What is annual leave in Hong Kong?

What is annual leave?

Annual leave refers to the period employees can be away from work while still receiving regular pay.

Employers generally provide this benefit to promote work-life balance and allow employees time for rest, travel, or to attend to personal matters. 

The specifics of annual leave—such as how many days are offered, whether it accumulates over time, and other conditions—may vary depending on jurisdiction, the employer’s policies, and any collective bargaining agreements in place.

Annual leave is usually distinct from other types like sick, maternity/paternity, public holidays, and other special entitlements.

The terms and conditions for annual leave should be clearly stated in an employment contract or the employee handbook.

How long is annual leave in Hong Kong?

In Hong Kong, annual leave is governed by the Employment Ordinance, which sets out the statutory rules for annual leave entitlements. This is distinct from statutory holidays, which are separate from annual leave and are also outlined in the Ordinance.

An employee’s entitlement to paid annual leave increases progressively from seven days to a maximum of 14 days according to his length of service and is entitled to paid annual leave if employed under a continuous contract every 12 months.

Hong Kong annual leave calculator

Years of Service	Annual Leave Entitlement
1	7
2	7
3	8
4	9
5	10
6	11
7	12
8	13
9 or above	14

Important points to note:

• Employees are generally eligible for annual leave after completing 12 months of service with the same employer.
• Some employers may allow employees to carry unused annual leave to the following year, although this is not a legal requirement. The specific rules regarding carrying over or accumulating annual leave are usually outlined in the employment contract or company policy.
• Certain categories of employees, such as domestic helpers, may have different terms specified in their contracts, but these must also meet the minimum requirements laid out in the Employment Ordinance.
• If a statutory holiday falls within an employee’s annual leave period, the employer must generally extend the annual leave by one day.

Payment of annual leave in Hong Kong

Employees get annual leave payment as the sum of average daily wages earned by an employee 12 months before the specified date.

If the employee still needs to complete 12 months, the calculation shall be based on the shorter period.

An employee may accept payment in lieu for leave entitlement exceeding ten days. If this option is taken, the employer should pay by the regular payday after the period of annual leave taken.

Employers may select 12 consecutive months as the common leave year for all employees, e.g. Jan 1 to Dec 31 or any period of 12 months commencing on the day on which employment began.

Employees employed for under 12 months in the common leave year receive their leave entitlement pro rata, rounded up to a full day of leave.

Employers may grant employees the pro rata annual leave before the next common leave year starts or allow it to be brought forward.

For example:

• Common leave year: Jan 1 to Dec 31 2020
• Start of employment: Sep 1 2020
• Pro rata annual leave = 122 / 365 X 7 = 2.34 days (round up to 3 days)
• (122 is the days between Sep 1 and Dec 31 2020)
• The employee may take three days of leave in 2023 or combine it to ten days in 2024.

Payment of annual leave pay on termination of employment contract

Leave is accrued in any 12-month period, commencing on the day the employment began.

In cases of employment contract termination, if the employee has served at least three months, irrespective of the reasons for termination, they are entitled to payment in lieu of any annual leave not yet taken. 

In calculating the daily payment rate, the contract termination date should be adopted as the end date. 

Annual leave during a business shutdown in Hong Kong

An employer might choose to close his business to grant annual leave to his employees. In such a situation, the employer must inform the affected employees in writing at least one month in advance.

In a period of shutdown, the employer might grant paid annual leave during the whole period even if the employee is not yet entitled to it.

If the annual leave an employee is entitled to exceeds the number of days of a business shutdown, he may take the remaining annual leave immediately following the shutdown.

Notes on annual leave in Hong Kong

Annual leave entitlement:

• Employees are generally eligible for annual leave after completing 12 months of service with the same employer.
• The number of annual leave days granted typically increases with the length of employment. For instance, an employee is typically entitled to 7 days of annual leave after one year of service. This may increase incrementally based on the number of years worked, up to a maximum of 14 days.

Calculation:

• The amount of annual leave is often calculated in proportion to the length of employment based on the completed years of service.

Carrying over leave:

• Some employers may allow employees to carry unused annual leave to the following year, although this is not a legal requirement. The specific rules regarding carrying over or accumulating annual leave are usually outlined in the employment contract or company policy.

Payment:

• During annual leave, employees should receive their usual wages. Employees are typically entitled to payment in lieu for any accrued but unused annual leave if employment terminates.

Special circumstances:

• If a statutory holiday falls within an employee’s annual leave period, the employer must generally extend the annual leave by one day.

Exceptions:

• Certain categories of employees, such as domestic helpers, may have different terms specified in their contracts, but these must also meet the minimum requirements in the Employment Ordinance.

Employers are free to offer more generous annual leave benefits than what is statutorily required.

The specific terms should be clearly spelt out in the employment contract.

Employees and employers should be familiar with the terms to ensure compliance and understand their respective rights and obligations.