Understanding Probation Period And Employment Contracts In Hong Kong

Understanding Probation Period And Employment Contracts In Hong Kong

The labor and employment law in Hong Kong is quite simple if we compare it to many other countries. Hong Kong does not have a lot of requirements and regulations for employers to follow which makes employee administration a lot more easier for employers. However, employees should keep in mind how the rules and rights work so that they can defend themselves and negotiate for the situation that would be beneficial for them. 

The individual rights of employees are given by the Employment Ordinance of Hong Kong. The employer and employee must be aware of the benefits of signing an employment contract that contains a job description, compensation, and other matters such as how this relationship should be governed. The employer has the right to give the employment probation clause to his contract which will help the employer to determine if that employee is the right person for the job. Without a working contract, the court will not have options apart from the Employment Ordinance stipulated statutory rights of the employee. When an employee is concerned about their rights on duty hours, statutory rest days, holidays, leaves, and so on, he might file a complaint with the labor department then upon conviction, the employer will be fined.

Probationary Period And Conditions Of The Contract

Many employers usually prefer to have a probationary period for a specific job because most of the time, the recruitment process is not perfect. The probation period in employment helps to find out whether or not the chosen candidate is fit for the position. Usually, when an employer starts delegating some of the job duties to the newcomer team, the employers discover the exaggeration of the skills during the recruitment process the newcomer does not match the organization’s culture or the newcomer is not competent, etc. 

As long as the probationary clause does not go below Hong Kong’s statutory standards specific to the Employment Ordinance, the probationary provision of the contract may include the exemption of specific clauses for example, a shorter notice period before contract termination. Throughout the probationary period, an employer may limit pay, providing some portion of the regular salary of the position. However, the compensation might not be less than the minimum wage which is HK$34.5 per hour. Other benefits such as pension plans and an end-of-year pro rata payment are often restricted by an employment probationary period. 

Probation periods may lower the chance of labor conflicts in the future. The termination of employees after the probation period may become a difficult process and there are many things that the HR department should take into consideration before they make their decision. Generally, the probation in Hong Kong is 1-6 months with an average period.

The notice period before contract termination during the job probation period should be specified in the probation provision of the employment contract. The contract notice cannot be less than 7 days notice after the first month of the probation period. 

The probation periods have not been limited exactly but a lot of companies tend to avoid more than 3 three-month periods to avoid potential conflicts.

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Termination During Probation Period in Hong Kong

  • Within the First Month: Once the employment contract is established, an employer can end it without notice under the legal rights, within the first month of the first probationary period.
  • After the First Month: Per a continuous employment contract, the employer should get at least 7 days’ notice before termination if it happened at least after the first month of probation. While the employer may simply choose to pay in lieu of notice, the calculation needs to be based on the average daily wages earned by the employee before the actual day or their termination of the contract, multiplied by the number of days in the notice period which normally is when wages are payable to the employee. But somehow the employer is allowed to terminate the employee without notice or further salary payment (i.e. wages until the day that the employment has ended) if the employee has been involved in continued misconduct, been involved in fraud, or if the employee habitually failed to perform his/her duties.

Probationary Period And Calculation Of The End Of Year Payment

The probationary employment period is not included when calculating an eligible pro rata end-of-year payment. 

The Employment Contract

In the employment contract, the conditions in which the parties involved are legally bound. Both parties shall negotiate as well as come up with terms of employment and indicate the details within the contract. Alongside the probation condition (if any), the contract should include the responsibilities of the position, the completion period, the date of the contract establishment, wages and benefits, the paid hours, the rest/holiday days, overtime conditions & payment (if any), the ground of termination, and the requirements of the termination notice.

Even if the employee is willing to sign the agreement, the employment contract should not deny the employee any of the statutory rights under the Employment Ordinance. The Employment Ordinance includes all employees except the employer’s family members who dwell or crew members covered by the Merchant Shipping (Seafarers) Ordinance, an apprentice covered under the Apprenticeship Ordinance, and employees as per the Contract for Employment Outside Hong Kong Ordinance (a primarily foreign-owned manual laborer normally employed outside of Hong Kong).

For the establishment of strong legal contracts by those companies, local expertise is a helpful way to make sure that you are covered from the day you launch your venture. When dealing with legal matters, an experienced and qualified legal support service and PEO provider (e.g., INS) can be your advisor and supporter.

Duration Of Probationary Period in Hong Kong

Unless otherwise indicated, a single-month contract, which is continuous employment, is renewable each month.

Conditions of Employment

  • Compensation Wage, overtime compensation, end-of-year payment, and other incentives.
  • Wage Period
  • Notice of Termination: terminations may be subject to statutory limitations
  • Code of Conduct: disciplinary action and penalties are to follow.
  • Employment Probation Period With number limit of benefits (if any), lower pay (if any), and requirement of early termination notice.
  • Duration of and Commencement
  • Date of agreement 
  • Responsibilities of the duties 
  • Reasons for contract termination

How FastLane Group Can Help?

The process of complying with the employee labor laws of Hong Kong can be made easy by involving a reliable PEO service company like FastLane. Let us be your trusted partner in ensuring compliance and smooth operations. Contact us now to streamline your HR processes and focus on what truly matters!