{"id":8654,"date":"2022-03-02T15:41:01","date_gmt":"2022-03-02T07:41:01","guid":{"rendered":"https:\/\/www.workstem.com\/?p=8654"},"modified":"2024-11-04T14:57:41","modified_gmt":"2024-11-04T06:57:41","slug":"how-paid-annual-leave-should-be-calculated","status":"publish","type":"post","link":"https:\/\/www.workstem.com\/hk\/en\/blog\/how-paid-annual-leave-should-be-calculated\/","title":{"rendered":"How Paid Annual Leave Should Be Calculated?"},"content":{"rendered":"\r\n

365 days a year that we all clearly know, employee does need time off, but not happy with only a weekend. How we can motivate their efficiency by offering them Annual Leave and Statutory\/Public Leave together, to enjoy a long vacation to recharge to back to work. Paid Annual Leave is part of the compensation, what should we be aware of?<\/p>\r\n\r\n

How many days of paid annual leave are there in a year?<\/h2>\r\n\r\n

According to the Employment Ordinance, employees who have been employed under a continuous contract<\/a> <\/span>for 12 months are entitled to annual leave with pay. An employee’s entitlement to paid annual leave increases progressively from seven days to a maximum of 14 days according to his length of service. Please refer to the table of “Annual Leave Entitlements” below.\u00a0<\/p>\r\n\r\n\r\n\r\n

\r\n
\"Annual<\/figure>\r\n<\/div>\r\n\r\n\r\n\r\n

*An employer who does not allow employees to take annual leave is liable to prosecution and, upon conviction, to a fine of HK$50,000.<\/em><\/p>\r\n\r\n

How to approve an employee’s application for paid annual leave?<\/h2>\r\n\r\n

As one of the employee benefits, applying for paid annual leave<\/a><\/span> may seem like there are no other additional rules, however, it is not. More specifically, the number of days off is determined by the total number of paid annual leave:<\/p>\r\n\r\n\r\n\r\n

*An employee shall take the paid annual leave to which he is entitled within the following period of 12 months.*\u00a0<\/strong><\/p>\r\n\r\n\r\n\r\n

The time of the leave should be appointed by the employer after consultation with the employee or his representative, confirmed by written notice to the employee at least 14 days in advance unless a shorter period has been mutually agreed.<\/p>\r\n\r\n\r\n\r\n

*If an employee has not been employed for 12 months in the common leave year, the employer should calculate his leave entitlement on a pro-rata basis.<\/p>\r\n\r\n\r\n\r\n

Paid annual leave should be granted for an unbroken period. If the employee so requests, it may be granted in the following manner:<\/p>\r\n\r\n\r\n\r\n

\r\n\r\n\r\n\r\n\r\n
Leave entitlement not exceeding 10 days\u00a0<\/td>\r\nup to 3 days can be granted separately; the balance should be granted consecutively<\/td>\r\n<\/tr>\r\n
Leave entitlement exceeding 10 days<\/td>\r\nat least 7 days should be granted consecutively<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/figure>\r\n\r\n

Restriction on Pay in lieu of Leave<\/h2>\r\n\r\n

According to the Employment Ordinance, regardless of whether an employee is entitled to holiday pay, an employer should grant his employee a statutory holiday, or arrange an \u201calternative holiday\u201d or \u201csubstituted holiday\u201d. An employer must not make any form of payment to the employee in lieu of granting a holiday. In other words, \u201cbuy-out\u201d of a holiday is not allowed. However, An employee may choose to accept payment in lieu of the part of his leave entitlement that exceeds 10 days.<\/p>\r\n\r\n\r\n\r\n

Example: An employee who is entitled to 12 days of paid annual leave may choose to take only 10 days of paid annual leave and accept payment from the employer in lieu of 2 days of annual leave.<\/p>\r\n\r\n

How to calculate if paid annual leave is converted into payment?<\/h2>\r\n\r\n

The daily rate of annual leave pay is a sum equivalent to the average daily wages earned by an employee in the 12-month period preceding the following specified dates.<\/p>\r\n\r\n\r\n\r\n

\r\n\r\n\r\n\r\n\r\n\r\n
Day(s) of Annual Leave<\/td>\r\nSpecified Dates<\/td>\r\n<\/tr>\r\n
1 day<\/td>\r\nDay of the annual leave<\/td>\r\n<\/tr>\r\n
More than 1 consecutive day<\/td>\r\nFirst day of the annual leave<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/figure>\r\n\r\n\r\n\r\n

NOTE: <\/strong>In calculating the average daily wages, an employer has to exclude<\/p>\r\n\r\n\r\n\r\n

(i) the periods for which an employee is not paid his wages or full wages, including rest day, statutory holiday, annual leave, sickness day, maternity leave, paternity leave, sick leave due to work injuries, or leave taken with the agreement of the employer, and any normal working day on which the employee is not provided by the employer with work; together with (ii) the sum paid to the employee for such periods.<\/p>\r\n\r\n\r\n\r\n

If an employee is employed for less than 12 months<\/strong>, the calculation shall be based on the shorter period, which also depends on the company’s usual practice. Annual leave pay should be paid to the employee not later than the normal payday after the period of annual leave taken.<\/p>\r\n\r\n

How is the remaining paid annual leave calculated when an employee leaves the company?<\/h2>\r\n\r\n

In any case, if an employee resigns after passing the probationary period, even if he\/she has not worked for one year, the employee will save some paid annual leave that has been not taken yet, and the number of annual leave days is calculated as follows:<\/p>\r\n\r\n\r\n\r\n

\r\n
\"paid
\r\n\r\n<\/figure>\r\n<\/div>\r\n\r\n\r\n\r\n

Calculation of Annual Leave Pay on Termination of Employment Contract:<\/strong><\/p>\r\n\r\n\r\n\r\n\r\n\r\n

* This refers to any untaken annual accrued in the previous leave year.<\/em><\/p>\r\n\r\n\r\n\r\n

Example:<\/strong><\/p>\r\n\r\n\r\n\r\n

Calculate 7-day annual leave pay<\/strong><\/p>\r\n\r\n\r\n\r\n

Assumption<\/strong><\/p>\r\n\r\n\r\n\r\n