[Tips for Employer’s Contribution to MPF] How to Calculate MPF for Non Monthly-Paid Employees? Which Employees are Covered by MPF Schemes? | Reap

[Tips for Employer’s Contribution to MPF] How to Calculate MPF for Non Monthly-Paid Employees? Which Employees are Covered by MPF Schemes?

Jenny

6 min read

Under the mechanism of Mandatory Provident Fund (MPF), employers are legally obliged to enrol newly-recruited employees in the MPF Schemes of the employers’ choice. Most, if not all employers might have different questions on this. How to calculate MPF for part-time employees? Which employees are covered by MPF schemes? What are the differences between the schemes on the market? Reap has compiled different information for you, so that employers can better understand their responsibility in MPF contribution.

  1. Employers’ Responsibility in MPF Contribution
  2. How to calculate MPF for Part Time/Non-Monthly Paid Employees
  3. Which types of employees need to get enrolled in MPF?
  4. What is a "contribution holiday"?
  5. Industry Schemes
  6. Master Trust Schemes
  7. Summary

Employers’ Responsibility in MPF Contribution

It is under the law of Hong Kong that both the employee and the employer are obliged to contribute 5% of the employee's relevant income (including any wages, salaries, leave allowances, fees, commissions, bonuses, gratuities, contractual remunerations, perquisites or allowances; while excluding severance payment of long service payment under the Employment Ordinance) to an MPF account on a regular basis, subject to a minimum and maximum level of relevant income.

For a monthly-paid employee, if his monthly relevant income is less than HKD 7,100, no contribution is required but the employer is required to pay 5% of the monthly salary as MPF contribution. If the monthly relevant income is more than HKD 30,000, the employer and the employee should each pay HKD 1,500 as the mandatory contribution.

Monthly Relevant Income (HKD)

Employer's Contribution (HKD)

Employee's Contribution (HKD)

< 7,100

5% of Relevant Income

Not Required

7,100 - 30,000

5% of Relevant Income

5% of Relevant Income

> 30,000

1,500

1,500


The employer must issue a contribution record to the employee within seven working days after the contribution is made, stating the employee's relevant income, employer's contribution (mandatory and voluntary), the employee's contribution (mandatory and voluntary) and the contribution date. If an employer fails to issue a contribution record to an employee, the maximum penalty is a fine of HKD10,000 for the first offense and the fine will be doubled for a second offense!

How to calculate MPF for Part-Time/Non-Monthly Paid Employees

How do employers calculate MPF for part-time/temporary employees? It is actually very simple! First of all, you need to know how to define eligible part-time employees.

  1. 18 to 64 years old
  2. Absence from work for at least 60 days (including Saturdays, Sundays and public holidays during the employment period, not actual working days)
  3. Full-time and part-time employment (including summer jobs, interns, part-time and contract staff)
  4. 60 days of employment where he/she will make a significant and hourly contribution to the labour force (the "60-day" rule is not applicable to the construction and catering industries. If you are a temporary employee in the construction or catering industries, i.e., employed on a daily basis or for less than 60 days, your employer must also enrol you in an MPF scheme and make contributions for you).

So, how should we calculate the MPF for part-time employees? We can divide the calculation into i) monthly payroll and ii) non-monthly payroll.

I) Monthly Payroll

Generally speaking, the employer should calculate the contribution in the same way as the full-time employee’s contribution -

Monthly Relevant Income (HKD)

Employer's Contribution (HKD)

Employee's Contribution (HKD)

< 7,100

5% of Relevant Income

Not Required

7,100 - 30,000

5% of Relevant Income

5% of Relevant Income

> 30,000

1,500

1,500

Example 1
Mary works part-time in a logistics company and earns HKD 8,300 per month. The breakdown of her MPF calculation is tabulated below - 

Monthly Relevant Income (HKD)

Employer's Contribution (HKD)

Employee's Contribution (HKD)

8300 x 5% = 415

8300 x 5% = 415

830

II) Non-Monthly Payroll

Part-time employees are normally paid on a daily, weekly or bi-weekly basis, which is shorter than a month. Thus, the employer must first calculate the threshold and ceiling of income for the payment period by using the range of HKD 280-1,000 per day to determine the amount of contribution. For example, for weekly payroll, the maximum amount of relevant income is HKD 7,000 (HKD 1,000 x 7 days) and the minimum amount of relevant income is HKD 1,960 (HKD 280 x 7 days) for a 7-day week. Based on the upper and lower limits of relevant income, the contribution arrangements for employers and employees are as follows -

Employee's 1-week

Relevant Income (HKD)

Employer's Contribution (HKD)

Employee's Contribution (HKD)

< 1,960
(< 280 x 7 days)

5% of Relevant Income

Not Required

1,960 - 7,000

(280 - 1,000 x 7 days)

5% of Relevant Income

5% of Relevant Income

> 7,000

350

350

It is worth noting that, according to the MPF Schemes Authority (MPFA), if a part-time employee's relevant income exceeds HKD 7,000 per week, the employer needs to make a fixed contribution of HKD 350; if the relevant income is less than HKD 7,000, it will be calculated by 5% of the employee’s actual salary.

Example 2

Peter works as a security guard at a shopping mall on Fridays, Saturdays and Sundays, where his salary is HKD 300 on Fridays and HKD 350 on Saturdays and Sundays. The security company pays Peter on a weekly basis, i.e., Peter's weekly salary is HKD 1,000. Since his weekly relevant income is HKD 1,000, he doesn’t need to make a mandatory contribution, whereas his employer's contribution is HKD 1,000 x 5% = 50 per week.

Peter’s Weekly

Relevant Income (HKD)

Employer's Contribution (HKD)

Employee's Contribution (HKD)

300 + 350 x 2 = 1,000

1000 x 5% = 50

Not Required

(< 1,960, the weekly threshold)

Example 3

Annie is a part-time employee of a company and works three days a week on Mondays, Wednesdays and Fridays at a daily rate of HKD 350 under weekly-pay, and her weekly relevant income is HKD 350 x 3 = HKD 1,050. According to the guidelines from MPFA, the weekly threshold is HKD 1,960, within which Annie’s relevant income falls. Thus, she does not have to contribute, but her employer needs to contribute for HKD 1,050 x 5% = HKD 52.5.

Annie’s Weekly

Relevant Income (HKD)

Employer's Contribution (HKD)

Employee's Contribution (HKD)

350 x 3 = 1,050

1050 x 5% = 52.5

Not Required

(< 1,960, the weekly threshold)

Note:
Employees are entitled to a “contribution holiday” upon employment and are not required to contribute for the first 30 days of employment and the first incomplete contribution period thereafter. For example, if an employee is paid monthly, if he/she starts working on January 20, 5% of his/her income for January and February will not be deducted as contribution. However, the employer does not have a “contribution holiday” and must make the employer's portion of contribution from the employee's first day of work.

Which types of employees need to get enrolled in MPF?

Except for exempt persons, employers should arrange for full-time and part-time employees aged 18 to 64 who have been employed for 60 days or more to enrol in an MPF plan within the first 60 days of employment. (60 calendar days, including holidays, from the date of employment to maintain the employment relationship, not the number of working days from the date of employment) The employer must provide the employee with the enrolment form of the MPF scheme in which he/she is enrolled.

Exempt persons include employees and self-employed persons who are under 18 years of age or at the age of 65

What is a "contribution holiday"?

A contribution holiday means that the employee is not required to make contributions for the first 30 days of employment and the first partial pay period immediately following the 30-day contribution holiday (if the employee's pay period is monthly or shorter), but the employer's portion of the contributions must be calculated from the employee's first day of work. To put it simply, the employee does not have to contribute to the MPF during the first 30 days of employment and the first incomplete pay period. The full pay period is from the 1st to the 30th/31st day of the month.

For example, Leo joins the company on April 15, 2021 for a three-month probationary period, with the payday being the last day of the month. The employer must enrol Leo in an MPF scheme on or before the 60th day of any employment (i.e., June 15, 2021), and for the sake of calculating the employer’s portion of the contributions, the calculation must begin on the first day of Leo's employment (i.e., April 15, 2021) and be made on or before the 10th day of the month following the 60th day of Leo's employment (i.e., June 25, 2021), as the first employer’s portion of the contribution.

Industry Schemes

The Industry Schemes are designed for temporary employees (i.e., employed on a day-to-day basis or for a period of less than 60 days) in the catering or construction industries.

General employees (i.e., non-temporary employees) in the catering or construction industries may also participate in the Schemes and their contributions are calculated on the same basis as for other general employees. Because of the high mobility of employees in these two particular industries, many of them are "casual employees" employed on a daily basis or for less than 60 days, and their wages are usually calculated on a daily basis, industry-specific plans are therefore available to meet the specific needs of these two industries. When a casual employee changes jobs between these two industries, there is no need to change Schemes because of the change of jobs, as long as both the former and the current employers are enrolled in the same Industry Scheme.

There are currently two MPF trustees offering Industry Schemes, including BCT and BEA. For employers in the construction or catering industries, if a temporary employee does not have an account with the employer's industry scheme, you will need to enrol the employee in an MPF scheme within the first 10 days of employment. Regardless of the length of their employment, employers are still responsible for enrolling employees who are employed on a daily basis or for less than 60 days (even if they are employed for only one day).

  • Based on the employee's "average daily relevant income" during the payroll period:

    The employer must first calculate the employee's average daily relevant income for the pay period and then check the income group under the contribution standard to determine the applicable daily contribution amount.

Temporary Employee’s Contribution Standard to be followed by the Employer

Daily Relevant Income (HKD)

Employer's Contribution (HKD)

Employee's Contribution

(HKD)

Total Contribution (HKD)

< 280

10

Not Required

10

≥ 280 but < 350

15

15

30

≥ 350 but < 450

20

20

40

≥ 450 but < 550

25

25

50

≥ 550 but < 650

30

30

60

≥ 650 but <750

35

35

70

≥ 750 but < 850

40

40

80

≥ 850 but < 950

45

45

90

≥ 950*

50

50

100

* This income group includes the maximum daily relevant income level (i.e. HKD 1,000) and the maximum contribution amount (i.e. HKD 50). If the temporary employee's daily relevant income exceeds HKD 1,000, the employee and his or her employer will still each contribute HKD 50 per day.

Finally, the daily contribution amount is multiplied by the number of working days in the contribution period to calculate the total amount of contributions payable for that week or month.

  • Average Daily Relevant Income = Relevant Income Earned in the Pay Period / Number of Working Days in the Pay Period
  • Daily Contribution = Contribution Amount According to the Average Daily Relevant Income Contribution Standard
  • Total Contribution = Daily Contribution x Number of Working Days in the Pay Period

Master Trust Schemes

The most popular MPF Scheme in Hong Kong is the Master Trust Scheme, issued by 16 approved trustees, including various banks and insurance intermediaries, accounting for 90% of the total number of MPF Schemes in the market and providing nearly 440 constituent fund choices. There are currently 45 Master Trust Schemes in Hong Kong, including 253 approved constituent funds. A feature of the Schemes is that the trustees are free to allow any employer, employee or self-employed person to participate, manage and invest freely. Registered MPF Schemes and constituent funds are available on this website.

Summary

As an employer, managing the company's expenses is never an easy feat. The employer is obliged to handle different MPF contributions for each and every employee and their specific payrolls, which can destabilise the company's cash flow. With Reap, you can use your credit card to pay for your company's expenses, such as salaries, purchasing costs, rents and MPF contributions, meanwhile enjoy a repayment period of up to 58 days, as if borrowing a mini-loan with immediate and guaranteed approval-it's never been this easy to turn your cash around!