Money Matter

MPF contributions after commission

Article exclusively contributed by the Mandatory Provident Fund Schemes Authority

Ah-Kit, aged 19, was employed as a hairdresser in a hair salon. He received a basic monthly salary of HK$5,000 and earned a commission for each haircut. In some months, his commissions came to as much as two-thirds of his basic salary, depending on how many customers he had. He had worked for the hair salon for nearly nine months and his employer had enrolled him in a registered MPF scheme.

Recently, Ah-Kit checked with the MPF trustees and found that his employer had only made MPF contributions based on his salary. These totalled HK$500, HK$250 of which equalled five percent deducted from his salary and HK$250 of which was contributed by the company. Ah-Kit wondered whether his commissions should be included in his income when his MPF contributions were calculated.

Ah-Kit called the Mandatory Provident Fund Schemes Authority hotline. They confirmed that his commissions should be included in the calculation of relevant income for MPF contributions. He then asked his boss, "Why are my MPF contributions so small? You should have included both my salary and commissions." His boss simply answered, "I've already made your contribution of HK$500, commensurate with your salary." Ah-Kit tried to explain the situation to his boss, who insisted that the calculation was right. His boss said, "I have contributed five percent of your HK$5,000 salary and the contribution was correct. By the way, I never heard from the trustees that there were outstanding contributions in your account."

Ah-Kit decided to lodge a complaint against his employer with the Authority. It immediately launched an investigation and found that Ah-Kit's employer had breached MPF legislation. The Authority explained to Ah-Kit's boss that he should have based the contributions for Ah-Kit on the sum of his salary and commissions. However, Ah-Kit's boss refused to do so and insisted that his calculation was correct. The Authority finally helped Ah-Kit claim his outstanding MPF contributions from his boss through the Small Claims Tribunal.

Q & A on the MPF system
Q1 Do "commissions" form part of an employee's relevant income when making MPF contributions?
A1 Yes. As defined in Section 2 of the Mandatory Provident Fund Schemes Ordinance, "relevant income" for a relevant employee means any wages, salary, leave pay, fee, commissions, bonus, gratuity, perquisite or allowance (other than a housing allowance or other housing benefit) expressed in monetary terms, paid or payable by an employer (directly or indirectly) to that relevant employee in consideration of the employment. The relevant income of a relevant employee is to be calculated on a per employment basis. Therefore, in Ah Kit's case, his boss should have included his commissions when he calculated his relevant income for MPF contributions.

Q2 What can employees do if they find that their MPF rights are violated?
A2 Employees are encouraged to report to the Mandatory Provident Fund Schemes Authority as early as possible if they fear their MPF rights are violated. Their identity and all information provided are kept confidential.

Q3 What are the Mandatory Provident Fund Scheme Authority's policies regarding handling complaints?
A3 The Authority will conduct a confidential investigation immediately after it receives a complaint. It will approach the complainant and the employer separately, to gather evidence and take statements under caution. A trustee report will also be obtained to find out if the allegations are indeed true. The Authority will directly notify the complainant of the investigation's results.

Through negotiation or warning, the Authority requires the employer concerned to rectify the situation. To ensure that scheme members' interests are duly protected, the Authority will submit a claim form on behalf of the complainant to the Small Claims Tribunal to claim the outstanding MPF contributions. Breaches of MPF legislation are dealt with under criminal prosecution.

Q4 What is the complainant's role in the process?
A4 The complainant should be able to testify in court and disclose his identity in the course of the investigation. It may take longer to gather evidence in certain cases, such as those involving casual construction workers who fail to provide employment details.

Taken from Career Times 28 November 2003

(Last review date: 23 August 2013)

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Disclaimer: The opinions expressed in this article are those of the contributor.

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