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The most significant and comprehensive piece of legislation regulating conditions of employment in Hong Kong is the Employment Ordinance.
The legislation provides the basic protection to employees including payment of wages, statutory holidays, wage deductions restriction, and many more benefits to all employees in Hong Kong, irrespective of the hours of work done by an employee. The Employment Ordinance safeguards the rights of employees in Hong Kong. In case, any of your employee falls under the ordinance protection, ensure that the employment contract meets the minimum requirements under the Employment Ordinance. The Employment Ordinance applies to all employees, regardless of their nationality with limited exceptions.
There are some other laws as well that are likely to apply to employees, notwithstanding contractual choice of law in the employment contract.
The employer in Hong Kong is responsible to maintain records of the wages paid and employment history of each employee for the previous one year. All the data should be kept at the employer’s place of business or employee’s place of employment, and should be preserved for at least 6 months after the discontinuation of an employment.
As per the Statutory Minimum Wage Ordinance, total sum of hours worked in each wage period must be recorded for the calculation of employee’s minimum wage.
Employees who are employed under a “Continuous Contract of Employment” – enjoys additional benefits such as paid annual leave, sickness allowance and much more.
An employee is considered being employed under a “Continuous Contract of Employment” when he has been working for an employer with minimum of 18 hours per week for not less than 4 weeks. In case of dispute, the employer has to prove that the employment was not continuous.
According to the Employment Ordinance, wages consists of all remunerations, allowances, earnings, service charges, tips, commission and payments for overtime.
It excludes the cost of accommodation, food, fuel, water, education, medical care or electricity provided by the employer, contribution of employer to retirement schemes, end of year payment, gratuity payable, bonus payment, traveling concession and allowances.
In Hong Kong, no employer can deduct wages of their employees except in cases as below:
Employers are bound to pay wages to employees on or before the due date, or within 7 days after it becomes due. An employer should terminate the contract according to its terms if he is unable to pay the wages.
Hong Kong laws has no fixed working hours, except for young person i.e., those below 18 years. Maximum working period for young persons is 8 hours a day or 48 hours a week.
Every employee employed in continuous employment contract, is entitled to one rest day every week or in every period of seven days. One rest day is counted as a period as long as 24 hours during which the employee can be absent from work. Payment for the rest day is subject to the contract.
No employer can force an employee to work on a rest day except in the event of:
The worked rest days should be substituted by the employer with other days.
Continuous employees with more than one year of service are provided with paid annual leave of up to 14 days, subject to tenure of service. Commonly in Hong Kong, increased contractual leave above the statutory minimum are offered by the employers.
In Hong Kong, there are 12 statutory holidays. In case a statutory holiday falls on the same day of a rest day, an alternative holiday be scheduled on the next day which should not be an alternative holiday, a statutory holiday or a rest day.
An employee is eligible for a holiday pay who is under a continuous contract for more than three months.
Both parties must mutually agree to the date for paid annual leave at least fourteen days in prior and should be utilized within 12 months of entitlement.
The daily pay for annual leave is calculated as the sum equal to the average daily wages of an employee in the past twelve months. In case an employee is entitled for more than 10 days of leave, he can “sell” his entitled leave for payment.
If an employer wishes to cease his business for granting annual leave, he must issue written notices at least before 1 month.
A “sickness allowance” up to a maximum of 120 days is given to continuous employees. The employment laws also provide for Paid Sickness Days in addition to Sickness Allowance.
Sickness Allowance is an additional benefit for employee under a continuous contract of employment. A contract of employment cannot be terminated while the employee is on paid sickness leave, but can be terminated for serious misconduct through summary dismissal.
Maternity protection is essentially given to female employees under a continuous contract of employment, with maternity leave, prohibition of heavy work, and protection from dismissal during the period. A medical certificate has to be presented by a female employee to confirm her pregnancy.
An employee under a continuous contract of employment is entitled to maternity leave pay only when the period of service exceeds forty weeks period before the commencement of maternity leave. The employer cannot dismiss a pregnant employee during this period except in exceptional circumstances. The employer should also prevent the pregnant employee from handling heavy work or any work which affects her fetus development.
The employee employed under continuous employment contract is entitled for end of year payment or annual payment also known as 13th month payment or end of year bonus, but it is presumed that it is not gratuitous nature or which is payable at the discretion of the employer, except if written terms or condition are expressed for other meaning as per the contract.
Severance Payment is granted by employer to an employee who is in employment under continuous contract for more than 24 months and dismissed by:
An employee under continuous contract of employment for more than 5 years is entitled for Long Service Payment when the employee is dismissed/resigns by following reasons:
The Hong Kong government allows for foreigners with special skills, knowledge, and experience although locals are given the first preference. Foreign professionals are divided into skilled and semi-skilled. Visas for semi-skilled professionals are valid for one-year period, and is non- renewable while skilled foreign professionals’ visas are renewable.
The MPF ordinance requires employers to enroll employees in a Mandatory Provident Fund (MPF) Scheme, subject to limited exceptions. Certain contributions to MPF must be made by employer and employee. There are certain exemptions for foreign nationals:
Contribution of 5% of the monthly cash income should be made by employees to MPF. The scheme is not compulsory for few employees, comprising:
Employees earning HKD 30,000 a month, must contribute up to HKD 1,500. In case of casual employees working on daily wages, a separate scale of contribution exists.
Termination of employment is comparatively clear in Hong Kong from other countries. The employment contract can be terminated by the company at any time, by serving notice of termination specified in the contract or making a payment in lieu of notice, with few exceptions.
Notice period may vary from seven days to one month, as laid down in the term of the contract. In cases of grave misconduct an employer may dismiss a worker without notice, although the threshold to justify a summary dismissal is high.
If the employer dismisses the employee without a valid reason i.e., misconduct, incompetence, lack of required qualifications or a layoff than the Employment Ordinance allows a continuous employee with more than two years’ service to induce a claim for remedies for unreasonable dismissal against an employer.
Statutory severance or long-service payments may be due, depending on duration of service and the reason for dismissal.
Generally, the employer must calculate and pay all the payment due to employee on termination. All the outstanding payment (except long service payment and severance payment) shall be paid on the date of termination or within seven days of termination.
Employers are prohibited from dismissing an employee (except in case of serious misconduct) in the following situations:
The Personal Data (Privacy) Ordinance regulates the collection and use of personal data in Hong Kong. It regulates an employer’s collection, use and disclosure of an employee’s personal data.
Employers must take reasonable care for the health and safety of their employees, including providing first aid equipment and prescribing precautions to be taken as per Occupational Safety and Health Ordinance (OSHO). The ordinance covers most industrial and non- industrial workplaces in Hong Kong. If an employee suffers an injury arising out of an accident which occurred in the course of employment, he is entitled for compensation. The employers should also comply with the Factories and Industrial Undertakings Ordinance and the Employees’ Compensation Ordinance.
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Copyright © Chandrawat & Partners. All Rights Reserved.
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