What is double pay?
Double pay, also known as the 13th month payment, is an end-of-year payment commonly offered by employers in Hong Kong. It typically amounts to one additional month's salary paid to employees, usually before the Lunar New Year.
Whilst double pay is a well-established practice in Hong Kong's employment landscape, it's important to understand that it is not a statutory requirement under the Employment Ordinance. However, once included in an employment contract or company policy, employers are legally obligated to honour this payment.
Is double pay mandatory in Hong Kong?
Double pay is not mandated by law. Unlike statutory entitlements such as annual leave or sick leave, employers are not required by the Labour Department to provide double pay to their employees.
However, if an employment contract, offer letter or company handbook explicitly states that double pay will be provided, it becomes a contractual obligation. Failure to pay double pay when contractually promised can result in legal action, with employers potentially facing heavy fines for breach of contract.
Many Hong Kong employers offer double pay as part of their benefits package to remain competitive in the talent market and maintain employee morale during the festive season.
When is double pay paid?
Double pay is typically paid at the end of the calendar year or before the Lunar New Year. The exact timing depends on the employer's policy and what has been agreed in the employment contract.
Some companies pay double pay in December, whilst others align the payment with the Lunar New Year period in January or February. The payment timing should be clearly specified in the employment contract or company policy.
How is double pay calculated?
Double pay is generally calculated as one additional month's basic salary. The calculation typically uses the employee's current monthly salary at the time of payment.
For employees who have not completed a full year of service, double pay is usually pro-rated based on the number of months worked. For example, an employee who has worked for six months would receive half a month's salary as double pay.
It's important to note that double pay calculations may vary between employers. Some companies base it solely on basic salary, whilst others may include allowances. The specific calculation method should be outlined in the employment contract or company policy.
What is the difference between double pay and bonus?
Double pay and bonuses are often confused, but they serve different purposes and have different legal implications.
Double pay is a contractual payment that, once promised, must be paid regardless of company or individual performance. It's typically a fixed amount equivalent to one month's salary.
Annual bonuses, on the other hand, are usually discretionary payments based on company performance, individual performance or both. Bonuses are typically not guaranteed and employers have more flexibility in determining whether and how much to pay.
Some employers offer both double pay and a performance-based bonus, whilst others may offer only one or the other. Understanding which benefits are contractually guaranteed versus discretionary is important when reviewing job offers or employment contracts.
Workday's payroll solutions help Hong Kong employers manage end-of-year payments, including double pay, whilst ensuring compliance with contractual obligations and local employment practices.
Frequently asked questions.
Can an employer refuse to pay double pay?
If double pay is stated in your employment contract or company policy, your employer cannot refuse to pay it. This constitutes a breach of contract and employees can file a claim with the Labour Tribunal. However, if double pay is not mentioned in any contractual documents, the employer has no legal obligation to provide it.
Do I still get double pay if I resign?
Whether you receive double pay after resignation depends on your employment contract and company policy. Some contracts specify that employees must be employed on a certain date to qualify for double pay. If you resign before the payment date, you may forfeit your entitlement unless the contract states otherwise. It's advisable to check your specific contract terms or seek clarification from your HR department before resigning.
Is double pay taxable in Hong Kong?
Yes, double pay is considered part of your employment income and is subject to salaries tax in Hong Kong. It will be included in your total assessable income when calculating your annual tax liability. Your employer should include double pay in your year-end tax documentation.