Articles

Everything About the Employment Ordinance in Hong Kong

By Will Elton, Last updated: 2021-07-12 (originally published on 2019-02-05)

What is employment ordinance?

The Employment Ordinance in Hong Kong states all of the important terms and conditions of employment law in Hong Kong. It covers all employees regardless of whether they are full-time, part-time or temporarily employed. The employees with ordinance are qualified for the rights and protection mentioned in ordinance. Basic terms and conditions must be met to maintain  the minimum standard. Be sure to learn about the employment ordinance in Hong Kong before signing the employment  contract for your new job.

Employees with Ordinance title, irrespective of their hours of work, are entitled to basic protection under the Ordinance, including payment of wages, restrictions on wage deductions and the granting of statutory holidays, etc.

In case the employee doesn’t fall under employment ordinance, then a mutual contractual agreement that dictates the terms and conditions between employer and employee must be included.

It applies to all employees excluding the condition of following:

  • a family member who lives in the same dwellings as the employer
  • an employee as defined in the Contracts for Employment Outside Hong Kong Ordinance
  • a person serving under a crew agreement under the Merchant Shipping (Seafarers) Ordinance, or on board a ship which is not registered in Hong Kong; and
  • an apprentice whose contract of apprenticeship has been registered under the Apprenticeship Ordinance, other than certain provisions of the Employment Ordinance.

Contract of Employment

The Contract of Employment is an agreement between employer and employee marking the terms and conditions to the job that they both agree. It should not violate any aspect of the employment ordinance, otherwise the said  contract of employment is considered illegal.

Before employment begins, an employer must clearly inform each employee each of the conditions of employment under which he is to be employed with regard to:

  1. wages (including rate of wages, overtime rate and any allowance, whether calculated by piece, job, hour, day, week or otherwise);
  2. wage period;
  3. length of notice required to terminate the contract; and
  4. if the employee is entitled to an end of year payment, the end of year payment or proportion and the payment period.

At all times, every employer must keep a record setting out the wage and employment history of each employee covering the period of his employment during the preceding 12 months. An employer who fails to stay in regulation of the Employment Ordinance or keep record of information regarding the employment contract may be liable to a fine of $10,000. Read more about the importance of the employment contract here.

Wages

“Wages” means all remuneration, earnings, allowances, tips and service charges, however designated or calculated, payable to an employee in respect of work done or work to be done. Allowances including travelling allowances, attendance allowances, commission and overtime pay are within the definition of wages. However, it does not include:

  1. the value of any accommodation, education, food, fuel, water, light or medical care provided by the employer;
  2. employer’s contribution to any retirement scheme;
  3. commission, attendance allowance or attendance bonus of a gratuitous nature or is payable only at the discretion of the employer;
  4. non-recurrent travelling allowance or the value of any travelling concession or travelling allowance for actual expenses incurred by the employment;
  5. any sum payable to the employee to defray special expenses incurred by him by the nature of his employment;
  6. end of year payment, or annual bonus which is of a gratuitous nature or is payable only at the discretion of the employer;
  7. gratuity payable on completion or termination of a contract of employment.

Overtime pay should also be included in calculating the above payments if :

  • it is of a constant character; or
  • its monthly average over the past 12 months is not less than 20% of the average monthly wages of the employee during the same period.

An employer is prohibited from deducting wages from his employee, except under the certain circumstances. An employer who makes an illegal deduction from the wages of an employee is liable to prosecution and, upon conviction, liable to a fine of up to $100,000 and imprisonment for one year.

What is Employee’s Rest Days?

Under a continuous employment contract, every employee is entitled to no less than one rest day per seven days. One rest day is counted as a continuous period of no less than 24 hours during which the employee does not need to work for his employer.

Rest day can be paid or unpaid depending on what employee and employer had agreed to.

Employers can appoint rest days to their employees in the contract or can also be appointed in a regular basis and/or irregular basis according to the nature of the industry.

The employer is responsible for appointing rest days, which can be either:

  • Regular rest days – the employer should inform his employees of the arrangement
  • Irregular rest days – before the beginning of each month, the employer must inform his employees, orally or in writing, of the appointed rest days for each employee

List of Statutory Holidays in Hong Kong

An employee, irrespective of their length of service, is entitled to the following 12 statutory holidays :

  1. the first day of January
  2. Lunar New Year’s Day
  3. the second day of Lunar New Year
  4. the third day of Lunar New Year
  5. Ching Ming Festival
  6. Labour Day, being the first day of May
  7. Tuen Ng Festival
  8. Hong Kong Special Administrative Region Establishment Day, being the first day of July 9. the day following the Chinese Mid-Autumn Festival
  9. Chung Yeung Festival
  10. National Day, being the first day of October
  11. Chinese Winter Solstice Festival or Christmas Day (at the option of the employer)

If the employer and employee agree, any day within 30 days before or after the statutory or alternative holiday may be taken by the employee as a substituted holiday. Before that the employee must arrange:

  • Alternative Holiday Arrangement
  • Prior Notice to Employee on the Date of Alternative Holiday

Important points about statutory holiday

  • If a statutory holiday falls on a rest day, the employee should be granted a holiday on the next day which is not a statutory holiday or an alternative holiday or a substituted holiday or a rest day
  • The employee’s holiday allowance pay should be paid to the employee no later than the day on which they are next paid their wages after that statutory holiday.
  • Regardless of whether an employee is entitled to holiday pay, an employer should grant his employee a statutory holiday, or arrange an “alternative holiday” or “substituted holiday”. 
  • An employer who, without reasonable excuse, fails to grant statutory holidays, alternative holidays or substituted holidays, or fails to pay holiday pay to an employee is liable to prosecution and, upon conviction, to a fine of $50,000.

Compulsory Work on Rest days

According to employment ordinance in Hong Kong, an employer cannot force employee to work on rest days except under two conditions:

  • in the event of a breakdown of machinery or
  • in any other unforeseen emergency.

Incase employee works on a rest day, a substitute day should be allocated within 30 days after the original rest day. In the event of a violation of the terms and conditions to rest days, the employer may be liable to receive a penalty of $50,000.

Voluntary Working on Rest Days

Except employees who are aged under 18 and working in industrial undertakings, an employee can work on rest days for wages. However, it is prohibited that the employment contract includes the conditions to make any type of payment (annual bonus or end of year payment) requiring work during rest days.

List of Different Types of Leave

Paid Annual Leave

An employer should give paid annual leave after having been employed under a continuous contract for 12 months. As per the employment ordinance in Hong Kong, annual leave is an employee’s right. The number of annual paid leave increases progressively from seven days to a maximum of 14 days according to length of service.

  • An employee shall take the paid annual leave to which he is entitled within the following period of 12 months.
  • Paid annual leave should be granted for an unbroken period. If the employee so requests, it may be granted is some conditions.
  • The daily rate of annual leave pay is a sum equivalent to the average daily wages earned by an employee in the 12-month period preceding the following specified dates.
  • An employer who, without reasonable excuse, fails to grant annual leave to an eligible employee is liable to prosecution and, upon conviction, a fine of $50,000.
  • An employee may choose to accept payment in lieu of the part of his leave entitlement which exceeds 10 days.
  • If an employee has been employed for a leave year and his employment contract is terminated, irrespective of the reasons of termination, he should be entitled to payment in lieu of any annual leave not yet taken.
  • If an employer intends to close down his business or part of his business for granting annual leave to his employees, he should inform the affected employees in writing at least one month in advance.

FURTHER READING: Annual leave in Hong Kong – A guide to Employee and Employer

Eligibility for Sickness

An employee is qualified for sickness allowance under the Sick leave policy if the following conditions are fulfilled:

  1. the sick leave taken is no less than four consecutive days (unless for any day off taken by a female employee for her pregnancy check-ups, post confinement medical treatment or miscarriage, any such day on which she is absent shall be counted as a sickness day and, subject to the following conditions, be paid sickness allowance);
  2. the sick leave is supported by an appropriate medical certificate; and
  3. the employee has accumulated a sufficient number of paid sick days

An employee shall not be entitled to sickness allowance under the following circumstances:

  • the employee, without reasonable excuse, refuses treatment by a company doctor of a medical scheme recognised by the Director of Health or disregards the advice of the doctor (if the recognised scheme of medical treatment operated by an employer does not cover treatment from a certain medical discipline, the employee may choose to receive treatment from any registered medical practitioner, registered Chinese medicine practitioner or registered dentist under that particular discipline) ;
  • the sick day falls on a statutory holiday on which the employee is entitled to holiday pay; or
  • compensation is payable under the Employees’ Compensation Ordinance in HK.

Important Points for Sick Leave

The daily rate of sickness allowance is the sum equivalent of four-fifths of the average daily wages earned by an employee in the 12-month period preceding the following specified dates. If an employee is employed for less than 12 months, the calculation shall be based on the shorter period.

An employer who without reasonable excuse fails to pay sickness allowance to an employee is liable to prosecution and, upon conviction, to a fine of $50,000.

An employee can accumulate paid sick days after having been employed under a continuous contract.

An employer is prohibited from terminating the contract of employment of an employee on his paid sickness day, except in cases of summary dismissal due to the employee’s serious misconduct.

RELATED READING: Will I Get Paid If I Get Sick During Coronavirus Outbreak?

Maternity Leave

As linked in many countries like Singapore, the Employment contract also includes the follow. A female employee employed under a continuous contract immediately before the commencement of her maternity leave and having given notice of pregnancy and her intention to take maternity leave in Hong Kong to the employer is entitled to the following periods of leave:  

  • a continuous period of 10 weeks of maternity leave;
  • if confinement occurs later than the expected date of confinement, a further period equal to the number of days from the day after the expected date of confinement to the actual date of confinement;
  • an additional period of leave for no more than four weeks on the grounds of illness or disability due to the pregnancy or confinement.

Taking of Maternity Leave

  •  With the agreement of her employer, a pregnant employee may decide to commence her maternity leave from two to four weeks before the expected date of confinement;
  • If the employee does not decide on the date, or fails to secure her employer’s agreement, the employee shall commence her maternity leave four weeks before the expected date of confinement;
  • Maternity leave commences on the date of confinement if it occurs before the scheduled maternity leave. In this case, the employee should give notice of the date of confinement and her intention to take 10 weeks’ maternity leave to her employer within seven days of her confinement.

Eligibility of Maternity Leave Pay

An employee is eligible for maternity leave pay if:

  1. she has been employed under a continuous contract for no less than 40 weeks immediately before the commencement of scheduled maternity leave;
  2. she has given notice of pregnancy and her intention to take maternity leave to her employer after the pregnancy has been confirmed. For example, the presentation of a medical certificate confirming her pregnancy to the employer; and
  3. she has produced a medical certificate specifying the expected date of confinement if so required by her employer.

Other Important Points for Maternity Leave

  • When the employee’s absence from work to attend medical examination in relation to her pregnancy, post confinement medical treatment or miscarriage is supported by an appropriate medical certificate, any such day on which she is absent shall be counted as a sickness day.
  • An employer is prohibited from dismissing a pregnant employee from the date on which she is confirmed pregnant by a medical certificate to the date on which she is due to return to work upon the expiry of her maternity leave if:
  1. the employee has been employed under a continuous contract, and
  2. she has served a notice of pregnancy to the employer.
  • If a pregnant employee produces a medical certificate discouraging her from handling heavy materials, working in places where gas injurious to pregnancy is generated, or doing other work injurious to pregnancy, the employer may not allocate such work to the employee.
  • Employees shall submit medical certificates issued by registered medical practitioners, registered Chinese medicine practitioners or registered midwives, if so required by employers where applicable, to be eligible for maternity protection.

FURTHER READING: Pregnant Woman should know about Maternity Leave in Hong Kong

Paternity Leave

A male employee is entitled to a paternity leave of 5 days if they are:

  1. the father of a newborn child or a father-to-be;
  2. employed under a continuous contract; and
  3. able to produce the required notification to the employer.

The employee must inform his intention to take paternity leave at least 3 months before the expected date of delivery of the child or at least 5 days before that date of paternity leave.

Eligibility for Paternity Leave Pay

A male employee is entitled to paternity leave pay if he –

  1. has been employed under a continuous contract for not less than 40 weeks immediately before the day of paternity leave; and
  2. has provided the required document to the employer within the following period (whichever period expires first) – (i) 12 months after the first day of paternity leave taken; or (ii) if he ceases to be employed, within 6 months after cessation of employment.

RELATED READING: Everything You Need To Know About Garden Leave

End of Year Payment

End of year payment means any annual payment (including double pay, 13th month payment, end of year bonus) of a contractual nature. It does not include any payment which is of a gratuitous nature or which is payable at the discretion of the employer.

An employee is eligible for an end of year payment if he has been employed under a continuous contract for a whole payment period. The payment period shall be the period specified in the employment contract, or a lunar year if it is not specified.

Termination of Contract of Employment

Either the employer or employee can terminate their continuous contract of employment by giving the other party the “due notice” in advance to its required length or “wages in lieu of notice” instead. Employment ordinance in Hong Kong gives right to both parties.

If the the due notice is given to opposite party shorter than its required length, wages in lieu of notice is compulsory to be given as a form of compensation to the opposite party unless the termination happens within the first month of probation period. The length of due notice varies according to the employment condition.

Nevertheless, both employer and employee bears the SAME liability related to the required length of due notice and paying wages in lieu of notice to the opposite party.

Contract of employment can further express the terms related to the required length of due notice and wages in lieu of notice, EO offer their minimum requirement as follows:

  • When the employment condition is still within probation but after the first month of probation, not less than 7 days notice is required to opposite party on termination (or referring to agreement but it must not less than 7 days)
  • When the employment condition is after the probation period (or no probation period), not less than 1 month notice is required to opposite party on termination (or referring to agreement but is must not less than 7 days).
  • Wages in lieu of notice is calculated by multiplying the average daily (or monthly) full wages earned by employee with the number of  days (or month) in the length of notice.

Termination Without Notice or Payment in lieu of Notice

An employer may summarily dismiss an employee without notice or payment in lieu of notice if the employee, in relation to his employment:

  1. wilfully disobeys a lawful and reasonable order;
  2. misconducts himself;
  3. is guilty of fraud or dishonesty; or
  4. is habitually neglectful in his duties.

Taking part by an employee in a strike is not a lawful ground for an employer to terminate the employee’s contract of employment without notice or payment in lieu.

Termination Payments

In general, the employer should calculate and pay all the payment to employee on termination of employment in Hong Kong. The items involved are usually as follows:

  • outstanding wages
  • wages in lieu of notice (if any)
  • payment of any untaken annual leave (pro rata payment for current leave year, if any)
  • end of year payment (pro rata payment for current payment year, if any)
  • long service payment or severance payment (if any)
  • other payment written in employment contract e.g. gratuity, provident fund, etc.

All the outstanding payment stated above (except long service payment and severance payment) shall be pay on the date of termination and within 7 days after.

As an employer or an employee one should understand clearly about employment ordinance in Hong Kong. Employee should know about what his/her right so that he/she is not over exploited in name of duty.

RELATED READING: Gig Economy – Are You Protected?

Reference
Labour.gov.hk

READ MORE: 
Official Employment Ordinance 

Tags: Hong Kong | human resources

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