A Brief Summary Of The Hong Kong Employment Ordinance

A Brief Summary Of The Hong Kong Employment Ordinance

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A Comprehensive Guide For Hong Kong Employment Ordinance

Finding An Employee

What Anti-Discrimination Laws Cover Staff Recruitment?

In Hong Kong, the Sex Discrimination Ordinance, Disability Discrimination Ordinance, Family Status Discrimination Ordinance, and Race Discrimination Ordinance collectively form the legal framework that prohibits discrimination in employee recruitment. These laws ban both direct and indirect discrimination against employees and job applicants based on the following grounds:

  • Sex, meaning whether the employee or candidate is male or female.
  • Marital status, including whether the employee or candidate is pregnant or breastfeeding.
  • Disability, encompassing physical and mental disabilities, whether total or partial, as well as illness, disfigurement, and learning disorders.
  • Family status, defined as having responsibility for the care of an immediate family member.
  • Race, which includes the race, color, descent, and national or ethnic origin of a person.

Therefore, an employer should ensure that one does not make discrimination statements in the advertisement of job offers or discriminating a particular candidate when considering offering him or her an employment chance, determining the conditions of employment, including wages, privileges, and seniority, or termination.

Are Employment Agencies Regulated?

Employers may use an employment agency either to assist in the search and selection of the right candidates who can fill the vacant positions or to hire the employees for them. 

According to the Employment Ordinance, if a person is working on a business that is aimed to get employment for another person or to provide the labor of another person to an employer, he/she is required to be licensed by the Commissioner for Labour, unless he/she is exempted. Employers can verify the licensing of the employment agency by the Labour Department website.

Hiring An Employee

Employee vs Independent Contractor?

In Hong Kong law, the employee and the independent contractor are two different categories. This contrast is referred to as the distinction between a contract of service and a contract for services. The employment ordinance entitlements and benefits are only available to an employee.

The opinion of whether a person is considered an employee or not is determined by the fact that the person performs their services as a businessman on their own account. It is a contract for services if the answer is yes. If the answer is no, then the contract is a contract of service. The courts approach the issue of this question by taking into account a number of factors. Nevertheless, there is no complete list of the factors that should be taken into account when answering that question, and also there can be no strict regulations about the importance that the various factors should have in each case. 

  • Control – The employment relationship rather than the independent contractor relationship will be created where the employer has the ability to control the individual to a high degree. Hence, for instance, if the way the individual does his/her work is set by the employer, the individual is more likely to be an employee. On the other hand, when a person is allowed to do his or her work the way he or she wants to, the person is more likely to be a dependent contractor.
  • Ownership of Tools and Hiring Own Staff – The chances of a formal employment relationship being created are lower when the individual provides his own equipment and hires his own staff to do his tasks.
  • The Possibility of Profit and the Risk of Loss – In an employment relationship, the individual is less likely to be involved where he/she can earn a profit from his/her management of the work or suffer a loss as a result of undertaking the work.

When Is An Employee Required To Have A Work Visa?

The permanent resident or the former permanent resident of Hong Kong has the right of abode and the right to land in Hong Kong and hence, cannot be subjected to any conditions on their stay. Hence, this kind of person does not need to have a work visa to work in Hong Kong.

On the contrary, an individual who does not have the right of abode and the right to land in Hong Kong must get a visa or entry permit to enter Hong Kong. Usually, an individual who comes to a country on a visitor or student visa will be obliged to a condition of stay to which he will not take up employment, whether paid or unpaid, or join in any business. Such a person will require a working visa to work in Hong Kong.

An individual who has a work visa is usually required to obey a rule of stay which states that he only work for a business or join it as the director of immigration may allow. A work visa thus usually authorizes an individual to work for a specific employer only. In case a person wants to switch his/her employer, he/she will have to get a new work visa. 

It is against the law for a company to hire someone who cannot be legally employed. An employer should make sure that the person is lawfully employable and also keep records to show that the person is lawfully employable.

Terms of Employment

Does The Employment Ordinance Apply To All Forms Of Employment Relationship?

Except for some cases, the Employment Ordinance is applied to all employees engaged under a contract of employment, as well as to the employer of such an employee and to the contract of employment between such an employee and his employer. Nevertheless, there is a clash of legal authority on whether global employers may choose to not to be conformed to the Employment Ordinance in order to make a unified employment agreement for senior executives for around the world.

Is It Necessary To Have An Employment Agreement In Writing Or Not?

Nevertheless, the Employment Ordinance necessitates that every employer needs to make an employee aware of something in an intelligible manner: 

  • the way the wages are computed and how frequently the wages are to be paid.
  • if the employee is going to be given a year-end payment then the amount and the time of such payment are to be determined.
  • the required length of time to deliver the notice for the termination of the employment contract. 

Nevertheless, it is a good practice for employers to adopt a written employment contract which helps to prevent any disputes concerning the terms of employment and to establish the rights of employers which the employment laws do not imply in the employment relationship (e. g. The right of the employer to terminate the employment while the employee is on garden leave.)

Does Hong Kong have a minimum wage?

Yes. According to the Minimum Wage Ordinance, an employee should be paid wages that are at least the minimum wage for any wage period. At the moment, 1st May 2023, the minimum wage rate is HK$40 per hour (approx. US$5).

The Employment Ordinance contains provisions that specify the employer’s duty to pay the wages, the time of payment of the wages, the way of paying the wages, and the strict restrictions on the deductions the employer can make from the employees’ wages.

Read An Overview Of The Minimum Wage Hong Kong

What Are The Standard Terms Of Employment In Hong Kong?

In Hong Kong, both the employer and the employee can decide on the terms of the pay and benefits package, as long as it meets the basic statutory requirements. Parties can agree on the terms of an employment contract, but the Employment Ordinance will make any agreement that reduces or eliminates any statutory right, benefit or protection of the employee, conferred by the Employment Ordinance. 

The significant terms of an employment contract are : 

  • the term of employment,
  • the employee’s position,
  • the probation period (if applicable), 
  • the employee’s responsibilities, salary including bonuses, other benefits, and rights (e) are the main factors that the employee’s job description should include. g. such as sick leave, annual leave, holidays, rest days, maternity leave, paternity leave, severance payment, long service payment, and mandatory provident fund).
  • The duration of the notice that is needed for the termination of the contract.

The contracts for some employment will contain other commercial matters such as the use and disclosure of confidential information and post-employment restraints.

Which Holidays Are The Employees Getting?

The Employment Ordinance states that an employee who is working under a “continuous contract” (which means that the employee must be continuously employed for a minimum of four consecutive weeks for at least 18 hours a week) of more than 3 months is eligible to receive paid statutory holidays.

Currently, there are 12 statutory holidays in Hong Kong: 

  • Lunar New Year’s Day;
  • The second of the Lunar New Year;
  • The third day of the Lunar New Year;
  • Ching Ming Festival;
  • Labour Day;
  • Tuen Ng Festival;
  • The day after the Chinese Mid-Autumn Festival;
  • Chung Yeung Festival;
  • Christmas Day or Chinese Winter Solstice Festival (the employer might choose one of them).
  • The first day of the new year;
  • Hong Kong Special Administrative Region Establishment Day;
  • National Day.

The possibility of the employer and the employee agreeing on the arrangement of the employee to work on a statutory holiday is subject to compliance with the statutory procedures. Moreover, the employee is provided with an alternative holiday in lieu.

Holiday statutes in the Employment Ordinance should be separated from the Holiday Ordinance in the General Holiday Ordinance. The general holidays consist of the statutory holidays in addition to the Sundays and the days that follow.

  • Good Friday;
  • The day after Good Friday; 
  • Easter Monday;
  • The Birthday of the Buddha;
  • Christmas Day (if the employer makes the Chinese Winter Solstice Festival a statutory holiday)
  • The first weekday after the Christmas Day

General holidays are generally observed by all banks, educational institutions, public offices, and government departments and, in most cases, many private employers observe general holidays though they are not obligated to do so.

Read Hong Kong 2024 Public Holidays

What Is The Amount Of Vacation Or Annual Leave That Employees Get?

The Employment Ordinance states that a person who is employed under a “continuous contract” is entitled to the statutory paid annual leave. As a consequence, the Employment Ordinance provides for a scaling of the minimum annual leave entitlements from 7 days (for those who have worked for more than 1 year but less than 3 years) to 14 days (for those who have worked for 9 or more years). This extra holiday comes along with the provision of statutory holidays.

Do the Employees Have the Right to Rest Days?

Yes. The Employment Ordinance states that a person who is employed under a “continuous contract” has the right to at least one rest day (i.e. a continuous period of no less than 24 hours without work) a week. This entitlement is also to the statutory annual leave and the statutory holidays. The Employment Ordinance does not mention if the rest days are in a paid or unpaid manner. If the employment contract is paid for on a monthly basis, the remaining days are usually paid and covered by the monthly wages of the employee.

Are Employees Allowed to Take Paid Sick Days?

According to the Employment Ordinance, a person who is working under a “continuous contract” for 1 month, before a sick day is entitled to sickness allowance. A right to the sickness allowance will be given at the pace of 2 paid sick leave days per month during the first year of employment and 4 paid sick leave days per month thereafter, with a limit of 120 days. A staff member has the right to get sick leave pay equal to four-fifths of his average daily wages in the past 12 months (or a shorter period if the employee has been employed for less than 12 months). Nevertheless, the contract is only payable when the employee is off sick for at least 4 days consecutively. An employer is not responsible for any sickness allowance if the employee does not give him/her a medical certificate that shows the number of days on which and the nature of the sickness or injury that caused the employee to be unfit for work.

Do Employees Get a Year-end Bonus?

In Hong Kong, there is no law that says employees have the right to a year-end bonus unless the employment contract says so. On the other hand, it is a usual thing for the employees to get a year-end bonus besides their salary already. This is also called the “13th month payment” or “end of year payment” and it is usually made by employers at the end of the Chinese New Year. 

The vast majority of the time, the issue of the year-end bonus, whether it is a contractual entitlement or a discretionary one, is always debatable. If the payment is contractual, the Employment Ordinance has a provision for the amount, payment, and timing of the bonus if the contract does not cover these aspects.

Even if the year-end bonus is solely at the employer’s discretion, they should not abuse that discretion unreasonably, in a wrong or capricious manner.

Read What are the 13th and 14th months’ Pay

Do Employees Have The Right To Take A Maternity Leave? How Long Is The Maternity Leave?

As stated in the Employment Ordinance, a female employee who is on a “continuous contract” must be provided with at least 14 weeks of maternity leave. If she has been working for more than 40 weeks before the maternity leave starts, she can get maternity pay (or else the leave is unpaid). Maternity pay is four-fifths of the average daily wage of the mother in the past 12 months (or a shorter period if she has been employed for less than 12 months). Nevertheless, the maternity pay for the period after the 10 weeks of maternity leave is limited to HK$80,000 (which can be refunded by the government).

An employee who is about to take maternity leave should inform her employer of her pregnancy and her plan to take maternity leave after the pregnancy has been confirmed by a medical certificate.

Read Hong Kong Maternity Leave

Do Employees Have The Right To Take A Paternity Leave? How Long Is The Paternity Leave?

According to the Employment Ordinance, a male employee who is working under a “continuous contract” will be entitled to five days’ paternity leave for the birth of each of his children. If he has been employed without a break for over 40 weeks before the start of the paternity leave, he is qualified for paternity pay (otherwise the leave is unpaid). Paternity pay is four‐fifths of the average daily wages of the last 12 months (or a shorter period if he has been employed for less than 12 months). The employee should inform the employer in advance before they take the leave.

What Kinds Of Retirement Benefits Do Employees Get?

Under the Mandatory Provident Fund Schemes Ordinance, an employer must make an employee who has been working for a continuous period of not less than 60 days in a Mandatory Provident Fund (“MPF”) scheme within the first 60 days of the employment, unless the employee is exempted. 

The employer is mandatory to pay contributions to an employee’s MPF account for each contribution period (which means usually the wage period).

Currently, in the situation of a monthly paid employee : 

  • If the employee’s monthly relevant income is less than HK$7100, only the employer has to contribute the mandatory one which is 5% of the employee’s monthly income.
  • If the employee’s monthly relevant income is HK$7,100 or higher, then both the employee and the employer have to make a mandatory contribution which is 5% of the employee’s monthly relevant income and this is subject for the cap of HK$1,500 for each of the employee and the employer.

According to the MPF legislation, the employer should deduct the employee’s contribution from the employee’s salary and make the contribution for the employee.

Managing The Employee Environment

Which Privacy Obligations Are Set For The Employers?

The Personal Data (Privacy) Ordinance in Hong Kong, which is also known as the PDPO, manages the regulation of employee data and the data of potential employees.  Under the PDPO, employers are obliged to make sure that: 

  • Personal data is collected in a completely informed way and in a fair manner, while at the same time, the amount of personal data collected is reduced and is done so with necessary and proper regard to the reduction.
  • Personal data should be processed in a secure way and should be kept for as long as they are needed for the fulfillment of the purposes of using the data; 
  • The usage of personal data should be either related to or limited to the original data collection purpose. Employees and candidates are the ones who have the right to access and make changes to their data. 

Thus, for instance, when a person gives personal data to an employer, the employer must specify the purpose of the collection, the persons to whom the data may be passed, and if it is obligatory or voluntary for the individual to give the data (unless this is obvious from the circumstances). The employer should let the person know his/her rights to ask for his/her data and to correct any mistakes in his/her data and the person to whom such requests should be made. A job advertisement stating that interested applicants must submit their data should also do the same for such notification requirements.

What Are The Activities And Responsibilities That An Employer Has To Perform To Ensure Occupational Safety And Health?

In Hong Kong, it is the duty of the employers to guarantee the safety and health of their employees at work as a common law and legislation. The Occupational Safety and Health Ordinance (OSHO) is the legislation that obliges employers, occupiers, and employees to implement certain measures that will keep the safety and health of the workers in the workplace. The Factories and Industrial Undertakings Ordinance (FIUO)  is the legislation that aims to make all the people working in industrial undertakings safe and healthy. The two statutes are the rules that control the different areas of hazardous activities in factories, buildings, construction sites, restaurants, commercial premises, and other workplaces.

What Are The Duties Of Tax Filing For An Employer?

Even though employees pay their own salaries tax for the income they get from employment in Hong Kong, employers have to deal with the record keeping and tax filing obligations.

The Inland Revenue Department (IRD) requires employers to keep records of the payroll about each employee, such as the employee’s particulars, the type of employment (full-time or part-time), the capacity in which the employee is employed, the amount of the cash compensation, non-cash and fringe benefits, MPF contributions, the employment contract (including any amendment) and the period of The payroll records along with other business records must be kept for a minimum of 7 years.

According to the Inland Revenue Ordinance, employers have to submit to the IRD: 

  • The beginning of the employment by any employee,
  • The end of any employee’s service and the employee’s leaving Hong Kong.

Every year, the IRD demands the employers to submit a return (“Employer’s Return”) of remuneration to the IRD for each employee who is still under employment as at March 31.

What Are The Rules Of Record Keeping For The Employers?

The Employment Ordinance stipulates that the employers must keep a record which shows the wages and the employment history of each employee for the period of the employment that the employee worked in the previous 12 months. The Immigration Ordinance obliged the employers to maintain a file at the workplace which included the complete name of the employee as shown in the identity card or other travel document, and the type and the number of that document.

Regulatory Filing and Approval

If the employer is a financial institution that is regulated in Hong Kong (e.g. a bank, a formally licensed or regulated by the Securities and Futures Commission, the Insurance Authority, or the Hong Kong Monetary Authority), hiring an employee might need the filing of reports and approval from the relevant financial regulator in some cases. The law in this area is a bit complex, thus, employers with specific issues should consult with financial services experts.

How FastLane Group Can Help?

Ensure compliance and streamline your employee management in Hong Kong with FastLane Group. Our expert team will help you navigate the intricacies of employment laws, from recruitment and visa requirements to benefits and safety regulations. We can provide comprehensive solutions tailored to your business needs. Contact us today to elevate your HR operations and safeguard your company’s future.