This article will focus on
understanding one of
the main aspects that
is to be taken seriously
in processing payroll in
Hong Kong; that is, the
Mandatory Provident Fund
(MPF).
U
nder the MPF Scheme Ordinance, it is
the employer’s obligation to ensure
that each employee is enrolled in
an MPF scheme. All full time and
part time employees aged between 18 and
65 years old, who are employed under a
continuous contract for at least 60 days,
must participate in an MPF scheme. Employee
and employers are required to contribute
5% of the employee’s relevant income*.
MPF Rules and
Exemption Limits:
DEFINITION OF TERMS:
• RELEVANT INCOME: “refers to all monetary
payments paid or payable by you to
your employees, including wages,
salary, leave pay, fees, commissions,
bonuses, gratuities, perquisites or
allowances (including housing allowance
or other housing benefit), but excluding
severance payments, long service
payments, payments in lieu of notice and
compensation for occupational injuries.”
HONG KONG LEGISLATION CHANGE
The Legislative Council for Hong Kong passed the amendment
of the minimum relevant income level and the maximum
relevant income level. The minimum relevant income level
has been increased from $6,500 to $7,100 per month
(or from $78,000 to $85,200 per year) (the new level
applies to contribution periods commencing on or after
1 November 2013). The maximum relevant income level
has been increased from $25,000 to $30,000 per month
(or from $300,000 to $360,000 per year) (the new level
applies to contribution periods commencing on or after
1 June 2014). Accordingly, the maximum mandatory
contribution amount has been increased from $1,250 to
$1,500 per month (or from $15,000 to $18,000 per year)
30-DAY CONTRIBUTION PERIOD:
It means that employees are not required to
make contributions on the following criteria:
• for the first 30 days of employment and
• any incomplete payroll period that
immediately follows the 30-day period
(if the employee’s wage period is
monthly or shorter than monthly); or the
calendar month in which the 30th day
of employment falls (if the employee’s
wage period is longer than monthly).
PERMITTED PERIOD:
• In the case of a regular employee, the
first 60 days of employment within
which the employer is required to enrol
the employee into an MPF scheme;
• In the case of a casual employee, the
first 10 days of employment within
which the employer is required to enrol
the employee into an MPF scheme
CONTRIBUTION DAY :
• contribution day is on the 10th day after
the last day of a calendar month within
which the contribution period ends (or the
10th day after the last day of the month
during which the permitted period ends if
this is a later date) for regular employees;
• for casual employees, which are under
Industry Schemes, contribution day is
on the 10th day after the last day of
the contribution period, or the next day
after payment of relevant income for
the contribution period. For those under
Master Trust Schemes and Employersponsored Schemes, contribution day is
on the 10th day after the last day of
the contribution period (or the 10th day
after the last day of the contribution
period during which the permitted
period ends if this is a later date)
*
CONTRIBUTION CALCULATION RULE:
Monthly
Relevant
Income
Mandatory Contributions
Employer
Portion
Employee
Portion
Less than
$6,500
Relevant
income x 5%
No contribution
required
$6,500 to
$25,000
Relevant
income x 5%
Relevant
income x 5%
More than
$25,000
$1,250
$1,250
CAPPING RULE:
• Employee M andatory contributions are subject
to minimum capping of HKD 6,500 and
maximum capping of HKD 25,000. Employer
mandatory contributions are not subject to
minimum capping though.
• Voluntary contributions capping is at the
sole discretion of the employee/employer.
CONTRIBUTION HOLIDAY RULE
(CONTRIBUTION/PERMITTED PERIOD)
• The 60-day permitted period and 30-day
contribution period rule for CASUAL employees
in the construction and catering industries does
not apply. Contribution starts on first day of
employment.
• The employer is exempt from making the MPF
contribution if the employee terminates within
the first 60-day permitted period.
“Ignorantia legis neminem excusat or Ignorance
of the law excuses no one” which means
anyone who is oblivious of the law may not
escape the consequences for violating that
law for reason he/she is unaware of it. It is
in this premise that it is important for each
company to be adept with the labour laws.
Accolade
OCTOBER 2013
27