The following are some frequently asked questions that we often encounter:
How does Talenox handle new employees during the First Contribution period (60 days)?
Does your system automatically handle MPF contribution calculations for new employees?
Why are my new employee's MPF contribution amounts showing as HKD $0 when his gross salary exceed the minimum limit?
Definitions
Before we go into an example of how MPF contributions will be calculated in the system for a new employee, you'll need to understand the definitions of different contribution periods we are referring to throughout the article.
1) MPF Contribution Holiday (First 30 Days and More)
Employees
Based on MPFA website, employees are not required to make MPF contributions for their first 30 days of employment; and
any incomplete payroll period that immediately follows the 30-day period (if the employee’s wage period is monthly or shorter than monthly); or
the calendar month in which the 30th day of employment falls (if the employee’s wage period is longer than monthly)
This period is when the employee is considered to be enjoying their MPF Contribution Holiday (employee).
Employers
The calculation of an employer’s contribution for an employee should begin from the first day of the employee’s employment.
2) When is MPF First Contribution for a New Employee?
For new employees, employers must make their first-time contributions to trustees on or before the next contribution day (the 10th day of each month) after the calendar month in which the 60th day of employment falls.
You can find examples of a first contribution period from MPFA website as well.
Examples of MPF Contribution Holiday & MPF First-Time Contribution for New Employees
Assuming a new employee joins a company with a salary of HKD$30,000 on 8 April 2024, he/she will only be contributing MPF in June 2024, instead of May 2024. Here's a breakdown of the timeline:
8 April 2024 - 7 May 2024:
No MPF (employee) contribution for a 30-day period (MPF contribution holiday).
MPF (employer) is calculated.
Total MPF (ER) + Holiday is HK$0 because it is within the first 30 days of employment
8 May 2024 - 31 May 2024:
Employee still enjoying Contribution Holiday.
MPF (ER) is calculated.
Total MPF (ER) + Holiday is HK$0 because there is no contribution this month as the contribution holiday includes the first incomplete wage period (8 May -31 May 2024)
1 June - 30 June 2024: The first contribution period is calculated from 1 June - 30 June 2024. The employee is no longer on contribution holiday.
Monthly MPF (EE): HKD$1,500
Total MPF (ER) + Holiday: HKD$4,500
April 2024 MPF (ER) contribution: HKD$1,500
May 2024 MPF (ER) contribution: HKD$1,500
June 2024 MPF (ER) contribution: HKD$1,500
Net + MPF (EE) + MPF (ER) : $28,500 + $1,500 + $4,500 = HKD$34,500
The Total MPF(ER) + Holiday and Net + MPF(EE) + MPF(ER) will now only reflect the MPF amount contributed for that month instead of the total amount in the first contribution period (April 2024 and May 2024) in June 2024 😁
How Will First Contribution Amounts be Displayed to New Employees during the First Contribution Period (First 60 Days)?
Payslips
Our payslips MPF contributions will exclude any MPF amounts when an employee is still under their First Contribution period.
The amounts will show $0 under the 'Statutory Funds' section in payslips until it has reached the First Contribution period (after 60 days) whereby the payslip will display an accumulation of the MPF amounts being contributed:
Values from previous months will be accumulated, labeled, and displayed under the relevant months
These accumulated amounts for the first contribution will be deducted from the Gross Salary of the employee during the First Contribution for MPF
Payroll Reports
The Payroll Report (on the 'Month Total' page) shows the following columns for MPF every month:
Mandatory MPF (Total MPF) - This will reflect the MPF that is calculated for the current month only, which will be HK$0 during the Contribution Holiday (first 60-day period)
Monthly MPF - This will contain MPF amounts that are deducted from Gross Salary for the current month (will include contribution holiday ER amounts).
If you need reminders of the definitions of these 2 columns, we also include this on the first page of the payroll report:
This will hopefully help you to distinguish between what is part of the Contribution Holiday and the total MPF amounts that are being deducted from Gross Salary for the month. :)
There you have it! You're a pro at MPF contribution calculations now!
The latest update for this article is on 17th May, 2024 to reflect the presentation of the MPF amount on MPF Summary.