employer shall exclude (i) periods during which no wages or all wages are paid to the employee, including rest days, statutory holidays, annual leave, sick leave, maternity leave, paternity leave, sick leave at work or leave as agreed by the employer, and any normal working day during which no work is provided to the employee; together with (ii) payments made in respect of the period.

Employers must make statutory holiday pay to employees on the first payday after statutory holidays at the latest.

Classic Case

Example 1: Eason is a full-time marketing manager of a listed company. He joined the company on June 28th, 2020 with a monthly salary of HK$10,000 and paid on rest days. According to “the Employment Ordinance”, employees are entitled to holiday pay if they have been employed on a continuous contract for at least 3 months.

Wages earned during the 12-month period on statutory holiday: HK$120,000, including wages earned for work and holiday pays.

Leaves taken during the 12-month period: 71 days of full pay leave, including 52 rest days, 12 statutory holidays, 7 days of annual leave. Because the employee has not received less than his full salary for taking leave during the 12 months, periods and wages not to be counted are “0“.

Holiday pay based on 12-month average wages (ADW) is calculated as the average daily amount of wages earned during the 12-month period: (HK$120,000 – 0)/(365 – 0)day = HK$329

Therefore, Eason’s holiday pay on September 22nd, 2021 (the day following the Mid-Autumn Festival) is HK$329.

Example 2: Danny is a part-time intern in a chain supermarket. He started his job on September 23rd, 2020 with a daily salary of HK$500 and no pay on rest days.

Wages earned during the 12-month period on statutory holiday: HK$155,500, including:

Wage earned by working for 301 days (that is, 365 days – 52 rest days – 12 statutory holidays) , HK$150,500

10 days of statutory holiday pay, HK$5,000

Leaves taken for less than full pay during the 12 months

52 no-paid rest days

2 no-paid statutory holidays (statutory holidays within the first 3 months of employment are no-paid)

Periods and wages not to be counted

52 no-paid rest days

2 no-paid statutory holidays

(Note: The above 54 days are no-paid leaves, so no period and wages have to be excluded)

Holiday pay calculated based on the 12-month average (ADW),

The average daily wage earned during the 12 months:

(HK$155,500 – 0)/(365 – 52 – 2)day = HK$500

Therefore, Danny ’s holiday pay on September 22nd, 2021 (the day following the Mid-Autumn Festival) is HK$500.

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