Employers and employees are often conflicted over sick leave and annual leave arrangements. Employers may not know how to deal with payroll issues, especially when employees are absent from work due to mandatory quarantine. Should employers allow staff to take full pay, ⅘ pay, or no pay leave for such circumstance? It’s not worthwhile if both sides end up in court due to wrong leave pay calculation.
What is sick leave allowance?
The daily amount of sick leave allowance is equal to ⅘ of the average daily wage (ADW) earned by the employee during the 12 months preceding the day of sick leave or the first day of sick leave if the number of sick days is more than one consecutive day. If the employment period of the employee is less than 12 months, the shorter period will be counted.
How exactly should sick leave allowance be calculated? When will it be paid?
In calculating the average daily wage, 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, work injury leave 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.
Sick leave allowance shall be paid to employees not later than normal pay day.
How to accumulate paid sick leave?
An employee is employed on a continuous contract (Ordinance 418) and will accrue 2 paid sick leave days for every month of service completed during the initial 12 months of employment; After that, 4 days can be accumulated for each month of service. Paid sick leave may continue to accrue throughout employment, but not exceeding 120 days at any time.
In Workstem, you can do it all in just a few simple steps, helping you to easily calculate your continuous sick leave.
Example 1: Lucy is an OL of one of the world’s top 500 companies with a monthly salary of HK$15,000. One day in June 2021, she sprained her foot in an accident and needed hospital treatment. Assuming that Lucy has to apply for sick leave from June 5th to June 8th (Saturday to Tuesday). According to the regulation of the Employment Ordinance, based on June 5th and June 6th (Saturday, Sunday) is paid day-off, Lucy only applies to the employer for sick leave from June 7th to June 8th, which is less than 4 days and not eligible for sickness allowance. Therefore, Lucy can get full pay on Saturday and Sunday, and no pay on Monday and Tuesday. If Lucy does not apply for other leave in June, her salary for June will be calculated as follows:
Deduct the salary for two days of unpaid leave,
The actual salary is: HK$15,000-HK$1,000=HK$14,000
Example 2: Chris works as a tallyman in a chain supermarket with a monthly salary of HK$10,000. One day in April 2021, he had a fever without cause and needed to be hospitalized for observation. Assuming that Chris needs to apply for sick leave from April 17th to April 21st (Saturday to Wednesday). According to the regulation of the Employment Ordinance and Chris’s schedule for the month, April 17th and April 18th (Saturday and Sunday) are normal working days and eligible for sickness allowance, i.e. his sick leave days are more than 4 days. So his salary from April 17th to April 21st is calculated as follows:
Salary of ⅘ paid sick leave (5 days): HK$10,000/30*5*4/5=HK$1,333.33
Example 3: Selina works as a marketing specialist in a foreign company with a monthly salary of HK$10,000. During the 12-month period of the first-day sick leave, she earns HK$120,000 in total, including salary earned from work and holiday payment.
Leaves taken within the 12-month period: 71 days of full-pay leave, including 52 rest days, 12 statutory holidays, and 7 days of annual leave. Periods and amounts not to be counted because the employee has not been paid less than her full salary for taking leave during the 12 months. The periods and amounts to be excluded are “0”.
The sick leave allowance based on the 12-month average daily wage (ADW) is as follows:
12-month average daily wage (ADW): (HK$120,000-0)/(365-0) day=HK$329
4-day sick leave allowance: HK$329 × (⅘) × 4 days = HK$1,053
Workstem is committed to providing employers with personalized choices that cater to the diverse needs of employees. Sick leave intelligent approval + sick leave allowance calculation, We can help you with all the details! Click on the link below now to experience a 14-day one-stop HR system free trial!