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How should pay sick leave be accounted for? Frequently Asked Questions in Labor Law

Employers often consider issues related to paid sick leave when processing employees’ salaries. For example, under what circumstances does the labor law count as legal paid sick leave? What should employees do with sick leave while they are still on probation? Sick leave records or even important accounting data? This article briefly introduces the relevant questions:

What are the conditions for paid sick leave (sickness benefit)?

According to the current Hong Kong Labor Law “Employment Ordinance”, in fact, the “paid sick leave” generally referred to here is the “sickness allowance” issued by the company.

The fifth chapter of the Employment Ordinance of the Labor Law also states that the eligibility for sickness allowance is a precondition that the employee is employed under a continuous contract, and then the following conditions must be met:

• Sick leave for not less than 4 consecutive days;

• Sickness benefits for each day of sick leave for pregnancy-related absences as set out below;

• Be able to produce appropriate medical certificates (prenatal examinations, etc.);

• The employee has accrued sufficient paid sick leave.

What about paid sick leave during the probationary period?

Article 33 of the Employment Ordinance of the Labor Law also protects employees, if they are employed on a continuous contract for one month and work more than 18 hours per week, they can receive sickness allowances according to the regulations.

However, since the law allows employers to deal with absences by deducting wages, employees who take sick leave without passing the probationary period must ultimately be determined by the company’s policy. In fact, it is difficult to investigate whether it is illegal.

What should an employer do with an employee’s sick leave record (doctor’s certificate)?

First, a valid medical certificate will be issued by a registered medical practitioner, registered Chinese medicine practitioner, or registered dentist. On the medical certificate, the number of days the employee is unfit to work will be indicated, and the illness or injury that makes the employee unfit for work.

Employers are also required to keep records of sick leave, recording the total number of paid sick leave taken and accumulated by each employee, the sickness allowance he has received, and the date of taking paid sick leave, and finally within 7 days after the employee resumes work from sick leave Sign verification and employees have the right to view sick leave records.

How is paid sick leave calculated?

The Labor Law states that the calculation method of sick pay sick leave and sick leave allowance is 4/5 of the average daily wages received by the employee in the year preceding the “specified date” (excluding rest days, statutory holidays, and other holidays), such as the employee If it is less than one year, it shall be calculated according to the shorter period.

If it is only one day of sick leave, the “specified date” is the day of sick leave; and for consecutive sick leave of more than one day, it will be counted from the first day of sick leave, and the date of payment of sickness allowance should not be later than the normal payday.

How do I accrue paid sick leave?

The Employment Ordinance of the Labor Law states that if an employee is employed under a continuous contract and works for more than one month in the first year of employment, 2 days of paid sick leave will be accumulated, and 4 days will be accumulated for each month of service thereafter. Paid sick leave may continue to accrue throughout the employment period, but may not exceed 120 days, although other arrangements may also be included in the employment contract between the employee and the employer.

How should sick leave benefits be accounted for?

According to the “Hong Kong Financial Reporting Standards” (HKFRSs) and “Hong Kong Financial Reporting Standards for Private Enterprises” (HKFRS for PE), basically, the entry of sick leave allowance and related benefits is included in the short-term employee benefits, which can be made in accordance with the “Inland Revenue Ordinance”. Profits tax deduction, and salaries tax income also includes holiday pay or allowances.

The above information is for reference only. If you have any questions about labor law, accounting, and accounting, we welcome your inquiries.

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