Mr. Alan Leong Kah-kit, legislative Councilor. "If you find the guidance given to you unreasonable, impracticable or difficult to manage, contact Legislative councilors to see if we can help," says Mr. Leung.

Under the MWO, employees must not be paid below the SMW rate on the total hours worked in a wage period. It is believed that the introduction of the minimum wage will increase costs for employers, particularly in the catering and retail industry, whilst HR departments suffer great pressure on payment calculations and administrative procedures.

Al though the Labour Department has announced draft reference guidelines on the SMW for employers and employees, there is still a huge controversy over payment calculations as the number of work hours are not limited, whilst the ordinance does not specify whether employees' rest time at the workplace, employees' on-call time outside the workplace, and employees' time spent at the workplace after office hours, other than working, would constitute "hours worked".

It is worried that the vagueness in the ordinance may lead to more labour dispute cases. In addition to employees being able to bring claims in the Labour Tribunal to recover unpaid wages, employers may be fined up to HKD$350,000 and imprisoned for three years in violation of the law.

"The first one is certainly about pay calculations. As indicated i n the guidelines provided by the Labour Department, paid leaves and meal hours have to be taken out for the calculation, and the hourly rate derived accordingly is very likely to exceed $28. To fulfill the requirement, some employers have to increase the hourly wage to $33-$34 on average."

"Another problem," he continues, "is work hour tracking. For some high paying employees there's actually no need to keep the record. So, I agree that there should be exemption for special cases. However, the Labour Department makes things complicated as it asks employers to keep record for fear that there may be disputes later. Many employers find it confusing."

Job Losses?
In response to the new bill, Secretary of Labour and Welfare Matthew Cheung Kin-chung urged caution, warning that some job losses might well be inevitable once the minimum wage law comes into effect. In fact, the special arrangement in the MWO for disabled employees raises the public's concern for possible job losses, told by Mr. Leong.

According to the MWO, per sons with disabilities will have the right to choose to have their productivity assessed to determine whether
they should be remunerated at not lower than the SMW level or at a rate commensurate with their productivity. Employers may terminate the disabled employees, not restricted by the Disability Discrimination Ordinance, if their productivity cannot reach the required level.

Mr. Leong explains, "Though the provision says it is decided by the disabled employees to whether take the assessment. Some societies are still worried about the possible job losses resulted from the arrangement."

"When we look at experience in other countries like the UK and Australia, job loss is somehow inevitable. So we are now discussing with the government, and see if the government could appropriate some funds from the Community Care Fund to take care of those who lose their jobs because of the minimum wage. However, so far the government only agrees to review the MWO two years after its implementation," he adds.

For his advice to employers and HR professionals, he says, "When you find the suggestions and guidelines from the Labour Department not reasonable, please reflect your views to legislative councilors so that we can see whether there are other ways to comprehend the ordinance to make things simpler."

As it is the first time for Hong Kong to implement the minimum wage and the ordinance is not yet executed, it may be still too early to talk about the possible effect of the ordinance now. Mr. Leong believes that we still need time to find the way.

Mr. Leong points out that the most difficult job types to handle would be commission-based job, flexible hours job, such as tour guide or cabin crew. "You have to understand that there are so many jobs around. You'll probably appreciate it is difficult to legislate or to apply the new ordinance to all these different jobs. Inevitably, there has to be a period of time within reach that you try to apply these legal principles and provisions to different work types. When the data and difficulties come back, and after you have dealt with them, you gather a certain amount of precedents and from that you can analyse and really work out a solution applicable to different jobs."

At the moment, what HR people need to do is to know more about the provisions and see how these provisions can be operated at the
working level.

"When we discussed the legislation, we reviewed overseas experience for reference. The problems I mentioned before also happened in countries such as the UK, Australia and Canada. Of course, every country dealt with the problems differently as the security network in each country varies. We also haven't studied in detail how each country calculates the wage. HR people may look at the experience of their counterparts abroad for reference. They may also seek advice from HR management consultants."

"I know that some organisations are already revising their payroll systems and software to meet the SMW requirement. I believe the Labour Department will not be that strict at the beginning as it's still the first time to run it in Hong Kong," Mr. Leong says.

Ms. Julita Leung, Chairperson – Minimum Wage Taskforce, Hong Kong Institute of Human Resource Management expresses support for the minimum wage as it ensures that employees are having reasonable wages, which is in line with the Institute's belief that talent is the important asset for a company. However, with the SMW, as told by Ms. Leung, there are points that employers and HR practitioners need to take heed of.

Paid Leave Not Included
"The MWO r equi r e s pay calculation to be conducted by multiplying the total number of hours worked by the employee in the wage period. It may be quite confusing for companies which pay monthly. As the monthly salary includes paid leaves, employers need to be careful when they convert it into hourly wage. Paid leaves and public holidays need to be taken out and not to be included," Ms. Leung reminds.

She points out that some employers calculate the wage wrongly by directly dividing the monthly salary by work hour, and misunderstand that the wage exceeds $28. But the truth is they have violated the law. Ms. Leung also reminds employers to pay the additional amount of wages by the end of each month to avoid violation of the ordinance.

"I believe that the implementation of the SMW will increase the workload of HR professionals as the pay calculation is greatly affected, especially for those work irregular hours or based on commission. As I know, some organisations have bought new HR systems to deal with the change, whilst some design software in house according to the requirements. It takes time for both the systems and us to adapt to the new change," she says.

Work Hour Tracking
The MWO stipulates that employers need to clearly record the hours worked by employees whose monthly salary is of or under HK$11,500, which means organisations have to set up a timerecording system if no such system is in place.

With this requirement, Ms. Leung reminds HR people to be cautious as situations vary, and rest days including paid leave are not included in the calculation. Even when the employee's monthly salary is above $11,500, employers may still need to keep his/her record of work hours (refer to Example 2).

"HR people need to clearly specify working hours, lunch times, rest days and the usual place of employment in all employment documentation.

Whether the lunch time and rest days are paid or unpaid should also be specified." With the legislation of the minimum wage, Ms. Leung holds that it may also have impact on employment relationship. "I think people should look at human resource management from a new perspective. How can companies maintain their corporate culture and good relationship with employees without violation of the law? It needs our contemplation."

Review to Ensure Compliance

Ms. Leung reminds HR to review their employment contracts and policy to ensure compliance.

To conform to the new legislation, besides knowledge of the MWO, Ms. Leung points out that it is also important for HR people to review the Employment Ordinance to ensure compliance. "For some companies, they may not have a clear policy for over-time work. They should take this opportunity to review their policy and employment contracts to reduce the chance of misunderstanding," she says.

Implications: In this case $6,000 monthly pay is less than the minimum wage since only wages for hours worked are included in the calculation of the minimum wage requirement. An addition amount of $528 is required because MWO only requires an employer to pay no less than HK$28/hour for hours worked.

Implications: In this case $10,016.136 monthly pay is less than the cutoff of HK$11,500 per month. The employer is required to keep a record of the work hours of the employee even though the monthly salary is HK$11,500.

De spi t e the he a t ed di s cus s ion and controversy that the minimum wage has generated, it may be still too early to predict the impact of the SMW on organisations. No matter what the influences, there is no doubt that employers and HR people need to know the relevant ordinances and provisions well, and review their existing policy from time to time to ensure compliance of the law. In short, get well prepared and informed for the new change.

What's New?
With the effect of the new legislation of the minimum wage, it will definitely increase the complexity of the whole HR operation, especially in the area of HR technology.

Facial Recognition System
A developer in biometric security and intelligent video technology has just launched an infrared-based facial recognition system for enterprises to perform employee authentication with "Time & Attendance" features.

The system, calls AccuFACER TA-300, can effectively eliminate "buddy punching" through facial recognition of registered users, generate accurate employee attendance data, and prepare at tendance repor t s , addres s ing management needs arising from the implementation of the SMW effective from 1 May, 2011.

An infrared-based facial recognition system islaunched addressing management needs arising fromthe SMW.

Eliminate "Buddy Punching"
"Since the announcement of the statutory minimum wage (SMW), we have received a number of enquiries from enterprises to seek an ideal system for recording accurate attendance data and eliminating the problems of 'buddy punching' (employees inappropriately entering time and labor data for each other)," says Mr. Ian Kwan, PSP Security's President.

"Many businesses in Hong Kong are using card readers or time clocks to track employee attendance. Since card readers and time clocks cannot authenticate the user identity, 'buddy punching' is quite common."

Accurate Time & Attendance
To address these concerns, the company has applied its facial recognition expertise in developing AccuFACER TA-300, which can support up to 1,000 registered users and authenticate a user in one second. "When the SMW becomes effective on 1 May in Hong Kong, the remuneration cost might significantly increase. It is therefore important for businesses to get accurate employee attendance data."

With the facial recognition technique, TA-300 can effectively eliminate "buddy punching", minimise loss due to time card theft, and ensure employees are paid based on their actual work hours.

TA-300 also comes with the "Time & Attendance" software which enables the administrator to create an employee roster, work schedules, and output 18 kinds of employee attendance reports, whilst the iPhone App allows users to connect to TA-300 from the iPhone and iPad and perform tasks including user enrollment, system settings change and attendance data review at any time from
Internet enabled devices (e.g. computer, iPhone/iPad, or Android device).