Do employers have to pay end-of-year pay to employees? How is the partial year-end payment calculated?

At the end of the year, with the holidays approaching, many companies will offer their employees long-awaited year-end bonuses, including double pay and bonuses, which may vary depending on business and personal circumstances. However, the definition and protection of end-of-year payment in the Employment Ordinance are the same.

However, in reality, many employers or employees may only have a vague understanding of the issue of end-of-year compensation. For example, must employers pay end-of-year compensation? How should part of the year-end payment be calculated?

and many more. This article will provide answers to the relevant issues of year-end compensation.

Do employers have to pay end-of-year payments?

Although there is no express provision in the Employment Ordinance that employers must pay employees year-end remuneration, including double pay (the 13th monthly pay) and bonuses, employers should also pay according to the terms of the employment contract. agreement to decide whether to pay end-of-year compensation to employees.

If the employer and the employee have a mutual agreement on the year-end payment (no oral or written, express or implied, or other agreements), the employer must perform the year-end payment in accordance with the terms and conditions and pay the employee the year-end payment.

If I resign during the payment period, how is the year-end payment calculated?

Once the employee chooses to terminate the employment contract before the end of the gratuity period (specified in the employment contract, or the lunar year if not specified), or during the gratuity period, the employee will not be entitled to the pro-rata calculation in the absence of a clause. Year-end remuneration.

However, if it is stipulated in the employment contract that an employee who is employed under a continuous contract has worked for one payment period, or his employment contract is terminated after 3 months of employment, the employee can receive pro rata end-of-year payment, subject to the following: condition:

• the employee continues to be employed after the gratuity period has expired;

• Employee dismissed by employer (but not summarily dismissed for gross negligence).

How is the partial year-end payment calculated?

If the employment contract stipulates how to calculate the percentage of end-of-year remuneration, it only needs to be calculated according to the specified percentage; but if it is not specified, it can generally be calculated according to the following formula:

Average monthly salary × (employment period (including probationary period) during the gratuity period / gratuity period)

When calculating the average monthly wages, any rest days, statutory holidays, paid annual leave, sick leave, maternity/paternity leave or leave agreed by both parties, etc. taken by the employee will not be counted if the employer has not paid the full wages.

If you think that the above method cannot be used to calculate the average monthly salary, you can calculate the average monthly salary by referring to the immediate year-end payment (or part of the year-end payment) of a person employed by the same employer and doing the same job.

If the employee has fixed overtime pay, it should also be included in the calculation of wages when calculating part of the year-end pay.

How are probationary employees calculated?

If there is a probationary period specified in the employment contract, the first 3 months of the probationary period should not be included in the calculation of the employee’s eligibility for part of the year-end payment.

However, if the employee still complies with the requirement of “employment during the gratuity period of not less than 3 months” after deducting the probationary period, the employer shall calculate the whole period of employment together with the probationary period when calculating the pro-rata year-end gratuity. inside.

The above information is for reference only. If you have any questions about year-end compensation, labor laws, the Employment Ordinance, or accounting, we welcome your enquiries.