A Guide Book on an Employer's Legal Obligations under the MPF
It is vital for employers to have a good understanding of their legal obligations under the MPF.
This section is intended to provide guidance to employers on their key legal obligations under the MPF Schemes Ordinance and its subsidiary legislation
MPF Regulation requires an employer to calculate relevant income for his employees.
Relevant income includes most income types, but excludes housing allowance, severance payments and long service payments. Some income types such as group medical benefit and uniform laundry allowance are also excluded.
Based on guidelines provided by the MPFA, TriMPF has built an inventory of income types that have the relevant income definitions pre-defined. You can choose to copy these income types from TriMPF's Income Master.
MPF Regulation requires an employer to calculate mandatory contributions for his employees and to obtain their authorization in order to make deductions for voluntary contributions (if any) from their payroll.
The employer and employee both contribute 5% of the employee relevant income, subject to a maximum of HK$ 20,000 of relevant income per month.
If the employee relevant income falls below the statutory minimum (currently HK$ 4,000, will become HK$ 5,000 with effect from 1st February 2003) , the employee can choose not to contribute but the employer still has to make contributions. If the employee chooses to contribute, the contributions will be treated as voluntary contributions.
TriMPF calculates contributions based on the above rules. You do not need to worry about these rules. If an employeeï¿½s basic salary is below the statutory minimum, TriMPF will ask you whether the employee wishes to make contributions and remind you to obtain an authorization from the employee concerned.
MPF Regulation requires an employer to prepare remittance statements and pay-records.
One pay-record should be prepared for each employee. It should contain the following information:
- The employee's relevant income for the covered period.
- Mandatory contributions made by the employee.
- Voluntary contributions made by the employee, if any.
- Mandatory contributions made by the employer.
- Voluntary contributions made by the employer, if any.
- The date on which the contributions were paid to the trustee.
The pay-records must be forwarded to all relevant employees not more than 7 days after the date the payment was made.
The remittance statement is a summary document containing similar details as the monthly pay-records for all relevant employees. The MPFA has issued a guideline outlining the format for the remittance statement. An employer needs to submit a remittance statement to the trustee in support of his contribution payment.
TriMPF produces remittance statements and monthly pay-records that are in compliance with the MPF Regulation and guideline.
MPF Regulation requires an employer to pay contributions within specified time frames.
Assuming that you are paying your employees on a monthly basis, the contribution period for say March is 1st to 31st of that month. Although you may be paying your employees on the 28th of March, i.e., the payday, you are required to pay your contributions within 10 calendar days after the end of the contribution period or 31st March (contribution day). If the contribution day is a public holiday, Sunday, gale warning day or a black rainstorm warning day, the contribution day should be the next following day which is not a public holiday, Sunday, a gale warning day, or a black rainstorm warning day.Effective from 1st February 2003,you can pay contributions for existing and terminated employees for the same month together.
TriMPF keeps a holiday table to keep track of your contributions due date.
Starting from the day after the due day, TriMPF generates an online reminder message telling you that the contributions for a particular period are overdue, and for how long, if you still have not remitted the contributions to the trustee.
MPF Regulation requires an employer to enroll an employee into an MPF scheme or MPF exempted ORSO scheme once the employee has been hired for 60 days or more.
Employees who are employed for a period of less than 60 days are exempted from MPF scheme enrolment.
The 60-day employment period is taken to mean 60 continuous days, e.g., an employer is not required to enroll a temporary staff who is hired for a month in July and for another month in October in the same year.
The 60-day scheme enrolment exemption rule does not apply to casual employees who are hired either on a day-to-day basis or for a fixed period of less than 60 days in the construction and catering industries. Employers in these two industries are required to enroll their casual employees into an MPF master trust scheme or an MPF industry scheme from day one.
TriMPF produces a ï¿½Prior to 60 Days Review Report?on the 50th day after an employee has been hired. With reference to this report, the employer can decide whether or not to continue hiring that employee.
If TriMPF detects that en employee has been hired for more than 60 days and was not enrolled into any scheme, it will generate an online warning message to that effect and stop you from confirming the payroll.
Certain categories of people are exempt from having to be enrolled into an MPF scheme.
MPF exempt persons include:
- Domestic helpers.
- Employees who have reached age 64 on or before 1st December 2000.
- Foreigners who have been working in Hong Kong for less than 13 months.
- Foreigners who have established retirement plans in their country of residence, from which they can benefit when they return home.
- Employees who are working overseas for an extended period of time.
TriMPF reminds you to check whether a particular employee is MPF exempted. If yes, TriMPF asks for the reason for exemption. TriMPF will apply MPF exempt status automatically to an employee who has reached age 64 on or before 1st December 2000.
MPF Regulation requires an employer to notify the trustee upon the occurrence of certain events.
The notifiable events include:
- New employee and his/her date of payment of relevant income.
- Change of an employee personal particulars.
- Change of the employer business particulars.
- Election by a new employee to transfer his/her accrued benefits from his/her previous employment to your scheme account.
TriMPF generates the required notifications automatically once it detects the occurrence of such events.
MPF Regulation requires an employer to calculate relevant income and mandatory contributions.
If you have made any error or omission in the previous monthï¿½s payroll, all you need to do right now is just to adjust the current month payroll by the erred or omitted amount. However, with MPF coming into place, it is not that simple as the adjustment will have implications on the previous monthï¿½s contribution calculation, subject to the maximum and minimum relevant income rules. To do the adjustment properly, you would have to retrieve the previous monthï¿½s payroll and contribution details in order that you can accurately calculate the amount to be adjusted in terms of both payroll and contributions.
TriMPF provides you with a Prior Period Payroll and Contribution Adjustment function to handle your errors and omissions in prior periods. Once you select the employee and the period to be adjusted, TriMPF will retrieve the related payroll and contribution details for that particular period for you. All you need to do is to input the amount to be adjusted right next to the income item concerned. TriMPF will recalculate the contributions for you and work out for you how much more or less contributions you should make in the current period.
An employer has to file tax returns.
Employers' tax returns include 56B, 56E and 56F.
MPF Regulation requires an employer to keep employment, payroll and contribution records.
The following are the MPF record-keeping requirements:
- each payment of relevant income including the total amount paid, the respective amounts of the items making up the payment and the date of payment (for at least 6 months after the payment is made)
- the date on which the employeeï¿½s employment began (for at least 6 months after the employment ceases)
- the employeeï¿½s name, correspondence address, a notice of election between the ORSO and MPF scheme and a notice authorizing the employer to deduct voluntary contributions from his/her relevant income (for at least 6 months after the employment ceases)
- the information in the remittance statement (for 7 years after the date of the remittance statement)
TriMPF assists you to keep the required records by providing you with data backup and restore facilities.
Employers would like to know what will be the impact on their bottom line if they increase their staff basic salary by a specified %. Previously, it may be as simple as just multiplying the employee total basic salary by a %. With MPF coming into place, it is not that simple as this increment will attract additional mandatory contributions and, where applicable, voluntary contributions.
TriMPF provides you with a financial modeling function. After you have specified an increase %, TriMPF will calculate the revised total basic salary, revised total mandatory contributions and, where applicable, revised total voluntary contributions and tell you instantly the estimated total impact on your bottom line.
TriMPF has built an interface with major banks payroll or auto-pay systems. You can choose to pay your employees through auto-pay.
TriMPF has the capability to generate computer files for your remittance data, thereby enabling you to send your remittance data to your trustee electronically.