The minimum wage is a crucial system for safeguarding the fundamental rights and interests of workers. This article will delve into the definition of Hong Kong's Statutory Minimum Wage (SMW), the methods for salary settlement under the hourly-rated system, its scope of application, and the basic principles to follow when calculating minimum wage. This guide aims to provide you with a comprehensive understanding of this important labour protection.
Definition and Evolution of Minimum Wage
Minimum wage, or Statutory Minimum Wage, refers to the lowest wage standard set by a country or region through legislation. It is designed to protect the income of grassroots employees and prevent excessively low wages.
In Hong Kong, the minimum wage system is established under the Minimum Wage Ordinance and is calculated on an hourly basis. The core principle is that the wages payable to an employee in respect of any wage period, when averaged over the total number of hours worked during that period, shall not be less than the SMW rate.
Hong Kong's SMW came into force on May 1, 2011, with the initial rate set at HK$34.50 per hour. Subsequently, the rate has been adjusted. Effective from May 1, 2025, the SMW rate has been raised to HK$42.1 per hour. Concurrently, the monetary cap on the requirement for employers to keep records of the total number of hours worked by an employee has also been revised to HK$17,200 per month.
Scope of Application of Minimum Wage
The SMW has a broad scope of application, covering employees with different pay patterns and employment arrangements, including:
- Employees paid monthly, weekly, daily, hourly, or on a piece-rate basis.
- Permanent, temporary, full-time, and part-time employees, among others.
However, the following individuals are not covered by the minimum wage:
- Persons to whom the Employment Ordinance does not apply: For example, registered apprentices under the Apprenticeship Ordinance (with specific exceptions), and seamen employed on vessels registered outside Hong Kong.
- Live-in domestic workers: This refers to domestic workers (such as domestic helpers, carers, drivers, gardeners, boatmen, etc.) who dwell free of charge in the household where they are employed, irrespective of their sex, race, or nationality.
- Specified student interns and work experience students during periods of exempt student employment.
For a detailed definition of the scope of application, it is recommended to consult the official documents of the Labour Department regarding the Minimum Wage Ordinance for the most accurate information.
Basic Principles for Calculating Minimum Wage
To accurately calculate the monthly (or other periodic) salary payable to an employee under the minimum wage system, both employers and employees need to be aware of the following basic principles. The Labour Department also provides a minimum wage reference calculator to assist with calculations.
- Definition of Working Hours:
- According to the Minimum Wage Ordinance, working hours for calculating minimum wage (any part of an hour is also counted) include:
- Time when the employee is, in accordance with the contract of employment or with the agreement or at the direction of the employer, in attendance at a place of employment.
- Time when the employee is, in connection with their employment, travelling (excluding travel between their place of residence and their usual place of employment, unless the place of employment is outside Hong Kong and is not their usual place of employment).
- According to the Minimum Wage Ordinance, working hours for calculating minimum wage (any part of an hour is also counted) include:
- Treatment of Meal Times:
- If an employee, during a meal break, is on duty at the place of employment in accordance with the employment contract, or with the employer's agreement or direction, then regardless of whether work is assigned to the employee at that time, such period should be included in the working hours for minimum wage calculation.
- Conversely, if the employee's meal break does not fall under the circumstances mentioned above, then that meal break is not considered part of the working hours for minimum wage calculation.
- Furthermore, if the employment contract or mutual agreement explicitly states that meal times are part of the employee's working hours, then these meal times must be included in the minimum wage hours.
- Definition of "Wages":
- Under the Minimum Wage Ordinance, "wages" refer to all remuneration, earnings, allowances (including travel allowances, attendance allowances, commissions, overtime pay, etc.), tips, and service charges, however designated or calculated, payable in money by an employer to an employee for work done or to be done.
- However, certain items are not included as wages, for example: end-of-year payments, discretionary bonuses, and employer contributions to retirement schemes.
- Remuneration for Rest Days:
- Neither the Minimum Wage Ordinance nor the Employment Ordinance stipulates that meal times and rest days must be paid.
- Whether meal times and rest days are paid, and the method for calculating such pay, are conditions of employment to be agreed upon by the employer and employee.
Purpose and Significance of Minimum Wage
The primary objectives of establishing a minimum wage are to prevent wages from being excessively low, to protect the basic livelihood of grassroots workers, and to help reduce the unreasonable loss of low-paid jobs. For many individuals engaged in long working hours, physically demanding labour, or unpleasant work, minimum wage legislation provides a fundamental income guarantee and is crucial for their sustenance.
Enquiry Channels
For a more in-depth understanding of the details of the Minimum Wage Ordinance, you can refer to the "Concise Guide to Statutory Minimum Wage" prepared by the Labour Department. If you have any questions regarding the calculation or application of the minimum wage, you are welcome to contact the various branch offices of the Labour Relations Division of the Labour Department or call their enquiry hotline (usually available on the Labour Department's official website) for further assistance and information.
