Everything You Need to Know About the Employment Ordinance in Hong Kong
By Will Elton, Updated: 2023-09-12 (published on 2019-02-05)
What is the employment ordinance in Hong Kong?
The Employment Ordinance is the primary legislation governing employment conditions and rights in Hong Kong.
It lays out the contractual obligations between employers and employees, establishing the minimum terms and conditions of employment. This includes rules related to wages, working hours, rest days, statutory holidays, annual leave, termination of employment, severance payment, and more.
It’s worth noting that while the Employment Ordinance covers a wide range of workers, there are certain exemptions, and not all workers may be entitled to all the protections under the law.
If you’re an employer or an employee in Hong Kong, it’s crucial to be familiar with the specifics of this law to understand your rights and responsibilities.
For employees, learn about the employment ordinance in Hong Kong before signing the employment contract for your new job.
What if an employee doesn’t fall under the employment ordinance in Hong Kong?
If the employee doesn’t fall under the employment ordinance, a mutual contractual agreement that dictates the terms and conditions between employer and employee must be created.
This applies to all employees, excluding the 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 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 of the job. 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 inform each employee of the conditions of employment under which they are to be employed:
- Wages (including the rate of wages, overtime rate and any allowance, whether calculated by piece, job, hour, day, week or otherwise);
- Wage period;
- Length of notice required to terminate the contract; and
- 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 a 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 in Hong Kong
The term “wages” encompasses all forms of remuneration, earnings, allowances, tips, and service charges, irrespective of their designation or calculation method, due to an employee for work completed or completed.
This definition includes various allowances such as travel allowances, attendance allowances, commission, and overtime pay.
However, it does not include the following:
- The value of any accommodation, education, food, fuel, water, lighting, or medical care provided by the employer;
- Contributions made by the employer to any pension scheme;
- Commission, attendance allowances, or bonuses that are discretionary;
- One-off travel allowances or the value of any travel concessions or allowances intended to cover the actual expenses incurred due to the employment;
- Any amount paid to the employee to cover extraordinary expenses resulting from the nature of their job;
- End-of-year payments or annual bonuses that are discretionary;
- Any gratuity payable upon the conclusion or termination of an employment contract.
Overtime pay should be included in the calculation of the above payments if:
- It is consistent or
- Its monthly average over the preceding 12 months equals or exceeds 20% of the employee’s average monthly wages during that same period.
Employers are forbidden from deducting an employee’s wages except under specific conditions.
Any employer who unlawfully deducts from an employee’s wages may be subject to prosecution and, if convicted, may face a fine of up to £100,000 and up to one year’s imprisonment.
HK employment ordinance rest days
Under a continuous employment contract, every employee is entitled to at least 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.
A rest day can be paid or unpaid, depending on what the employee and employer had agreed to.
Employers can appoint rest days to their employees in the contract or be appointed regularly and/or on an 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
Compulsory work on rest days
According to the employment ordinance in Hong Kong, an employer cannot force an employee to work on rest days except under two conditions:
- In the event of a breakdown of machinery or
- In any other unforeseen emergency.
If an 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 of rest days, the employer may be liable to receive a penalty of $50,000.
Voluntary working on rest days
Except for employees under 18 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 payment (annual bonus or end-of-year payment) requiring work during rest days.
List of Statutory Holidays in Hong Kong
An employee, irrespective of their length of service, is entitled to the following 12 statutory holidays :
- the first day of January
- Lunar New Year’s Day
- the second day of the Lunar New Year
- the third day of the Lunar New Year
- Ching Ming Festival
- Labour Day, the first day of May.
- Tuen Ng Festival
- Hong Kong Special Administrative Region Establishment Day is the first day of July 9, following the Chinese Mid-Autumn Festival.
- Chung Yeung Festival
- National Day is the first day of October.
- 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
Essential points about statutory holiday
- Suppose a statutory holiday falls on a rest day. In that case, the employee should be granted a holiday on the following day, which is not a statutory holiday, an alternative holiday, 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.
Employment ordinance annual leave in Hong Kong
An employer should give paid annual leave after being employed under a continuous contract for 12 months.
As per the employment ordinance in Hong Kong, annual leave is an employee’s right. The yearly 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 12 months.
- Paid annual leave should be granted for an unbroken period. If the employee so requests, it may be granted in 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 accept payment in lieu of the part of his leave entitlement exceeding ten days.
- If an employee has been employed for a leave year and his employment contract is terminated, irrespective of the reasons for 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 company for granting annual leave to his employees, he should inform the affected employees in writing at least one month in advance.
Eligibility for sickness leave
An employee is qualified for sickness allowance under the Sick leave policy if the following conditions are fulfilled:
- 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);
- An appropriate medical certificate supports the sick leave and
- 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 months 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.
As linked in many countries like Singapore, the Employment contract includes the following.
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 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 ten 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:
- She has been employed under a continuous contract for no less than 40 weeks immediately before the commencement of scheduled maternity leave;
- 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
- 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 a 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:
- The employee has been employed under a continuous contract, and
- 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.
A male employee is entitled to a paternity leave of 5 days if they are:
- the father of a newborn child or a father-to-be;
- employed under a continuous contract and
- able to produce the required notification to the employer.
The employee must inform his intention to take paternity leave at least three months before the expected date of delivery of the child or at least five days before that date of paternity leave.
Eligibility for paternity leave pay
A male employee is entitled to paternity leave pay if he –
- has been employed under a continuous contract for not less than 40 weeks immediately before the day of paternity leave and
- 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 six months after cessation of employment.
End-of-year payment means any annual payment (including double pay, 13th-month payment, and end-of-year bonus) of a contractual nature. It does not include any gratuitous or payable payment at the employer’s discretion.
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
The employer or employee can terminate their continuous employment contract by giving the other party the “due notice” in advance to its required length or “wages in lieu of notice” instead.
The employment ordinance in Hong Kong gives rights to both parties.
Suppose the due notice is given to the opposite party shorter than required. In that case, wages in lieu of notice are compulsory to be given as compensation to the opposite party unless the termination happens within the first month of the probation period. The length of due notice varies according to the employment condition.
Nevertheless, both employer and employee bear 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. Employer ordinance offers their minimum requirement as follows:
- When the employment condition is still within probation but after the first month of probation, not less than seven days’ notice is required to the opposite party on termination (or referring to an agreement, but it must not be less than 7 days)
- When the employment condition is after the probation period (or no probation period), at least one month’s notice is required to the opposite party on termination (or referring to the agreement, but it must be at least seven days).
- Wages in lieu of notice are calculated by multiplying the average daily (or monthly) full wages earned by the employee with the number of days (or months) 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:
- Wilfully disobeys a lawful and reasonable order;
- Misconducts himself;
- Is guilty of fraud or dishonesty or
- He 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.
In general, the employer should calculate and pay all the payments to the employee upon termination of employment in Hong Kong. The items involved are as follows:
- Outstanding wages
- Wages in lieu of notice (if any)
- Payment of any untaken annual leave (pro rata payment for the current leave year, if any)
- End-of-year payment (pro-rata payment for the current payment year, if any)
- Long service payment or severance payment (if any)
- Other payments written in the employment contract, e.g. gratuity, provident fund, etc.
All the outstanding payments stated above (except long service payment and severance payment) shall be paid on the date of termination and within seven days after.
One should clearly understand the employment ordinance in Hong Kong as an employer or an employee. Employees should know their rights so they are not over-exploited in the name of duty.