Getting paid is probably the most exciting time for employees, but payroll could be a pain in the neck to employers and their human resources department. If you are inexperienced in payroll management, this article will be able to help.
Labour law payroll guide
Looking at the Labour Law, payroll is not as complicated as you think. Employers have to pay their employees on the closing day as written on the contract or within 7 days. The contract should list down the closing days of every working period instead of the payday so that it will be more flexible. Most of the companies will set their closing day at the end of a month so the payday will be earlier if it is a holiday or non-working day. The payday can be different every month.
In Hong Kong, most of the companies pay by banking autopay, which means transferring to employees’ bank account every month. Others ways are paying by cheque or cash. Here are some major concerns about two major ways to pay:
The reasons why most companies choose autopay are convenient, professional and that all transactions are recorded clearly. Autopay is suitable for every company while both parties have bank accounts. For example, an HSBC bank account can handle 50 autopay groups at the same time, with 200 items in each group. That’s equivalent to 10,000 employers’ payroll process. If you have are an SME with few employees, you can even use the e-banking on your smartphone to manage the transactions.
The only concern about autopay is how to operate, such as the formats of the bank account number of different banks and the estimated time used to transfer over different banks. Many employers or employees have questions about different formats for bank account numbers. Bank account numbers usually can be separated into three parts and have a little bit of a difference amongst banks. A basic bank account number contains a 3-units bank code, a 3-units branch code and 7 to 9-units of account numbers. However, most of the debit cards have no bank code on them, or have a 6-units code starts with “622”. Generally, you just need to recognize the combinations of 3 and 8-units, or 3 and 9-units.
Although many ATMs have limitations while transferring over different banks, HSBC, Hang Seng Bank, BOC, BEA, DBS and Standard Chartered can all freely transfer over without administrative fee, only have to verify by a PIN-protected security device. Autopay system will send out the transaction at 00:00 on the payday. For the same bank, the transaction will be received within a few hours and for different banks, the transaction will be received within a day depends on the number of transactions being approved.
Paying by cheque
There are still companies that choose to pay by cheque in this electronic era, for example, small traditional company that lacks technical knowledge. There are people who always suspect companies of tax evasion or MPF contribution by cheque payroll. In fact, paying by cheque is also an MPF company and Inland Revenue Department approved payroll method. Also, using cheque to transfer might actually be a more convenient way in which there will be fewer problems as compared to e-banking. It usually takes 1 to 2 days to complete the transaction using cheque payment. After which, the amount will be shown on the ledger balance and it becomes available balance only when the transaction is finished.
Recently there is an electronic cheque to transfer huge amount by e-banking without the receiving party’s bank account number safely. An electronic cheque does not require a signature but it is an encrypted PDF file. All you need to do is send the encrypted file to the receiver and the transaction is done once the receiver uploads the file by e-banking.
To conclude, you should manage your payroll by autopay if you clearly know about e-banking and have no time to do small and complicated tasks. If you want to do it by yourself and you do not have too many emploeers, you can choose to pay by cheque. Payroll seems easy but it is an administrative work which commands extra attention. The rest of the work will be much easier if you choose the right method at first. You can try to apply and use the electronic cheque if you have to do a huge transaction too.