Hong Kong Payroll

PY-HK Payroll Hong Kong HELP.PYHK Release 4.6B ™

PY-HK Payroll Hong Kong SAP AG Copyright © Copyright 2000 SAP AG. All rights reserved. No part of this brochure may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice. Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. ® ® ® ® ® ® Microsoft , WINDOWS , NT , EXCEL , Word and SQL Server are registered trademarks of Microsoft Corporation. ® ® ® ® ® ® ® ® ® IBM , DB2 , OS/2 , DB2/6000 , Parallel Sysplex , MVS/ESA , RS/6000 , AIX , S/390 , ® ® ® AS/400 , OS/390 , and OS/400 are registered trademarks of IBM Corporation. ® ORACLE is a registered trademark of ORACLE Corporation, California, USA. ® ® TM INFORMIX -OnLine for SAP and Informix Dynamic Server are registered trademarks of Informix Software Incorporated. ® ® ® ® UNIX , X/Open , OSF/1 , and Motif are registered trademarks of The Open Group. ® HTML, DHTML, XML, XHTML are trademarks or registered trademarks of W3C , World Wide Web Consortium, Laboratory for Computer Science NE43-358, Massachusetts Institute of Technology, 545 Technology Square, Cambridge, MA 02139. ® JAVA is a registered trademark of Sun Microsystems, Inc. , 901 San Antonio Road, Palo Alto, CA 94303 USA. ® JAVASCRIPT is a registered trademark of Sun Microsystems, Inc., used under license for technology invented and implemented by Netscape. SAP, SAP Logo, mySAP.com, mySAP.com Marketplace, mySAP.com Workplace, mySAP.com Business Scenarios, mySAP.com Application Hosting, WebFlow, R/2, R/3, RIVA, ABAP, SAP Business Workflow, SAP EarlyWatch, SAP ArchiveLink, BAPI, SAPPHIRE, Management Cockpit, SEM, are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other products mentioned are trademarks or registered trademarks of their respective companies. 2 December 1999

SAP AG PY-HK Payroll Hong Kong Icons Icon Meaning Caution Example Note Recommendation Syntax Tip December 1999 3

PY-HK Payroll Hong Kong SAP AG Contents PY-HK Payroll Hong Kong..................................................................................6 Payroll in the SAP System ............................................................................................................ 7 PY-HK Mandatory Provident Fund (MPF).................................................................................... 8 PY-HK Occupational Retirement Schemes (ORSO)................................................................... 9 PY-HK Gross Payroll Accounting .............................................................................................. 10 PY-HK Entitlement Plan .............................................................................................................. 11 PY-HK Implementation of the Entitlement Plan........................................................................ 12 PY-HK Entitlement Plan infotypes............................................................................................ 13 PY-HK Entitlement plan (0347) ........................................................................................... 14 PY-HK Assigning an Entitlement Plan ........................................................................... 15 PY-HK Transferring Entitlement Plans........................................................................... 16 PY-HK Contribution/Entitlement Eligibility (0349) ............................................................... 17 PY-HK Eligibility Grouping for Entitlement Plan ....................................................................... 18 PY-HK Assigning the Eligibility Grouping............................................................................ 19 PY-HK Offset Entitlement against Severance Payment........................................................... 20 PY-HK Guaranteed Payments..................................................................................................... 21 PY-HK Setting up guaranteed payments ................................................................................. 22 PY-HK Calculation Bases.................................................................................................... 23 PY-HK Probation Periods.................................................................................................... 24 PY-HK Statutory Probation Period................................................................................. 25 PY-HK Defining the Company's Probation Period ......................................................... 26 PY-HK Guaranteed Payments-related infotypes...................................................................... 27 PY-HK Contract Elements Infotype (0016) - Hong Kong .................................................... 28 PY-HK Defining an Employee's Guaranteed Payment .................................................. 29 PY-HK Net Payroll Accounting ................................................................................................... 30 PY-HK Tax .................................................................................................................................... 31 PY-HK Implementation of Tax.................................................................................................. 32 PY-HK Rental Allowance.......................................................................................................... 33 PY-HK Creation of Rental Allowance.................................................................................. 34 PY-HK Rental Deduction .......................................................................................................... 35 PY-HK Creation of Rental Deductions ................................................................................ 36 PY-HK Overseas Travel Allowance.......................................................................................... 37 PY-HK Creation of Overseas Travel Allowance.................................................................. 38 PY-HK Tax Infotypes ................................................................................................................ 39 PY-HK Tax (0345) ............................................................................................................... 40 PY-HK Creating tax data for an employee..................................................................... 41 PY-HK Contribution Plan ............................................................................................................ 42 PY-HK Implementation of Contribution Plan ............................................................................ 43 PY-HK Contribution Plan Infotypes .......................................................................................... 45 PY-HK Contribution Plan (0346) ......................................................................................... 46 PY-HK Assigning a Contribution Plan............................................................................ 48 PY-HK Transferring Contribution Plans ......................................................................... 49 PY-HK Contribution/Entitlement Eligibility (0349) ............................................................... 50 4 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Eligibility Grouping for Contribution Plan...................................................................... 51 PY-HK Assigning the Eligibility Grouping............................................................................ 52 PY-HK Crediting previous years of service .............................................................................. 53 PY-HK Deductions ....................................................................................................................... 54 PY-HK Subsequent Activities ..................................................................................................... 55 PY-HK Payroll Results Checking ............................................................................................... 56 PY-HK Evaluation of Payroll Results........................................................................................ 57 PY-HK Preparation of Payroll Results Check Data............................................................. 58 PY-HK Generating Payroll Results Check Data ............................................................ 59 PY-HK Displaying the Payroll Results Check Data ....................................................... 60 PY-HK Payroll Results Check Tool ..................................................................................... 61 PY-HK Evaluating the Payroll Results Check Data ....................................................... 62 PY-HK Reporting.......................................................................................................................... 63 PY-HK Tax Reporting .................................................................................................................. 64 PY-HK The Tax Reporting Process.......................................................................................... 65 PY-HK Generating a tax report ................................................................................................ 66 December 1999 5

PY-HK Payroll Hong Kong SAP AG PY-HK Payroll Hong Kong PY-HK Payroll Hong Kong Purpose This component allows you to process the payroll for the employees of your organization in Hong Kong, using data from the SAP Personnel Administration component. In addition, you can run a number of payroll reports that will generate useful information that you can use to analyse the payroll with. Implementation Considerations You should take into consideration the other areas in SAP HR, in particular Personnel Administration, when implementing the Hong Kong payroll. Integration The payroll component is closely integrated with the other areas in SAP HR, as well as other SAP modules such as Financial Accounting and Controlling. 6 December 1999

SAP AG PY-HK Payroll Hong Kong Payroll in the SAP System Payroll in the SAP System Purpose You can use this component to calculate the remuneration for work done for each employee. However, Payroll does not just involve the calculation of remuneration, but consists of a variety of processes that are becoming increasingly important due to the employer’s increased obligation to supply benefits and medical welfare. These benefits are products of: • Labor law • Tax law • Contribution law • Benefits law • Civil law • Reporting law • Information law • Statistics law Integration Payroll can be integrated in Personnel Administration, Time Management, Incentive Wages and Accounting: • Standardized data retention enables you to use master data and other payroll relevant data from Personnel Administration. • Time data, entered via Time Management, is automatically included in the Payroll and is valuated during the payroll run. • Data from the Incentive Wages component is used to calculate piecework wages and premium wages directly in Payroll. • Information on expenses and payables from Payroll is posted for accounting directly in Financial Accounting, and you assign the costs to the appropriate cost center. You can also control the financial system of third-party providers. Features The System calculates the gross and net pay, which comprises the individual payments and deductions that are calculated during a payroll period, and are received by an employee. These payments and deductions are included in the calculation of the remuneration using different wage types [Ext.]. After the remuneration payroll you can carry out various subsequent activities, for example, you can see to remuneration payment or the creation of various lists, and make evaluations. December 1999 7

PY-HK Payroll Hong Kong SAP AG PY-HK Mandatory Provident Fund (MPF) PY-HK Mandatory Provident Fund (MPF) Purpose The Mandatory Provident Fund contains the necessary information required to process the MPF- approved retirement schemes. These schemes require periodic contribution from the employee, with a similar contribution from the employer. When the employee quits or terminates his or her contract, the retirement scheme calculates his or her entitlement. Implementation Considerations In providing the MPF-approved retirement schemes, the system uses the following two functions: Contribution Plan This component processes the periodic contribution made by the [Page 42] employee and employer. Entitlement Plan This component calculates the employee's entitlement due to him upon [Page 11] retirement, or when he terminates his contract. Integration For MPF-approved retirement schemes, a contribution plan will have its corresponding entitlement plan. When you create a contribution plan infotype for an employee, the system will prompt you for the relevant entitlement plan infotype. Features With the MPF-approved retirement schemes in the system, you can: • Set up default retirement plans for different employee groups. • Allow employees to transfer from one plan to another plan. You can also restrict the transfer of plans according to eligibility. • Define variable contribution amounts, with a default amount. • Calculate the contribution amount using a matrix of the employee's years of enrollment, age and income. • Vest the employer's contribution through a matrix of years of enrollment, age and termination reason. • Calculate the entitlement using a matrix of the employee's years of enrollment, age, termination reason and wages. 8 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Occupational Retirement Schemes (ORSO) PY-HK Occupational Retirement Schemes (ORSO) Purpose Besides MPF [Page 8], companies may also provide their employees other retirement schemes. These schemes can be divided into two categories: • The first type of retirement schemes require a contribution from the employee and the employer. When the retirement scheme matures, the employee then receives an entitlement amount. • The second type of retirement schemes do not require any employee contribution, only an entitlement when the retirement scheme matures. Implementation Considerations In providing the ORSO retirement schemes, the system uses the following two functions: Contribution Plan This component processes the periodic contribution made by the employee [Page 42] and employer. Entitlement Plan This component calculates the employee's entitlement due to him or her [Page 11] upon retirement, or when he terminates his contract. Integration Those schemes with a contribution plan has a corresponding entitlement plan. When you create a contribution plan infotype for an employee, the system prompts you for the relevant entitlement plan data as well. Features • You can define default retirement plans for different employee groupings. • Employees can transfer their contribution and/or entitlement from one plan to another eligible plan. • Contribution amounts are variable, with a company default. • Contribution amount can be calculated through a matrix of years of enrollment, age and income. • Entitlement can be calculated througha matrix of years of enrollment, age and termination reason and the employee's wages. • Employer's contribution can be vested through a matrix of years of enrollment, age and termination reason. December 1999 9

PY-HK Payroll Hong Kong SAP AG PY-HK Gross Payroll Accounting PY-HK Gross Payroll Accounting Purpose The gross payroll component for Hong Kong processes employee's data from Personnel Administration and generates wage types that are to be used in Net Payroll. Pre-tax deductions are included when processing Gross Payroll. 10 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Entitlement Plan PY-HK Entitlement Plan Purpose When an employee works for an organization, he or she is eligible to join one or more company retirement schemes. He or she is also mandated to join the MPF scheme [Page 8]. These schemes entitles the employee to receive a lump-sum or pension fund once he terminates his or her employment. This component records and processes these entitlement portions of the retirement schemes. Integration Some retirement schemes require both the employee and employer to contribute to the schemes. Employee contribution, for example, may come in the form of a monthly deduction from his salary. Therefore, such schemes require a contribution portion [Page 42] as well as an entitlement portion. For those schemes that require employee as well as employer contribution, you need to also implement the contribution portion of the schemes. Features With the entitlement plan, you can: • Group all employees that are eligible to join the same retirement schemes. • Allow employees to transfer from one eligible retirement scheme to another. • Allow employees to accrue their entitlement by crediting his previous entitlement. • Calculate the entitlement via a matrix of years of enrollment, the employee's age and reason for termination. This applies to those schemes with no employee contribution. • Calculate the entitlement via reference to the contributions paid, the declared returns as well as the enrollment period, the employee's age and reason for termination. This applies to those schemes with employee and employer contributions. • Offset the employer's portion of the entitlement against the employee's severance or long service payment. This applies to those schemes with employer's contribution. December 1999 11

PY-HK Payroll Hong Kong SAP AG PY-HK Implementation of the Entitlement Plan PY-HK Implementation of the Entitlement Plan Purpose By implementing the entitlement plan, you record and process the entitlement portion of the MPF [Page 8] or other company retirement scheme available to the employees. Prerequisites MPF and some company retirement schemes require that the employee and employer contribute to the schemes. This is known as the Contribution Plan [Page 42]. For such schemes, you must also implement the corresponding contribution portion of the scheme. Process Flow Implementing the entitlement plan involve the following steps: • Define the different schemes that are available for the employees to enroll. • Define the type and nature of the schemes that are available for the different groups of employees. Below are some examples of the different types and natures of schemes: Schemes Example 1 Example 2 Type Employer sponsored scheme Master trust scheme Nature Company self funding Mandatory provident fund • Enter the details of the organization that provide each scheme. Some schemes may be provided internally, while others are provided by external organizations. • Define specific information about each scheme, including the provider, the type of scheme, the calculation base used to calculate the entitlement, and more. • Define the eligbility groupings used to differentiate groups of employees enrolling in different schemes. You must also define the eligibility period for each grouping. • Define the transfer rules for changing from one scheme to another. • Define the method in which the employee chooses to withdraw his entitlement. In addition, you can define the wage type in which the entitlement amount is stored. • Define the vesting schedule and multiplier for each scheme, if applicable. You can customize the above process via the Entitlement Plan [Ext.] section of the Hong Kong payroll implementation guide (IMG). Result Once you have implemented the entitlement plan, you are now able to: • Group the employees into eligible groups. • Enrol the employees into the relevant entitlement plan. • Transfer the employees from one eligible plan to another. 12 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Entitlement Plan infotypes PY-HK Entitlement Plan infotypes Definition These are the infotypes you need to record and process the entitlement portion of MPF and company retirement schemes. Integration MPF and those retirement schemes that require employee and employer contributions also need corresponding contribution plan infotypes [Page 45]. December 1999 13

PY-HK Payroll Hong Kong SAP AG PY-HK Entitlement plan (0347) PY-HK Entitlement plan (0347) Definition This infotype stores the entitlement portion of a MPF [Page 8] or company retirement scheme that the employee enrolls in. Use When an employee enrolls in a scheme, you enter the enrollment details for the entitlement portion of the scheme. This includes administrative details such as the employee's account number. You can also include details of previous schemes, especially if the current scheme allows the employee to transfer those details from the previous scheme. When the employee terminates his or her employment, the entitlement due is either calculated internally, or by an external party. If an external party calculates the entitlement, you enter the amount here. Moreover, for those schemes which are based on contributions from employee and employer, the entitlement amount is divided into employee and employer amounts, and further sub-divided into mandatory and voluntary amounts. The employer's portion can then be used to offset its liability for long service payment or severance payment. By dividing the entitlement into mandatory and voluntary amounts, you can treat each portion differently. For example, in MPF schemes, there must be full and immediate vesting of mandatory employer contributions, but not for the voluntary contribution. Also, the employee's mandatory contribution may need to be withheld until the employee retires, but he or she may have more flexibility with the voluntary amount. Structure The account number field contains a unique ID of the employee who is enrolled in the scheme. Previous plan The data contains details about any credit coming in from a previous scheme the employee was enrolled in. This includes (if possible) the previous scheme, the payout amount of the previous entitlement, the period for which he was enrolled in the previous plan. Withdrawal details Besides the dividing of the entitlement to employee and employer amounts, and further sub- dividing into mandatory and voluntary amounts, you can also define the type of withdrawal for the entitlement, and specify if the entitlement should be processed by the system. Integration For those schemes that require employee and employer contribution, this entitlement plan has a corresponding contribution plan (0346) [Page 46] to record and process the contribution details. 14 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Assigning an Entitlement Plan PY-HK Assigning an Entitlement Plan Use MPF [Page 8] and other company retirement schemes [Page 9] have an entitlement portion which record and calculate the lump-sum or pension fund an employee is entitled to. By assigning an employee to a specific entitlement plan, the system records and processes the entitlement data for that employee. Prerequisites Some schemes (including MPF) require that the employee contribute to the scheme. For such schemes, you need to assign that employee a contribution plan first. When you have assigned that employee a contribution plan [Page 48], the system automatically display the entitlement plan infotype (0347) for you to enter the appropriate entitlement data of the scheme. Procedure 1. From the Easy Access menu, choose Human Resources → Personnel Management → Administration → HR Master Data → Maintain. The Maintain HR master data screen appears. 2. Enter the employee's personnel number, and then enter 0347 in the Infotype field of the Direct selection section of the screen (to access the Entitlement Plan infotype). 3. Then select the Create button. A list of eligible MPF and ORSO-type schemes appears. 4. Select the appropriate scheme from the list. The Create Entitlement Plan screen appears. 5. Enter the appropriate entitlement plan information for the employee into the entitlement plan infotype [Page 14]. 6. Save the entry when you are done. Result The employee is now enrolled into the selected entitlement plan. December 1999 15

PY-HK Payroll Hong Kong SAP AG PY-HK Transferring Entitlement Plans PY-HK Transferring Entitlement Plans Use As an employee continues to work for the company, he or she may have the opportunity to transfer from one retirement scheme to another. For example, when he or she moves to a more senior position, he or she may choose to upgrade his or her retirement scheme. You can reflect this transfer of entitlement plans in the system, including recording any credit brought forward from the old scheme. Prerequisites You should have already set up the rules for transferring between eligible entitlement plans. You can do this via the Define retirement benefit entitlement transfer rules [Ext.] in the Hong Kong payroll implementation guide (IMG). Procedure 7. From the Easy Access menu, choose Human Resources → Personnel Management → Administration → HR Master Data → Maintain. The Maintain HR master data screen appears. 8. Enter the employee's personnel number, and then enter 0347 in the Infotype field of the Direct selection section of the screen (to access the Entitlement Plan infotype (0347)). 9. Then select the Change button. 10. Select the appropriate MPF and ORSO-type scheme from the list. The Change entitlement plan screen appears. 11. Select the Transfer button. The Transfer entitlement plan dialog box appears for you to enter the plan to transfer to. 12. Choose the entitlement plan that the employee is being transferred to. A new Create entitlement plan screen appears for you to enter the new data. 13. Enter the information for the new entitlement plan in the appropriate fields. 14. Save the entry when you are done. Result The employee is now enrolled into the new entitlement plan. See also: Assigning a Contribution Plan [Page 48] Assigning an Entitlement Plan [Page 15] 16 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Contribution/Entitlement Eligibility (0349) PY-HK Contribution/Entitlement Eligibility (0349) Definition This infotype defines the retirement schemes that the employee can enrol in. These schemes include company retirement schemes [Page 9] as well as MPF [Page 8] schemes. Use An employee is mandated to join the MPF scheme. He or she may also be eligible to join other company retirement schemes, depending on the employee's seniority and occupation, as well as other company requirements. The system allows you to organize the employees into different groups, with each group eligible for specific schemes. December 1999 17

PY-HK Payroll Hong Kong SAP AG PY-HK Eligibility Grouping for Entitlement Plan PY-HK Eligibility Grouping for Entitlement Plan Use For each entitlement plan, you can assign a group of employees that are eligible for this plan. This enables an organization to tailor the retirement schemes to specific groups of employees. For example, you may have one entitlement plan for executives and another for general staff. Integration Once you create eligibility groups for the entitlement plans, you have to also create rules for transferring from one eligbility entitlement plan to another. Activities Before you can assign the eligibility grouping for each employee, you need to set up the eligibility grouping for each entitlement plan. This includes: • Defining the employee different groupings in your organization. • Assign all the entitlement plans that are eligibility for each group of employees. • Defining the transfer rules for moving between eligibility entitlement plans within a group. The steps mentioned above in setting up the eligibility grouping can be found in the Hong Kong Payroll Implementation Guide (IMG). After you have customized the eligibility groupings to reflect your organization, you can then assign each employee to the appropriate grouping. This assignment is done using the Contribution/Entitlement Eligibility infotype [Page 50]. 18 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Assigning the Eligibility Grouping PY-HK Assigning the Eligibility Grouping Use You define the entitlement plans that an employee is eligible to enrol in. Prerequisites You have to set up the eligibility groupings beforehand. This is done via the Entitlement Plan section of the Hong Kong payroll implementation guide (IMG). Procedure 15. From the Easy Access menu, choose Human Resources → Personnel Management → Administration → HR Master Data → Maintain. The Maintain HR master data screen appears. 16. Enter the employee's personnel number, and then enter 0349 in the Infotype field of the Direct selection section of the screen (to access the Contribution/Entitlement Eligibilty infotype (0349) [Page 50]). 17. Then select the Create button. The Create Cont/Ent Eligibility screen appears. 18. Enter the appropriate entitlement plan eligibility grouping for the employee. 19. Save the entry when you are done. Result The entitlement plan eligibility grouping is created for the employee. December 1999 19

PY-HK Payroll Hong Kong SAP AG PY-HK Offset Entitlement against Severance Payment PY-HK Offset Entitlement against Severance Payment Purpose An employee, who terminates his or her employment, receives either a long service payment or severance payment. However, if the organization already contributes to the employee's retirement scheme, then the employer's contribution to the scheme is used to offset its liability to the long service or severance payment. Prerequisites You should have set up the long service or severance payment function before you offset the employer's portion of the entitlement against the long service or severance payment. To set up the long service or severance payments, please go to the Hong Kong Payroll Implementation Guide (IMG). 20 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Guaranteed Payments PY-HK Guaranteed Payments Purpose A guaranteed payment is an annual bonus that is paid to an employee for his or her contribution to the company. It is usually paid at the end of the year, and the amount is calculated as a factor of the employee's pay. For example, a guaranteed payment can be the equivalent of two times the employee's monthly salary. The guaranteed payments component lets you setup, define and process an employee's guaranteed payment. Guaranteed payment is also commonly known as end-of-year (EOY) payment, thirteen month payment or annual bonus. Implementation Considerations In the payroll environment, guaranteed payments can be calculated in the following scenarios: • You include the calculation of guaranteed payments in the regular payroll run. The employee will be paid both his or her monthly payments as well as the guaranteed payment. • You calculate the guaranteed payments in a separate (off-cycle) payroll run. This is a once- off payroll run that calculates the employee's guaranteed payment. • When an employee terminates his or her employment, you need to calculate his or her guaranteed payment as part of his final regular payments. You have to ensure that all three scenarios are taken into consideration when you implement the guaranteed payments [Page 22] component into the system. Features With the guaranteed payments component, you can: • Assign differing guaranteed payments for different employees. This is done by creating organizational groupings as well as employee groupings, and then assigning these groupings to respective guaranteed payments settings. • Assign differing valuation of a month's bonus for different employees. For example, one employee uses the average of his or her annual salary, while another uses his or her December's salary as the calculation basis for guaranteed payments. • Pro-rate an employee's guaranteed payment if he or she terminates his or her contract before the end of the financial year. You enter an employee's guaranteed payment [Page 29] data via the Contract Elements infotype (0016). December 1999 21

PY-HK Payroll Hong Kong SAP AG PY-HK Setting up guaranteed payments PY-HK Setting up guaranteed payments Purpose Before you can let the system calculate an employee's guaranteed payment, you need to set up the system. The main purposes of setting up the system are: • customizing the system according to your company's requirement. • making sure that the system can handle all the different scenarios for guaranteed payments. For example, the system must handle guaranteed payments in a regular payroll run, as well as during an off-cycle payroll run. Prerequisites In order to set up the system correctly, you need to have all the possible guaranteed payment's calculation bases [Page 23] available in the system. These calculation bases appear in the Contract Elements infotype (0016) where you select the appropriate calculation base and enter the multiplication factor for the employee's guaranteed payment. Process Flow To set up the system for guaranteed payments: 1. Specify all the different guaranteed payment methods that your company requires. You need to specify, among other attributes, the payment methods and the eligible period for an employee's guaranteed payment. 2. Group all employees with the same guaranteed payment processing together. You can then run payroll according to these groupings. 3. Specify all the possible calculation bases for all the guaranteed payment scenarios. 4. Check that the calculation bases and statutory probation periods [Page 25] are correctly set up, in the payroll schema, for each of the following scenarios: a. incorporating guaranteed payments within the regular payroll run b. as an off-cycle payroll run c. for a terminating employee You can use the implementation guide to help you set up the above process. To do so, go to the End-of-Year (EOY) Payment section [Ext.] of the Hong Kong payroll implementation guide. Result Once you have completed this process, you can enter an employee's guaranteed payment [Page 29] details in the Contract Elements infotype (0016). 22 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Calculation Bases PY-HK Calculation Bases Definition A calculation base is an amount (in a wage type) that is used as a basis to determine an employee's guaranteed payment. Some examples of calculation bases are: • an employee's current month salary (/007) • an employee's monthly salary as at December of the current year (/033) • an employee's current month basic pay (/031). The basic pay is listed in the Basic Pay infotype (0008), and can include such wages as: − the employee's current month salary − the employee's monthly allowances (meal, accommodation, travel) − the employee's overtime allowance Use By specifying a calculation base for an employee's guaranteed payment, along with a multiplication factor in the form of guaranteed months, the system calculates the employee's guaranteed payment. You specify both calculation base and guaranteed months in an employee's Contract Elements infotype (0016) [Page 28]. You have to specify all the calculation bases that are used for all the different groups of employees in the company. This is done via the Set up the end-of-year (EOY) payment calculation bases [Ext.] step in the Hong Kong payroll implementation guide (IMG). December 1999 23

PY-HK Payroll Hong Kong SAP AG PY-HK Probation Periods PY-HK Probation Periods Definition To calculate guaranteed payments, you must take into account two types of probation period: Statutory probation This is the time period a person needs to serve in a company to be [Page 25] legally entitled to the benefits as an employee. Company probation This period is set by the company, and is usually used to determine the employee's capability before confirmation of full-time employment. You can define this period in one of the following infotypes: • Contract Elements (0016) [Page 28] • Monitoring of Dates (0019) Use For an employee to be eligible for guaranteed payment, he must fulfill the minimum period of the two probation periods. Both probation periods are also used to calculate the pro-rated period for the guaranteed payment. 24 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Statutory Probation Period PY-HK Statutory Probation Period Definition The statutory probation period is the time period an employee must be with a company to be entitled the full benefits from the company. Use The statutory probation period is used to calculate the number of eligible days, as well as the number of calendar and anniversary months used to determine an employee's guaranteed payment. You should make sure that the statutory probation period defined in the function (HKEOY) used to calculate the abovementioned parameters is accurate. This is done via the maintain maximum statutory probationary period [Ext.] step in the Hong Kong payroll implementation guide (IMG). See also: Probation Periods [Page 24] December 1999 25

PY-HK Payroll Hong Kong SAP AG PY-HK Defining the Company's Probation Period PY-HK Defining the Company's Probation Period Use Besides being the period for confirming the employee's full-time employment, the company's probation period is used, together with the statutory probation period [Page 25], to determine the guaranteed payment for the employee. Prerequisites You should check that the statutory probation period is correctly defined. You can do this via the maintain maximum statutory probationary period [Ext.] step in the Hong Kong payroll implementation guide (IMG). Procedure To define the company's probation period with the Contract Elements infotype (0016) [Page 28]: 1. From the Easy Access menu, choose Human Resources → Personnel management → Administration → HR Master Data → Maintain. The Maintain HR Master Data screen appears. 2. Enter the employee's Personnel number, and select the Contract Elements infotype (0016). Then choose New or Change. The Contract Element screen appears. 3. In the Deadline section of the screen, enter the probation period for the employee. 4. If applicable, you can enter the extended probation end date. 5. Save the entry. To define the company's probation period with the Monitoring of Dates infotype (0019): 1. From the Easy Access menu, choose Human Resources → Personnel management → Administration → HR Master Data → Maintain. 2. The Maintain HR Master Data screen appears. 3. Enter the employee's Personnel number, and select the Monitoring of Dates infotype (0019). Then choose New or Change. 4. The Monitoring of Dates screen appears. 5. Select Expiration of Probation as the Date type, and enter the date on which the probation expires. 6. Save the entry. 26 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Guaranteed Payments-related infotypes PY-HK Guaranteed Payments-related infotypes Definition For the system to calculate an employee's guaranteed payment, you must enter the relevant data required to determine the guaranteed payment. You enter this data via the following infotypes: Contract Elements (0016) [Page 28] - There is a section in this infotype where you can enter the information regarding an employee's guaranteed payment. You can also enter the company's probation period [Page 24] information here. Monitoring of Dates (0019) - You can also enter an employee's company's probation period information in this infotype. The system takes the information from either the Contract Elements infotype or here. In addition, you must maintain the respective infotypes that generates the calculation bases used to calculate guaranteed payments. For example, if you want to use an employee's salary, you must maintain the Basic Pay infotype (0008). December 1999 27

PY-HK Payroll Hong Kong SAP AG PY-HK Contract Elements Infotype (0016) - Hong Kong PY-HK Contract Elements Infotype (0016) - Hong Kong Use The Contract Elements infotype for Hong Kong includes a section where you can enter the guaranteed payment information for an employee. In addition, the company's probation period [Page 24] information you enter here is used to determine if the employee is eligible for the guaranteed payments benefit. Structure Contractual regulations In this section, you enter the information about the contract signed between the employee and the company. Guaranteed payment This section is where you enter the guaranteed payment information of the employee. Specifically, you specify the calculation basis that is used, and enter a multiplication factor of the calculation basis. This multiplication factor is usually entered as a number of "months", since the calculation basis is usually based on a monthly income. Deadlines In this section, you enter the different time-specific deadlines that are critical to the employee. The deadlines that you can enter here are: • Probation period • Notice period • Work permit expiration period Entry In this section, you enter the time-related information about the employee. For example, you can enter the initial date that the employee is hired with respect to the corporation. You can also enter a time period which can be credited to the employee's tenure. This can be used to calculate, for example, an insurance scheme contribution. See also: Guaranteed payments-related infotypes [Page 27] 28 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Defining an Employee's Guaranteed Payment PY-HK Defining an Employee's Guaranteed Payment Use You define the employee's guaranteed payments entitlement in the Contract Elements infotype (Infotype 0016). Prerequisites During the implementation stage, you have to setup the different groupings to pay guaranteed payment either with the regular payroll run, or during a separate off-cycle run. You should also make sure that the statutory probation period is correctly set. Please refer to the End-of-Year (EOY) Payments section of the Hong Kong payroll implementation guide (IMG). When entering an employee's personal data, you have to enter the employee's probation period [Page 26] with the organization. Procedure 6. From the Easy Access menu, choose Human Resources → Personal management → Administration → HR Master Data → Maintain. The Maintain HR Master Data screen appears. 7. Enter the employee's Personnel number, and select the Contract Element infotype (0016) [Page 28]. Then choose New or Change. The Contract Element screen appears. 8. In the Guaranteed payment section of the screen, enter the number of months the employee will be paid for the entire year. For example, if an employee is entitled one month of guaranteed payment, then he will be paid 13 months for the year. 9. If you want to base the employee's guaranteed payment on a different month's pay, enter the wage type in Calculation base field. The default calculation base is the employee's last month's pay. December 1999 29

PY-HK Payroll Hong Kong SAP AG PY-HK Net Payroll Accounting PY-HK Net Payroll Accounting Purpose The net payroll component for Hong Kong calculates employee's net remuneration according to statutory regulations. The Net Payroll converts gross wages into net wages and processes the taxes for the employees. Gross wages includes wage types entered in Personnel Administration and those generated within Gross Payroll. The net payroll also includes the processing of any regulatory and/or company retirement schemes that the employees may have enrolled in. The Net Payroll generates a results cluster of wage types for the employees in the payroll run. This cluster serves as the basis for all further processing and output from the payroll system. This includes the generating of statutory reports. Integration The Net Payroll is closely integrated with the other areas in SAP HR, as well as other SAP modules such as Financial Accounting and Controlling. 30 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Tax PY-HK Tax Purpose The tax component lets you set up and maintain an employee's tax data. The data is then processed and printed to the relevant IR56 tax reports that is to be submitted to the Hong Kong tax authority. Features Within the tax component for Hong Kong, you can: • Group employees into tax reporting groupings. • Declare the percentage of an employee's salary as overseas travel allowance. • Declare the percentage of an employee's salary as rental allowance. • Specify that the employee's quarters is provided by the company. In this case, you have three options: − The employer pays the rent and can recover a percentage of the rent from the employee. − The employee pays the rent and can recover a percentage of the rent from the employer. − The rental is recorded as an additional payment, and is entered manually into the system. • Enter relevant information that is required for the IR56 tax reports. December 1999 31

PY-HK Payroll Hong Kong SAP AG PY-HK Implementation of Tax PY-HK Implementation of Tax Purpose In order to process an employee's tax data, you need to tailor the tax component to your organization's specifications. Process Flow To implement the tax component, you must: • Set up the system to store the employee's address for the IR56 tax reports if an employee is provided with company-owned quarters. • Define the types of quarters an employee is entitled to rent, or stay at during an overseas trip. • Set up the different tax groupings in the organization. These groupings are used for tax reporting purposes. • Define the tax period for the different tax groupings. • Set up the tax reporting details required in the IR56 tax reports. Result Now that you have implemented the tax component, you can • Declare a percentage of the employee's salary as rental allowance. • Declare a percentage of the employee's salary as overseas travel allowance. • Specify the percentage deducted from the employee's salary as rental deduction. You can also specify other information the is required in the IR56 tax reports. 32 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Rental Allowance PY-HK Rental Allowance Definition According to the Inland Revenue Department (IRD), an employee's rental allowance is tax exempt up to a percentage of the employee's salary. As such, some organizations allow their employees to declare a portion of their salary as rental allowance. Use By specifying a percentage of the employee's salary as rental allowance, the accumulated amount over the financial year will be tax exempted. Integration The employee must provide rental receipts, which will be recorded in the system with the Receipts infotype. The Hong Kong payroll will reconcile the accumulated rental allowance with the actual receipts. If the accumulated receipts are less than the stipulated rental allowance, then the remaining portion of the rental allowance is no longer considered tax exempted. However, if the accumulated receipts exceed the rental allowance, the excess receipts are ignored. December 1999 33

PY-HK Payroll Hong Kong SAP AG PY-HK Creation of Rental Allowance PY-HK Creation of Rental Allowance Purpose By declaring a portion of an employee's salary as rental allowance, it will be reported in the relevant IR56 form that this portion of income is tax exempted. Process Flow To create rental allowance as a portion of an employee's remuneration package, 1. Maintain the employee remuneration wage types via the Check provisional rental & overseas travel processing [Ext.] entry within the Wage Types section of the Hong Kong payroll implementation guide (IMG). 2. Go to the General Tax infotype (0345) [Page 40] for the employee, and do the following: a. Select the Quarters provided by ER checkbox, and the type of accomodations in the Nature field. When you select the Quarters provided by ER checkbox, the % to Rent, EE pays rent to landlord and % recovered from ER fields are now enabled. b. Enter the percentage of the rental allowance in the % to Rent field. c. Select the EE pays rent to landlord checkbox, and enter 100 in the % recovered from ER field. d. Select the save button. Result You have entered the relevant rental allowance for the employee. To reconcile the rental allowance, you must enter the rental receipt information in the Recipts infotype. You should do this before you print the IR56 tax reports [Page 66]. 34 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Rental Deduction PY-HK Rental Deduction Definition Rental deduction is a recurring payment which the employee pays the employer for providing accommodations. Use If the organization provides the employee accomodations, it can recover the cost of the accomodation from the employee as rental deduction. In this case, the cost of the accommodation is not linked to the employee's salary, it is based on the actual cost to the employer when the employee accepts the accommodation. December 1999 35

PY-HK Payroll Hong Kong SAP AG PY-HK Creation of Rental Deductions PY-HK Creation of Rental Deductions Purpose If the organization provides accommodations to the employee, they can recover the cost of the accommodations from the employee by charging him a monthly rental deduction. Process Flow To deduct rental from an employee's remuneration, 1. Enter the rental amount as a recurring deduction payment using the Recurring Payments/Deductions infotype (0014). You can use the Rental Base wage type MX01. 2. Go to the General Tax infotype (0345) [Page 40] for the employee, and do the following: a. Select the Quarters provided by ER checkbox, and the type of accommodations in the Nature field. When you select the Quarters provided by ER checkbox, the % to Rent, EE pays rent to landlord and % recovered from ER fields are now enabled. b. Select the ER pays rent to landlord checkbox, and enter 100 in the % recovered from EE field. c. Select the save button. Result The employee will have a rental deduction equal to the cost entered in wage type MX01. 36 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Overseas Travel Allowance PY-HK Overseas Travel Allowance Definition According to the Inland Revenue Department (IRD), an employee's overseas travel allowance is tax exempt up to a percentage of the employee's salary. As such, some organizations allow their employees to declare a portion of their salary as overseas travel allowance. Use By specifying a percentage of the employee's salary as overseas travel allowance, the accumulated amount over the financial year will be tax exempted. Integration The employee must provide overseas travel receipts, which will be recorded in the system with the Receipts infotype. The Hong Kong payroll will reconcile the accumulated overseas travel allowance with the actual receipts. If the accumulated receipts are less than the stipulated overseas travel allowance, then the remaining portion of the overseas travel allowance is no longer considered tax exempted. However, if the accumulated receipts exceed the overseas travel allowance, the excess receipts are ignored. December 1999 37

PY-HK Payroll Hong Kong SAP AG PY-HK Creation of Overseas Travel Allowance PY-HK Creation of Overseas Travel Allowance Purpose By declaring a portion of an employee's salary as overseas travel allowance, it will be reported in the relevant IR56 form that this portion of income is tax exempted. Process Flow To create overseas travel allowance as a portion of an employee's remuneration package, 1. Maintain the employee remuneration wage types via the Check provisional rental & overseas travel processing [Ext.] entry within the Wage Types section of the Hong Kong payroll IMG. 2. Go to the General Tax infotype (0345) [Page 40] for the employee, and enter the percentage of the employee's salary that is to be declared as overseas travel allowance. You can find this field directly under the employee's tax file number. Result You have declared the overseas travel allowance for the employee. To reconcile this overseas travel allowance, you must enter the overseas travel receipts in the Recipts infotype. You should do this before you print the IR56 tax reports [Page 66]. 38 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Tax Infotypes PY-HK Tax Infotypes Definition These are the infotypes you require to record and process an employee's tax data. Use Structure Integration December 1999 39

PY-HK Payroll Hong Kong SAP AG PY-HK Tax (0345) PY-HK Tax (0345) Definition This infotype stores the relevant information required for the processing of an employee's tax information. Use Within this infotype, you can record: • The employee's enrollment in the rental and overseas travel allowance scheme. • The percentage of salary declared as rental and overseas travel allowance. • The amount deducted from the employee for accommodation provided by the employer. • The employee's plan to depart from Hong Kong upon termination of his employment. You can enter the reason of his departure and the country he is going to. • Information that is relevant to the IR56 tax reports{link}. Structure The % to os trav field states the percentage of the employee's wages that is to be considered as overseas travel allowance, and is therefore exempted from tax. Rental The Quarter provided by ER and Nature fields are for the IR56 tax reports. By selecting ER pays rent to landlord, and specifying the percentage recovered from EE, you can create a rental deduction from the employee. By selecting EE pays rent to landlord, and specifying the percentage recovered from ER, you can create a rental allowance for the employee. You can also specify that the rental allowance is entered manually as an additional payment. Other info related to IR56 This section provides relevant information that is required in the IR56 tax reports, such as: When the employee plans to leave Hong Kong. When the employee's salary is paid by the employer. If the employee is only working part-time for the company. In this case, you can specify the principal employer. 40 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Creating tax data for an employee PY-HK Creating tax data for an employee Procedure 20. From the Easy Access menu, choose Human Resources → Personnel management → Administration → HR Master Data → Maintain. The Maintain HR Master Data screen appears. 21. Enter the employee's personnel number, and then enter 0345 in the Infotype field of the Direct selection section of the screen (to access the Tax infotype (0345) [Page 40]). 22. Then select the Create button. The Create Tax screen appears. 23. Enter the appropriate tax information for the employee into tax infotype. 24. Save the entry when you are done. Result You have entered the relevant tax data for the employee. December 1999 41

PY-HK Payroll Hong Kong SAP AG PY-HK Contribution Plan PY-HK Contribution Plan Purpose MPF [Page 8] and some company retirement schemes require employee and employer contributions. This component records and processes these contributions while the employee is enrolled in such schemes. Integration For each contribution plan, you need to have a corresponding entitlement plan [Page 11] to record and process the entitlement owed to the employee. Features With the contribution plan, you can: • Define the eligibility for entry into the retirement schemes. This may depend on, among other things, the seniority of the employee, the employee's occupation and location. • Group all employees that are eligible to join the same retirement schemes. • Allow employees to transfer from one eligible retirement scheme to another. • Recognize some portion of the employee's previous years of service when calculating his schedule for contribution. • Divide employee and employer contributions into mandatory and voluntary portions. You can also define the amount value for each portion to be based on the employees' years of service, age and income. • Set up contributions as a percentage of the employee's salary or a fixed sum. • Define alternative contribution amounts when an employee's total cash income either falls below a minimum value, or exceeds a maximum value. 42 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Implementation of Contribution Plan PY-HK Implementation of Contribution Plan Purpose By implementing the contribution plan, you can record and process the contribution portion of the MPF [Page 8] or other company retirement schemes available to the employees. Prerequisites You also need to implement the entitlement portion [Page 12] of such schemes. Process Flow Implementing the contribution plan involve the following steps: • Create the different schemes that are available for the employees to enroll. • Define the eligbility groupings used to differentiate groups of employees from enrolling in different schemes. You must also define the eligibility period for each grouping. • Create the rules for transferring from one scheme to another. • Create specific rules to determine the default contribution amounts. • Set up the matrix of rules that are used to decide the level of contributions by employees and employers. The rules include: − the employee's age − the employee's length of service (with option to include any previous length of employment) − the employee's salary • Set up the non pro-rated calculation bases for those employees that enrol in a scheme after the start of a payroll period. This also applies to the situation when an employee must contribute the entire contribution for the payroll period regardless of any absence taken during that period. • Define the type and nature of the schemes that are available for the different groups of employees. Below are some examples of the different types and natures of schemes: Schemes Example 1 Example 2 Type Employer sponsored scheme Master trust scheme Nature Company self funding Mandatory provident fund • Enter the details of the organization that provide each scheme. Some schemes may be provided internally, while others are provided by external organizations. • Define specific information about each scheme, including the provider, the wage type that provides the employee's salary, the wage types where the contributions are stored and more. • Define any special rules that applies to the scheme. • Customize the proration and cumulation of contribution plan wage types, if applicable. December 1999 43

PY-HK Payroll Hong Kong SAP AG PY-HK Implementation of Contribution Plan You can use the Contribution Plan [Ext.] section of the Hong Kong payroll implementation guide (IMG) to implement the abovementioned steps. Result Once you have implemented the contribution plan, you are now able to: • Group the employees into eligible groups. • Enrol the employees to the relevant contribution plan. • Transfer the employees from one eligible plan to another. 44 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Contribution Plan Infotypes PY-HK Contribution Plan Infotypes Definition These are the infotypes you require to record and process the contribution portion of MPF and company retirement schemes. Integration These schemes also require corresponding entitlement plan infotypes [Page 13] to record and process the employee's entitlement. December 1999 45

PY-HK Payroll Hong Kong SAP AG PY-HK Contribution Plan (0346) PY-HK Contribution Plan (0346) Definition This infotype stores the contribution portion of a MPF [Page 8] or company retirement scheme that the employee enrolls in. Use When an employee enrolls in a scheme, you can enter the enrollment details for the contribution portion of the scheme. This includes administrative details and the contribution levels. You can also specify different contribution levels if the employee's income falls within different specific ranges. The three income ranges that exists are as follows: • Less than minimum relevant incomed • Within the normal income range • Greater than maximum relevant income Structure The account number field contains a unique ID provided to the employee who is enrolled in the scheme. Normal contribution You can either choose the default contribution levels or specify alternative levels. You use the Hong Kong payroll implementation guide (IMG) to set the default contribution levels [Ext.]. For alternate levels, you can specify the contributions as: Flat rate Specifies a flat percentage, for example, 5% of the employee's salary Flat amount Specifies a fixed amount, for example, $500. Excess rate Specifies a percentage in excess of the mandatory amount, for example, the mandatory contribution plus 5% of the employee's salary. Excess amount Specifies an amount in excess of the mandatory amount, for example, the mandatory contribution plus $500. Less than minimum relevant income This section specifies the contribution levels if the employee's relevant income is less than the minimum relevant income. For this to take effect, you should have defined the income range for the contribution plan in the payroll IMG for Hong Kong. Similar to the Normal contribution section, you can either choose the default contribution levels or specify alternative levels. Greater than maximum relevant income This section specifies the contribution levels if the employee's relevant income is more than the maximum relevant income. Similar to the Normal contribution section, you can either choose the default contribution levels or specify alternative levels. 46 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Contribution Plan (0346) Integration As all contribution plans are eventually paid back to the employee, every contribution plan will have a matching entitlement plan (0347) [Page 14]. December 1999 47

PY-HK Payroll Hong Kong SAP AG PY-HK Assigning a Contribution Plan PY-HK Assigning a Contribution Plan Use Some retirement schemes, including MPF [Page 8], require a regular contribution from both the employee and the employer. Assigning the appropriate contribution plan allows you to record the contribution amounts from both employee and employer. This amounts are then used in the payroll run to calculate the employee's net income. Prerequisites When an employee terminates his employment, he can expect to receive an entitlement from the retirement scheme he enrolled in. This means that the system also needs to record and process the entitlement data as well. Procedure 25. From the Easy Access menu, choose Human Resources → Personnel Management → Administration → HR Master Data → Maintain. The Maintain HR master data screen appears. 26. Enter the employee's personnel number, and then enter 0346 in the Infotype field of the Direct selection section of the screen (to access the Contribution Plan infotype (0346)). 27. Then select the Create button. A list of eligible MPF and ORSO-type schemes appears. 28. Select the appropriate scheme from the list. The Create Contribution Plan screen appears. 29. Enter the appropriate contribution plan information for the employee into contribution plan infotype [Page 46]. 30. Save the entry when you are done. Result The employee is now enrolled into the selected contribution plan. The system will automatically display the corresponding entitlement plan for you to enter the entitlement data for this scheme. See also: Assigning an Entitlement Plan [Page 15] 48 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Transferring Contribution Plans PY-HK Transferring Contribution Plans Use During the course of his employment, an employee may transfer from one retirement scheme to another. For example, when he moves to a more senior position, he may choose to upgrade his retirement scheme. You can reflect this transfer of contribution plans, including recording any brought forward credit from the old scheme. Prerequisites You should have already set up the rules for transferring between eligible contribution plans. You can do this via the Define contribution plan transfer rules [Ext.] in the Hong Kong payroll implementation guide (IMG). Procedure 31. From the Easy Access menu, choose Human Resources → Personnel Management → Administration → HR Master Data → Maintain. The Maintain HR master data screen appears. 32. Enter the employee's personnel number, and then enter 0346 in the Infotype field of the Direct selection section of the screen (to access the Contribution Plan infotype (0346)). 33. Then select the Change button. 34. Select the appropriate MPF and ORSO-type scheme from the list. The Change contribution plan screen appears. 35. Select the Transfer button. The Transfer contribution plan dialog box appears for you to enter the plan to transfer to. 36. Choose the contribution plan that the employee is being transferred to. A new Create contribution plan screen appears for you to enter the new data. 37. Enter the information for the new contribution plan in the appropriate fields. 38. Save the entry when you are done. Result The employee is now enrolled into the new contribution plan. The system will then automatically display the corresponding entitlement plan infotype (0347) [Page 14] for you to enter the entitlement data for this new scheme. See also: Assigning a Contribution Plan [Page 48] Assigning an Entitlement Plan [Page 15] December 1999 49

PY-HK Payroll Hong Kong SAP AG PY-HK Contribution/Entitlement Eligibility (0349) PY-HK Contribution/Entitlement Eligibility (0349) Definition This infotype defines the retirement schemes that the employee can enrol in. These schemes include company retirement schemes [Page 9] as well as MPF [Page 8] schemes. Use An employee is mandated to join the MPF scheme. He or she may also be eligible to join other company retirement schemes, depending on the employee's seniority and occupation, as well as other company requirements. The system allows you to organize the employees into different groups, with each group eligible for specific schemes. 50 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Eligibility Grouping for Contribution Plan PY-HK Eligibility Grouping for Contribution Plan Use For each contribution plan, you can assign a group of employees that are eligible for this plan. This enables an organization to tailor the retirement schemes to specific groups of employees. For example, you may have one contribution plan for executives and another for general staff. Integration Once you create eligibility groups for the contribution plans, you can also create rules for transferring from one eligbility contribution plan to another. Activities Before you can assign the eligibility grouping for each employee, you need to set up the eligibility grouping for each contribution plan. This includes: • Defining the different employee groupings in your organization. • Assign all the contribution plans that are eligibility for each group of employees. • Defining the transfer rules for moving between eligibility contribution plans within a group. The steps mentioned above in setting up the eligibility grouping can be found in the implementation guide. After you have customized the eligibility groupings to reflect your organization, you can then assign each employee to the appropriate grouping. This assignment is done using the Contribution/Entitlement Eligibility infotype [Page 50]. December 1999 51

PY-HK Payroll Hong Kong SAP AG PY-HK Assigning the Eligibility Grouping PY-HK Assigning the Eligibility Grouping Use This is to assign an employee to the set of contribution plans he is eligible to enrol in. Prerequisites You have to set up the eligibility groupings with the implementation guide beforehand. You can do so via the Assign contribution plan eligibility [Ext.] step in the Hong Kong payroll implemention guide (IMG). Procedure 39. From the Easy Access menu, choose Human Resources → Personnel Management → Administration → HR Master Data → Maintain. The Maintain HR master data screen appears. 40. Enter the employee's personnel number, and then enter 0349 in the Infotype field of the Direct selection section of the screen (to access the Contribution/Entitlement Eligibilty infotype (0349) [Page 50]). 41. Then select the Create button. The Create Cont/Ent Eligibility screen appears. 42. Enter the appropriate contribution plan eligibility grouping for the employee. 43. Save the entry when you are done. Result The contribution plan eligibility grouping is created for the employee. 52 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Crediting previous years of service PY-HK Crediting previous years of service Use Some organizations allow their employees to take into account their previous employment when they enter a retirement scheme. You can enter this data in the employee's Contract Elements infotype (0016) [Page 28]. Procedure 44. From the Easy Access menu, choose Human Resources → Personnel Management → Administration → HR master data → Maintain. The Maintain HR master data screen appears. 45. Enter the employee's personnel number, and then enter 0016 in the Infotype field of the Direct selection section of the screen (to access the Contract Elements infotype). 46. In the Credit of Previous Service field, enter the years, months and days of previous employment that the retirement scheme should take into account. 47. Save the entry. Result The system will take into account the entered period of previous employment when calculating the contributions to enrolling into the retirement scheme. December 1999 53

PY-HK Payroll Hong Kong SAP AG PY-HK Deductions PY-HK Deductions Purpose The deductions component describes how some deductions can be handled in the R/3 system. 54 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Subsequent Activities PY-HK Subsequent Activities Purpose After processing Net Payroll, the SAP Payroll system includes a number of post-payroll activities that you can make use of. You can, for example, create electronic media for making direct deposits into employee's bank account. Integration You can post payroll results to the general ledger and controlling accounts in the Financial Accounting module of the SAP system. Features Final Payroll Processing allows you to: • Check that the payroll results have no inconsistencies before you release them • Directly deposit employee's pay • Print out employee's payslip • Post to Financial Accounting and Controlling December 1999 55

PY-HK Payroll Hong Kong SAP AG PY-HK Payroll Results Checking PY-HK Payroll Results Checking Purpose The payroll results check tool lets you evaluate the different payments made to and on behalf of the employees in a particular payroll area for a particular payroll accounting period. This allows you to check for inconsistencies in the payroll results prior to the final release of that period's payroll. Implementation Considerations You need to set up any additional user wage types that is to be used in the payroll results check tool. For more information, please refer to the Payroll Result Checking [Ext.] section of the Hong Kong payroll implementation guide (IMG). 56 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Evaluation of Payroll Results PY-HK Evaluation of Payroll Results Purpose Evaluating the payroll results prior to releasing the payroll enables you to check for inconsistencies that may arise from mistakes and errors. Hence you can correct these errors and re-run the payroll for that period, before releasing the payroll. Prerequisites You have to make sure that the payroll for the payroll area and period has been run before you can evaluate the payroll results. Process Flow Once the payroll has been run for a particular payroll area and period, you can evaluate the payroll results as follows: 1. Generate the payroll results check data to prepare the data for the payroll results check tool. You can use a batch job to generate for more than one payroll area or period. 2. Run the payroll results check tool. You will see a number of reports that you can use to analyse the payroll results for that period. Result From the reports of the payroll results check tool, you can compare the payroll results for different periods and check for inconsistencies. If you find any inconsistency, you can that check to see if it is an accounting error. When you are sure that there are no inconsistencies, you can then release the payroll results. December 1999 57

PY-HK Payroll Hong Kong SAP AG PY-HK Preparation of Payroll Results Check Data PY-HK Preparation of Payroll Results Check Data Use Before you can use the payroll results check tool, you need to prepare the payroll results check data. This is done by generating the payroll results check data for the appropriate payroll areas and periods. Integration You can display the generated payroll results check data at a later stage without the need to regenerate the data. This is useful if you generate a number of payroll results check data as an overnight batch job. You will then be able to see the generated payroll results data at a later time. Prerequisites You have to run the payroll before you can generate the payroll results check data. Activities You should generate the payroll results check data for each period sequentially. Changes made to data in one period will affect data in subsequent periods. Therefore, if you change data in one period, you must regenerate the payroll results check data for all subsequent periods. However, this only applies to the payroll results check data that falls within a single tax year. For performance reasons, you should create a batch input file to run this report during off-peak time. 58 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Generating Payroll Results Check Data PY-HK Generating Payroll Results Check Data Prerequisites You have to run the payroll for this period before you can generate the payroll results check data. Procedure 1. Choose Human resources → Payroll → Asia/Pacific → Hong Kong → Subs. activities → Per payroll period → Evaluation → Payroll results check tool → Preparation → Data generation. The Payroll results check tool: Generation screen appears. 2. Enter the relevant payroll area and period. 3. If you want the results to be written to the cluster, set the Data update required checkbox. 4. If you want to display the results of the generation on the screen, set the Results display required checkbox. 5. Choose the Execute button. Result The payroll results check data is generated for the period selected. If you had set the Result display required checkbox, the results of the generated data appears on the screen. See also: Displaying the Payroll Results Check Data [Page 60] Evaluating the Payroll Results Check Data [Page 62] December 1999 59

PY-HK Payroll Hong Kong SAP AG PY-HK Displaying the Payroll Results Check Data PY-HK Displaying the Payroll Results Check Data Use You can use this function to display the generated payroll results check data for a particular payroll area and period. This is especially useful if you had generated the payroll results check data using a overnight batch job. Prerequisites You have to generate the payroll results check data for the specific period before you can display the generated results. Procedure 6. Choose Human resources → Payroll → Asia/Pacific → Hong Kong → Subs. activities → Per payroll period → Evaluation → Payroll results check tool → Preparation → Data display. The Payroll results check tool: Display screen appears. 7. Enter the relevant payroll area and period. 8. Choose the Execute button. Result The summarized results of the payroll results check data appears on the screen. See also: Generating Payroll Results Check Data [Page 59] Evaluating the Payroll Results Check Data [Page 62] 60 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Payroll Results Check Tool PY-HK Payroll Results Check Tool Use Once you have generated the payroll results check data for all the relevant payroll areas and periods, you can then use the payroll results check tool to analyse the payroll data. Prerequisites You have to generate the payroll results check data before you can run the payroll results check tool. Features When running the payroll results check tool, you can restrict the check to only specific wage types that you are interested in. Otherwise, the default list of wage types is used. You can customize this list of wage types in the payroll customizing IMG for Hong Kong. You also have the option to exclude data of terminated employees (leavers) from the payroll results check tool until the end of the tax year. Activities When you execute the payroll results check tool, you will receive the following analysis: Payroll reconcialiation report Contains a list of all the incoming and outgoing payments (in terms of wage types) for the period. From this report, you can move back and forth to view data from preceding and subsequent periods. Payroll summary report Contains period and year-to-date amounts for the following wages: • Gross payment • Other payment • Total deductions • Net payment Breakdown of payments report Contains the list of payments that will or has been paid to employees, broken down by the methods of payment. Retroaction details report Contains a detailed listing of the retroactive payments for the period. Adjustment details report Contains a detailed listing of the adjustments for the period. December 1999 61

PY-HK Payroll Hong Kong SAP AG PY-HK Evaluating the Payroll Results Check Data PY-HK Evaluating the Payroll Results Check Data Prerequisites You have to generate the payroll results check data before you can run the payroll results check tool. Procedure 9. Choose Human resources → Payroll → Asia/Pacific → Hong Kong → Subs. activities → Per payroll period → Evaluation → Payroll results check tool → Evaluation. The Payroll results check tool screen appears. 10. Enter the relevant payroll area and period. 11. If you only want to analyse specific payments, enter the wage types that represent these payments. Leaving the Wage type selection option blank to have the system use the default list of wage types. 12. If you want data of terminated employees (leavers) to be included, select the Keep leavers until end of year checkbox. 13. Choose the Execute button. Result The Payroll reconciliation report appears on the screen. The top of the screen contains buttons to display the other reports evaluated by the payroll results check tool. See also: Generating Payroll Results Check Data [Page 59] Displaying the Payroll Results Check Data [Page 60] 62 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK Reporting PY-HK Reporting Purpose The reporting component provides the reports required for submitting year-end tax returns according to statutory regulations. December 1999 63

PY-HK Payroll Hong Kong SAP AG PY-HK Tax Reporting PY-HK Tax Reporting Purpose Regulation requires that a set of tax reports be submitted to the tax office. These are the IR56 tax reports that provides the tax authorities information to enable them to process an employee's tax for the financial period. The required tax reports that you have to generate include: IR56B Employee's return of remuneration and pensions for the tax year report. IR56E Notification by an employer of an employee who commences to be employed report. IR56F Notification by an employer of an employee who is about to cease to be employed report. IR56G Notification by an employer of an employee who is about to depart from Hong Kong report. Implementation Considerations The payroll IMG for Hong Kong sets up some of the tax reports default settings. Integration You need to have all the relevant information prepared in the R/3 system before you can generate the tax reports. 64 December 1999

SAP AG PY-HK Payroll Hong Kong PY-HK The Tax Reporting Process PY-HK The Tax Reporting Process Purpose For the organization, the tax reporting process consist of a number of reports that is to be sent of the tax authorities at specific times during an employee tenure with the organization. In addition, additional reports may be needed if the employee leaves the country or if any payroll data changes after a report has been submitted. Prerequisites Normally, you can generate a tax report only after a payroll run. Process Flow Below shows the various tax reports, the situation when these reports must be submitted, and it is implemented in the system. Tax report When to submit How it is implemented IR56E After an employee has been You can generate this report after completing hired. the first payroll run for that employee. IR56B At the end of the financial You can generate this report for all employees year. after completing the final payroll run for the finanical year. You have to resubmit this form if any payroll data has If additional payroll data should become change. available after the IR56B is submitted, then an amended IR56B form should be resubmitted after the subsequent payroll has been run. IR56F When the employee gives You can generate this report after entering the notice of termination. termination event for the employee. You have to resubmit this If additional payroll data should become form if any payroll data has available after the IR56F is submitted, then an change. amended IR56F form should be resubmitted after the subsequent payroll has been run. IR56G When the employee is You can generate this report after entering the leaving Hong Kong. departing Hong Kong information within the Tax infotype for Hong Kong. December 1999 65

PY-HK Payroll Hong Kong SAP AG PY-HK Generating a tax report PY-HK Generating a tax report Procedure To generate the IR56B at the end of the financial year, 1. From the Easy Access menu, choose Human Resources → Payroll → Asia/Pacafic → Hong Kong → Subs. activities → Annual → Country reporting → IR56B Report. The selection screen for the report appears. 2. User either the Personnel number or matchcode selection to select the employees. 3. Enter the relevant conditions in the General IR56B information section. 4. Select the Execute button. To generate any of the IR56E, F and G reports, or to generate the IR56B report a subsequent time, 1. From the Easy Access menu, choose Human Resources → Payroll → Asia/Pacafic → Hong Kong → Subs. activities → Period-independent → Country reporting. 2. Choose the appropriate report to generate. The selection screen for the relevant report appears. 3. User either the Personnel number or matchcode selection to select the employees. 4. If you are generating IR56E, F or G reports, select the relevant period that this report is valid. 5. Enter the relevant conditions to generate the reports. 6. Select the Execute button. Result The relevant reports will be generated and printed out to the selected printer. 66 December 1999

Hong Kong Payroll

by yaozm2001 on Sep 03, 2009

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Hong Kong Payroll Document Transcript