Employee remuneration, which includes cash and non-cash payments and benefits, should be offered fairly and competitively to help attract, retain and motivate good people, who will in turn contribute to the employer’s overall growth and success. Remuneration is rarely a driver of employee engagement. However, there is a strong cultural commitment to reward and recognition as a reinforcer of employee performance. Therefore, it is equally important for employers to pay employees “right” as it is to pay them “more”.

Pay governance

n            Employers should have a clear remuneration philosophy (preferably written and published to employees) that guides their remuneration practices.

n            Employers should develop a systematic salary structure or set of ranges showing mid-point pay for standard good performance. Appropriate monetary values should be attached to salary grades to reflect the value of work done.

n            External salary surveys should be conducted on a regular basis to ensure market competitiveness.

n            Appropriate pay adjustments should be made from time to time according to organisation strategy, market trends, employee performance, job responsibility and organisation performance.

The process for conducting salary benchmark studies and reviews can be found in Appendix II.

Remuneration communication

n            Employers should communicate pay packages honestly, fairly and openly, including the initial offer, pay reviews and bonuses.

n            Payment should be made regularly and on time according to the schedule set out in the contract of employment. Employees should be provided with a periodic statement showing a breakdown of various pay items.

n            In the case of a merger or acquisition, employees should be informed at the first opportunity as to how their pay and benefits may be affected.

Benefits

n            Minimum statutory benefits such as maternity pay, long service payment, and sickness allowance are required by law and should be paid on time. Employers should never terminate employment for the reason that an employee will become eligible for statutory benefits.

n            Non-statutory fringe benefits for employees should be provided depending on the organisation’s capacity to implement appropriate schemes. Organisations should ensure that employees have access to clear information regarding their benefits plans, and that benefits are fairly and consistently applied.

n            Employers should be aware of their responsibilities under the Mandatory Provident Fund Schemes Ordinance (MPFSO). Currently, employers and employees are both required to contribute 5% of the employees’ monthly relevant income after 60 days of continuous employment. Employees earning less than $5,000 per month are not required to contribute, and those earning above $20,000 per month are only required to contribute $1,000. (In all cases, employers and employees may voluntarily contribute more). Employers should keep up to date with amendments to the MPFSO in order to comply with its terms. Under the MPFSO, the Mandatory Provident Fund Schemes Authority is required to conduct a review of the minimum and maximum relevant income levels not less than once every 4 years.  The upcoming one will be in 2010.  Employers should keep abreast of the proposed amendment and revisit their schemes accordingly.

n            Should a need arise for employee pay or benefits reduction, employers must comply with current legislation. Employees should be fully briefed on the reason for the reduction and the available options. Only upon receiving employee consent should such reductions be made. Employees will be more willing to accept such changes if the management discusses in good time the organisation’s situation, fairly and reasonably applies the reductions, and restoring back to the previous level if business recovers.