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Rather, they seek to clarify the nature of these payments when they are already provided under the contract of employment to the effect that they should be reckoned as part of an employee's wages when calculating the amounts of statutory entitlements under the Employment Ordinance.

Those statutory entitlements which are calculated on the basis of an employee's wages include wages in lieu of notice to terminate employment, severance payment, long service payment, maternity leave pay and sickness allowance (plus penal damages for wrongful termination), holiday pay, annual leave pay and end-of-year payment.

Mr Chan pointed out that while end-of-year payment (EYP) was a widespread practice in many trades in Hong Kong, disputes often arose as to whether an annual payment was of a contractual or gratuitous nature and whether the employer had any statutory obligation to pay pro-rata EYP when dismissing an employee.

To remove doubts and to further improve protection for employees, the Government proposes to make the following amendments to the EYP provisions:

to provide that any contractual annual payment shall be governed by the existing provisions on EYP, except when the employer has stipulated in writing that such payment is gratuitous and payable at his discretion; and

to reduce the qualifying service for pro-rata EYP from 26 weeks to three months, not including the first three months of any probation period, in the payment period.

End

Businessmen play leading role in economic transformation: FS

The Financial Secretary, Mr Donald Tsang, said today (Friday) that the economic transformation of Hong Kong was started and was being led by the private sector without any formal government intervention..

Speaking at a business luncheon organised by the Hong Kong Trade Development Council in Singapore, Mr Tsang said this principal of minimal intervention by government in the business sector had been the linchpin of Hong Kong's economic success.