Daily pay for holidays and leave from the 12-month average.
Leave pay
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Average daily wage
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Leave days
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Your breakdown
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Why your leave pay is not just your daily salary
When you take a statutory holiday or a day of paid annual leave in Hong Kong, the Employment Ordinance does not simply pay you your basic daily rate. Instead it pays the average of what you earned across the preceding twelve months, divided by the days you actually worked. For someone on a flat salary that average lands close to their normal daily pay, but for anyone whose earnings include commission, overtime, or allowances, the averaged figure can be noticeably higher. This calculator does exactly that twelve-month averaging and then multiplies by the number of leave days you are taking.
The rule exists to stop employers from underpaying staff during leave by stripping out the variable parts of their pay. Wages, under the Ordinance, means more than base salary, so commissions and many allowances feed into the average. The Labour Department is the authority to consult for which payments count and which periods are excluded. This tool is aimed at employees checking a payslip and at small employers without a payroll system, both of whom need a quick, defensible figure rather than a rough guess at the daily rate.
The twelve-month average, and what gets left out
The calculation takes your total wages over the twelve months before the leave and divides by the number of days you worked in that window. Certain stretches are carved out of both the wages figure and the day count so they do not distort the average: periods of statutory holiday, annual leave, sickness, maternity or paternity leave, rest days, and any leave taken with the employer's consent, along with the sums paid for them. Strip those out and you get a cleaner average daily wage that reflects normal earning, which is then applied to the leave days you take. This is a labour entitlement, not a tax, so there is no Inland Revenue calculation involved, though the leave pay you receive is itself assessable salaries income.
Twelve days of leave on a $480,000 year
Imagine you earned $480,000 over the preceding twelve months and worked 313 days in that window after the excluded periods come out, and now you are taking 12 days of leave. Dividing wages by days gives the average daily wage, and multiplying by the leave days gives the pay due.
Notice the average daily wage of $1,533.55 is higher than a naive $480,000 divided by 365, which would give about $1,315, because the formula divides by days actually worked rather than every calendar day. That difference is the whole reason the Ordinance prescribes this method. The chart compares the two ways of slicing the same annual wage.
Leave pay, answered
My pay includes commission. Does that lift my leave pay?
Generally yes. Because the average is built from total wages, and wages under the Ordinance include many commissions and allowances, a year with strong commission earnings raises your average daily wage and therefore your leave pay. That is precisely what the twelve-month method is designed to capture, so a salesperson's holiday pay can sit well above their base daily rate. Check with the Labour Department on whether a specific allowance counts as wages.
Why divide by days worked instead of 365?
Because dividing by every calendar day would dilute the average with days you were never paid to work, understating the daily figure. The Ordinance excludes non-working periods and their pay from both sides of the fraction so the result reflects a genuine working day. In this example that is the gap between $1,533.55 and roughly $1,315, money the employee is entitled to.
Is leave pay taxed?
Leave pay is part of your employment income, so it forms part of your assessable income for salaries tax like the rest of your salary. It is not separately taxed or exempt. There is no special leave-pay levy; it simply rolls into your annual income that the Inland Revenue Department assesses.