From: SHRM.org – A link to the online article can be found here.
Employment law differs significantly in Hong Kong from legal requirements in the United States. Employers who are unfamiliar with these laws risk liability, so learning about workers’ rights, the types of contracts used in the work relationship, and how companies may lawfully end the employment relationship is wise.
1. Key Minimum Employment Rights
The principal statute regulating the work relationship is the Employment Ordinance. Many benefits and protections under the ordinance are available only to “continuous employees”—workers who are employed under a continuous contract. A continuous employee must have worked for the same employer for at least four consecutive weeks and at least 18 hours each week.
2. The Employment Contract
In Hong Kong, employment contracts can be for an open term—that is, permanent—or a fixed term. If the period is not specified in the contract, it will be deemed to be a contract for one month, renewable from month to month once the employee has worked for at least 18 hours per week for a continuous period of four weeks.
The use of agency workers is not as common in Hong Kong as in certain other jurisdictions in Asia, partly due to the relative ease with which employers can terminate employment in Hong Kong.
There is no requirement for employment contracts to be in writing, although in practice, most are. English and Chinese are the official languages in Hong Kong. English is most commonly used by the legal, business, professional and financial sectors.
There is no restriction on the use of probationary periods, and they are common, typically ranging from three to six months. Regardless of what is written in a contract, either party may terminate the contract during the first month of a probationary period. Employers are not required to provide notice to the employee before ending an employment contract.
3. Working Time
There are no specific laws on working hours. However, a continuous employee is entitled to statutory holidays, statutory annual leave and at least one rest day every seven days.
4. Leave
Continuous employees with at least one year’s service are entitled to paid annual leave of up to 14 days, depending on length of service. Employers commonly provide enhanced contractual leave above the statutory minimum.
There are 12 statutory holidays in Hong Kong.
Continuous employees accrue a “sickness allowance” up to a maximum of 120 days.
Female employees are entitled to 10 weeks’ paid maternity leave, and male employees are entitled to five days’ paid paternity leave if certain eligibility criteria are met, including being a continuous employee.
5. Pay and Social Security
Hong Kong has had a statutory minimum wage since 2011, which is currently HKD 34.50 (approximately USD 4.40) per hour. This will increase to HKD 37.50 (approximately USD 4.78) per hour as of May 1. Payment of Hong Kong tax is the employee’s responsibility, and employers are not required to withhold tax through the payroll system.
The default statutory pension fund plan is called the Mandatory Provident Fund (MPF). Unless exempted, an employer is required to enroll an employee into an MPF plan within the first 60 days of employment. Both the employer and employee must contribute a minimum of 5 percent of the employee’s income into the fund, subject to a statutory cap of HKD 1,500 (approximately USD 191.10).
Many employers pay an end-of-year payment of one month’s base salary at Chinese New Year, although this is increasingly being replaced by performance-related bonuses.
6. Discrimination
Discrimination or harassment on the grounds of sex, pregnancy, marital status, disability, family status and race are prohibited.
7. Resolving Disputes
The Hong Kong Labor Tribunal has exclusive jurisdiction on certain labor issues, including disputes relating to employment contracts and claims about breaches of the Employment Ordinance. Parties are not entitled to legal representation in the tribunal.
8. Employee Representation
Employees are free to join unions, but union representation is low.
9. Business Transfers
There is no automatic transfer of employment when a business or assets are sold. The buyer is not obliged to make offers of employment to the seller’s employees. When offers of employment are made, they will generally include keeping continuity of service from the seller and employment on terms that are the same or no less favorable than those that existed between the employee and the seller.
10. Data Protection
Employers must comply with the general principles contained in the Personal Data (Privacy) Ordinance (PDPO). The PDPO governs the collection, use and handling of employees’ personal data.
11. Terminating Employment
Terminating employment is relatively straightforward in Hong Kong. With certain exceptions, the employment contract can be terminated by the company at any time by giving notice to the employee specified in the contract or making a payment in lieu of notice.
Minimum notice varies from seven days to one month, depending on the term of the contract. An employer may dismiss a worker without notice in limited circumstances, including in the case of gross misconduct, although the threshold to justify a summary dismissal is high.
The Employment Ordinance allows a continuous employee with at least two years’ service to make a claim for remedies against an employer for unreasonable dismissal if the employer dismisses the employee without a valid reason. Valid reasons include:
Certain categories of employees are also shielded from dismissal, including employees who are pregnant and those who are receiving the sickness allowance.
Statutory severance or long-service payments may be due, depending on duration of service and the reason for dismissal.
Reprinted with permission from SHRM.org. c 2019. All rights reserved.
