Martindale

Employment and Labour Law: 2nd edition

Hong Kong

Simmons & Simmons (Hong Kong office) Fiona Loughrey

1. SOURCES OF EMPLOYMENT LAW

The main sources of Hong Kong employment law are as follows.

1.1 Statute

Some of the most important statutes are as follows:

  • Employment Ordinance;
  • Sex Discrimination Ordinance;
  • Disability Discrimination Ordinance;
  • Family Status Discrimination Ordinance;
  • Employees’ Compensation Ordinance; and
  • Personal Data Privacy Ordinance.

The Employment Ordinance is the primary piece of employment legislation. It provides certain minimum benefits to employees who work, including rights to minimum notice of termination, the right to terminate on the making of a payment in lieu of notice and rights to paid annual leave, sick leave and maternity leave. Entitlement to many of the benefits granted under the Employment Ordinance will depend on whether an employee is under a ‘continuous contract’. To be in ‘continuous’ employment an employee must have been employed for four or more weeks. A ‘week’ is any period of seven days ending on a Saturday, in which an employee has worked a minimum of 18 hours. This is often referred to as the ‘4/18 rule’.

Hong Kong’s equal opportunities legislation comprises the Sex Discrimination Ordinance, the Disability Discrimination Ordinance and the Family Status Discrimination Ordinance. This legislation – which applies to the employment relationship – prohibits discrimination on grounds of sex, marital status, family status, pregnancy and disability. The legislation also prohibits harassment (on grounds of sex or disability) and victimisation. The Race Discrimination Bill gazetted on 21 November 2006 introduces legislation which will make unlawful discrimination (or harassment, victimisation or vilification) on the grounds of race. At the time of writing, the Bill was being considered by the Legislative Committee (which has the power to amend a gazetted bill before bringing it into force).

Other Hong Kong ordinances relevant to the employment relationship include the Employees’ Compensation Ordinance, the Mandatory Provident Fund Schemes Ordinance and the Occupational Safety and Health Ordinance.

1.2 Regulations

A second source of law is the statutory regulations passed under the ordinances listed above. These include eg the Occupational Safety and Health (Display Screen Equipment) Regulations passed under the Occupational Safety and Health Ordinance.

1.3 Common law

Certain obligations binding on both sides are implied into the employment relationship at common law. These are, as would be expected (Hong Kong having been a British colony until 1997), very similar to common law obligations implied under English law. They include eg an employee’s duties of fidelity and obedience and duty to work with due care and diligence and an employer’s duty not to destroy the relationship of trust and confidence between employer and employee.

1.4 Case law

Statutes relating to employment law are interpreted by the courts. Particular provisions of the Employment Ordinance have needed to be interpreted on many occasions. Judicial interpretation has over the years given rise to a large body of case law which can be binding in future interpretations. Since the return of the former colony to Chinese rule in 1997, decisions of English and other common law courts are now of persuasive effect. However, decisions from other common law jurisdictions, including Canada, New Zealand and Australia, are often taken into account.

1.5 Codes of Practice

The Equal Opportunities Commission has published Codes of Practice which provide guidance on the interpretation and application of Hong Kong’s anti-discrimination (equal opportunities) laws. Whilst the Codes are non-binding, a failure to comply with their recommendations may be used as evidence in proceedings brought against an employer.

A Code of Practice has also been published in respect of the Personal Data (Privacy) Ordinance. Again, a failure to comply with the provisions of that Code may be taken into account by a court when deciding whether there has been a contravention of the ordinance.

2. PRINCIPAL INSTITUTIONS
2.1 Courts

The Hong Kong Labour Tribunal has exclusive jurisdiction over certain categories of claim including the following:

  • a claim for a sum of money which arises from the breach of a term, whether express or implied, of a contract of employment for performance in Hong Kong;
  • a claim arising from a person’s failure to comply with the provisions of the Employment Ordinance;
  • a claim regarding the right of an employee to statutory severance pay (and the amount of that payment); and
  • a claim for remedies for unreasonable termination (a statutory claim under the

Employment Ordinance).

The Labour Tribunal does not have jurisdiction to hear and determine claims founded in tort.

Claims in the Labour Tribunal are investigated and determined by a single Presiding Officer. Labour Tribunal procedure is informal, and legal representation is generally not permitted.

The Labour Tribunal has power to decline jurisdiction in respect of any claim commenced there and to transfer claims to either the District Court or Court of First Instance. (The Court of First Instance has exclusive jurisdiction over claims of over HK$1,000,000 in value; at the present (largely fixed) exchange rate that amount is equal to about US$125,000.)

Where an award or order is made by the Labour Tribunal, any party to the claim may require the presiding officer to review the award or order made. An application for review should be made within seven days of the date of the award or order which is the subject of the application.

Where an award or order is either (a) wrong in law or (b) outside the jurisdiction of the Tribunal, any party may, within seven days of the date on which the order or award was served on him, apply to the Court of First Instance for leave to appeal against the decision.

No appeal may be made to the court on a finding of fact.

2.2 Other institutions

The Labour Department is the government department which administers government policy on employment issues and deals with enforcement of the Employment Ordinance.

There is currently one single commission, the Equal Opportunities Commission, which is charged with the responsibility for dealing with and investigating complaints related to discrimination.

3. ROLE OF THE TRIBUNALS AND COURTS
3.1 Labour tribunals

Labour tribunals generally deal with all employment claims arising from contracts of employment (see above). Transfer to court may be effected at the presiding officer’s discretion, who must grant leave to transfer. Appeals on questions of law are heard by the Court of First Instance, then the Court of Appeal, then the Court of Final Appeal. Leave is required prior to lodging an appeal.

3.2 Civil courts

The courts also retain a number of areas of jurisdiction in relation to employment such as:

  • actions by employees for damages following injury at work and prosecution under the health and safety at work legislation;
  • (in practice) larger contractual claims; and
  • claims relating to breaches of confidentiality by an employee and covenants in restraint of trade (eg non-competition clauses).
4. EMPLOYMENT STATUS AND CATEGORIES OF WORKER
4.1 Contract of employment or contract for services?

The question of whether an individual is an employee or self-employed is an important one as the legal rights enjoyed by and applicable to each differ widely. Generally, if a worker has a contract of employment this means that he is an employee, whereas if he has a contract for services he will be self-employed.

The two key requirements of a contract of employment are that there be ‘mutuality of obligation’ and ‘sufficient control’. If either or both of these factors are absent, there cannot be a contract of employment. If both these factors are present, there may be a contract of employment. The labour tribunal must go on to consider the facts of the situation.

Case law has suggested that if a worker can answer ‘yes’ to the following questions he is likely to be an employee:

  • Is he employed as part of the business of the employer, with his work being done as an integral part of the business?
  • Is his remuneration by way of payment of wages or salary?
  • Does he continue to be paid during absence for illness?
  • Is he entitled to paid holidays?
  • Is he a member of a company pension scheme (and is the company contributing to that scheme on his behalf)?
  • Is control established by a disciplinary code laid down by an employer?
    • Is there a prohibition on working for other companies or individuals?
    • Conversely, if a worker can answer ‘yes’ to the following questions he is more likely to be self-employed:
  • Does he provide his own equipment?
  • Does he hire his own helpers?
  • Does he take a degree of financial risk?
  • Does he have any responsibility for investment and management?
  • Can he arrange for a substitute to perform the services?
  • Does he have the opportunity to profit from sound management in performing his tasks?

These are not by any means exhaustive lists. However, in general, the greater the degree of personal responsibility an individual undertakes, the more likely he is to be considered to be a self-employed worker rather than an employee.

4.2 Some legal consequences of the distinction

Examples of the rights which employees and the self-employed respectively enjoy are set out below.

Employee Self-employed
Right to claim compensation in the event Not applicable
of a dismissal without a valid reason  
Entitled to be paid wages free of deductions (except in certain limited circumstances); Subject to the payment terms agreed; not an offence to breach offence to withhold
Severance or long service payment entitlement Not applicable
Maternity rights (including protection against dismissal whilst pregnant or on maternity leave) Not applicable
Statutory sick pay (and protection from dismissal during paid statutory sick leave) Not applicable
Statutory minimum notice period (or payment in lieu) Not applicable
A right to rest days Not applicable
Right to safe work place Safe place and system of work

A right to (paid) statutory holidays and paid annual leave

Not applicable
Protection against dismissal on grounds (1) that the employee has an unresolved employee’s compensation claim or (2) relating to jury service or trade union activity Not applicable
Right to be enrolled by the employer in a Mandatory Has to self-enrol; no right to

Provident Fund Scheme (subject to certain exceptions) company contributions and to have contributions to the scheme paid by the employer

4.3 An employer’s perspective

An employer will have different rights and obligations depending on whether the worker is an employee or self-employed. If the worker is self-employed, the employer will benefit from the self-employed person’s contractual obligations (eg to fulfil his contractual obligations, to work with due skill and diligence) and will be under an obligation to observe the worker’s rights (examples of which are in the table above).

The burden is more onerous if the worker is an employee. The employer will benefit from the employee’s obligations (eg to obey lawful orders, to work faithfully and with due diligence, to give the minimum notice period or payment in lieu), but will be under an obligation, among other things, to observe the employee’s rights (statutory and contractual), maintain certain records (including wage and statutory sick leave records), inform the Inland Revenue Department of the commencement or termination of an individual’s employment, file annual returns with the Inland Revenue Department in respect of the employee’s remuneration, enrol the employee in a Mandatory Provident Fund Scheme (subject to certain exceptions) and make contributions to that scheme on the employee’s behalf.

4.4 Categories of employee

An employee’s rights under the Employment Ordinance will frequently depend upon whether he is employed under a ‘continuous contract’.

Continuous contract

Under the Employment Ordinance, an employee is employed under a continuous contract if he has been employed under a contract of employment for at least 18 hours a week for a period of four weeks or more.

In any dispute as to whether a contract of employment is a continuous contract the onus of proving that it is not a continuous contract is on the employer.

Whether an employee is under a continuous contract of employment will affect rights under the Employment Ordinance such as entitlement to rest days, paid sick leave, paid statutory holidays, annual leave and maternity leave.

Part-time workers

Other than to the extent there is a distinction between employees who are under a continuous contract (by virtue of the 18-hour-a-week for four weeks or more requirement) and those who are not, there is no distinction drawn between part-time workers and full-time workers. There is no protection in Hong Kong law which is expressly specific to part-time workers.

Fixed-term contracts

Fixed-term contracts are used in Hong Kong. An employer’s failure to renew a fixed-term contract on expiry will be treated as a dismissal by the employer for purposes of eg determining an employee’s right to receive statutory severance or long service pay. Otherwise, there is no specific protection for fixed-term workers in Hong Kong.

Probationary employees

The Employment Ordinance allows for employees to be employed on a probationary basis. Under the Employment Ordinance, the employment of a probationary employee may be terminated by either party without notice or payment in lieu of notice during the first month of employment. This is the case even if a notice period has been specified in the employment contract or has otherwise been agreed. Following completion of the first month, employment may be terminated by either party on not less than seven days’ notice or, if longer, the contractually agreed notice period.

4.5 Employee representatives

There are no legal provisions which require employee representatives to be elected or appointed or established.

4.6 Directors

The term ‘director’ refers to a statutory office held in a company. A director holds his position as a director by virtue of appointment to that position. This appointment refers only to the individual’s appointment to the office of director of a company. The circumstances in which a director can be removed from his office as director are not dictated by employment law but, rather, by company law and the articles of association.

In practice, most directors are also employees of the company and will enter into a separate contract of employment with the company or a subsidiary. In their position as an employee of the company, a person who is also a director of the company will enjoy all employment rights applicable to normal employees of the company.

Whilst one individual may be both a director of a company and an employee of the company, the two positions are distinct and separate. However, the relevant documentation should reflect the fact that the two separate positions are held by one individual. For example, it is common for a director’s employment agreement to provide that if the employee’s employment is terminated, the employee will, if requested, resign from any directorships held in the company failing which the company can do anything necessary to effect the resignation of the directorships.

5. CONTRACT
5.1 What constitutes an employment contract?

As stated above, in order for there to be a contract of employment there must be:

  • mutuality of obligation; and
  • sufficient control.
5.2 Formal requirements

Employers are not required to provide employees with written information in relation to their terms and conditions of employment unless on employees’ written request (see section

6.1 below). Other than this, there are no formal requirements which must be complied with when entering into a contract of employment – it is not even necessary for the contract to be in writing. The usual contractual principles will, however, apply, so that there must be: offer, acceptance, consideration, an intention to enter into legal relations and certainty.

A contract of employment may comprise more than one document. The central contract may incorporate, by reference, terms in other documents such as an employee handbook.

5.3 Implied terms

In addition to the express terms which the parties include in a contract, some terms may be implied by law. Sources of these implied terms include:

  • common law (such as the mutual duty of trust and confidence); and
  • custom and practice within the company.

It is not possible to derogate from many of the implied terms, by use of an express term. Similarly, where statute sets out a right (such as a minimum notice period, or a minimum redundancy payment) an express contractual term which purports to reduce that right will be void.

Where there is an express term dealing with a particular circumstance, common law will not imply a term which contradicts that express term.

5.4 Collective agreements

Definition

All unions (including employee, employer or a combination of employer and employee associations) are registered under the Trade Unions Ordinance, which is administered by the Registrar of Trade Unions.

At the end of December 2005, there were 729 registered trade unions in Hong Kong, consisting of 686 employees’ unions, 21 employers’ associations and 22 mixed organisations of employers and employees. The total estimated membership was around 667,503 (18 per cent of the total number of salaried employees and wage earners in Hong Kong (3.61 million in 2005)).Collective agreements are agreements negotiated between an employer and a trade union. An employee will only be able to enforce a term contained in a collective agreement if he can show that it has been incorporated into his employment contract.

Incorporation

Where a union exists, terms from a collectively negotiated agreement may be incorporated into or reflected in an employee’s contract of employment.

For example, it may be a term of an employee’s contract (whether written or oral) that the employee will be bound by any term which has been collectively agreed between his employer and a trade union. In such a case the employee would be bound by employment terms negotiated between his employer and the union and included in a collective agreement.

In contrast to the common use of collective ‘awards’ and agreements in eg Australia, a Hong Kong union is more likely to negotiate the form of, or certain terms of, the contract. As is demonstrated by the figures given above, only a limited percentage of the workforce in Hong Kong belongs to unions, and some unions are more active than others in negotiation of employment terms.

6. TERMS AND CONDITIONS
6.1 Mandatory express terms

Hong Kong law does not require employers to provide employees with a written statement of the substantive main terms and conditions of their employment. Exception is that employers are required to provide written terms on wages and wage period and (if applicable) end of year payment, and length of termination notice if the employee requests this in writing.

6.2 Typical contractual terms

The precise terms of an individual’s contract of employment will sometimes be the subject of negotiation, particularly with senior employees. Typical clauses included are:

  • commencement date of employment and (for fixed-term contracts) expiry date and renewal terms;
  • job title;
  • place of work and right to relocate employee;
  • rate of remuneration, and any entitlement to overtime pay and how it is calculated may also be included;
  • intervals at which remuneration is paid;
  • normal work hours;
  • annual leave entitlement;
  • entitlement to benefits such as bonuses, share options, medical and retirement benefits;
  • details of what will constitute gross misconduct and be grounds for termination of the contract without notice;
  • the employee’s consent to the holding and processing of data concerning them;
  • a ‘garden leave’ clause allowing the employer to prevent the employee from coming into work for a period of time whilst continuing to pay the employee’s full salary during this period;
  • notice periods for termination of employment required to be given by employer and employee, and a ‘payment in lieu of notice’ clause allowing the employer to make a lump sum payment to the employee and terminate the contract of employment immediately, rather than serving notice or waiting for the full notice period to expire;
  • post-termination restrictive covenants including non-compete, non-solicitation and non-poaching of employees;
  • not to use or disclose confidential information otherwise than in the course of employment;
  • not to work for another employer during the course of employment;
  • to return company property on the termination of employment; and
    • governing law.
    • When drawing up an employment contract, it is obviously advisable to reflect any applicable statutory restrictions which must be adhered to including:
  • rules on rest days and statutory holidays and alternatives and substitutes therefor; and
  • a worker’s entitlement to paid holiday in any leave year (an employer can provide contractual leave entitlement over and above the statutory minimum).

Special statutory provisions apply to young workers (ie a person who has attained the age of 15 but not 18) working in industrial undertakings such as factories.

6.3 Wages

The calculation of many entitlements under the Employment Ordinance depends on whether certain payments fall within the definition of ‘wages’. The term ‘wages’ is broadly defined in the Employment Ordinance. It means all remuneration, earnings, allowances including travelling allowances and attendance allowances, attendance bonus, commission, overtime pay, tips and service charges, however designated or calculated, capable of being expressed in terms of money, payable to an employee in respect of work done or to be done under his contract of employment, but does not (in summary) include:

  • the value of any accommodation, education, food, fuel, light, medical care or water provided by the employer;
  • employer contributions to a retirement scheme;
  • commission which is gratuitous or discretionary;
  • any attendance allowance or attendance bonus which is gratuitous or discretionary;
  • non-recurrent travelling allowances;
  • reimbursement of travelling expenses;
  • the value of any travelling concession;
  • reimbursement of expenses;
  • end of year payments;
  • gratuities payable on completion or termination of a contract of employment; or
  • any annual bonus which is gratuitous or discretionary.

A 2005 decision which focused on what items of pay fall within the definition of ‘wages’ in the Employment Ordinance is Liang v Lisbeth Enterprises Ltd (trading as Phillip Wain International) [2005] 2 HKLRD 150 (Court of Appeal). This case was primarily concerned with whether commissions fall within the definition of ‘wages’ for the purposes of calculating annual leave pay and holiday pay. The Court of Final Appeal decision (which reversed the decision of the lower court, the Court of First Instance and the Court of Appeal) confirmed that commissions calculated other than on a daily basis did not fall within the definition of ‘wages’ for the purpose of calculating annual leave and holiday pay. The effect of this decision will, however, be reversed when the Employment (Amendment) Bill comes into force in, it is expected, 2007. (This was gazetted on 8 December 2006 and is, at the time of printing, being considered by the Legislative Committee of Hong Kong.) It deals with the calculation of items such as payment in lieu of notice, maternity leave pay, sickness allowance, holiday and annual leave pay, and is likely to require that such payments are calculated based on an average of the last 12 months’ earnings, which will include variable elements, such as commissions.

6.4 Statutory holidays

The case of Cathay Pacific Airways v Tam Wai Mei [2005] HKEC 886 (Court of First Instance) addressed the issue of whether ‘extra’ days off granted by employers in addition to the minimum statutory rest days may be used to compensate for work on statutory holidays.

The starting position is that the Employment Ordinance requires employers to grant 12 statutory holidays every year. It also requires employers to grant one rest day in every period of seven days. Where an employee has been required to work on a statutory holiday, the employer is required to notify the employee, within a certain time frame, of the fact that he will be granted an alternative holiday in lieu of a statutory holiday. (Specifically, the requirement is to notify not less than 48 hours before the alternative holiday, where such alternative holiday is to be taken within 60 days before the statutory holiday it is intended to replace, or not less than 48 hours before the statutory holiday itself, where such alternative holiday is to be taken within 60 days after the statutory holiday.) A substituted holiday (which must be within 30 days of the holiday it is intended to replace) may also be granted in place of a statutory holiday or alternative holiday by agreement between employer and employee.

In the Cathay case, the employee (under her employment contract) was granted two days off in every period of seven days, which is twice the statutory requirement in relation to rest days. Cathay attempted to argue that the ‘extra’ day off each week could be used to compensate for statutory holidays on which the employee worked.

The labour tribunal and court at first instance disagreed, saying that the employee was entitled to two days off per week and such days could not be used as alternative/substituted holidays for statutory holidays (this means that the employer must grant an extra day off as an alternative/substituted holiday on top of the two days off per week). Further, the case suggests that the Employment Ordinance provisions require specific designation of the alternative or substituted holiday; it is not sufficient merely to reserve an ability to point retrospectively to a ‘pool’ of days on which the employee did not work as covering the alternative or substituted holiday under the Employment Ordinance.

The Court of Appeal, however, overturned the decision of the labour tribunal and lower court. The court held that the employer had complied with the Employment Ordinance requirements (a) to grant statutory holidays (or, more specifically, alternative holidays in lieu of statutory holidays on which the employee had to work) and (b) to designate alternative holidays. No appeal has been lodged by the claimant in the Court of Final Appeal.

The position of employers has been improved and clarified as regards the granting of statutory/alternative holidays, whether or not the employment contract has any provision dealing with this issue. Although the current state of case law seems to suggest that specific designation of alternative holidays is not required, it is none the less considered advisable by practitioners, including the writers, that this practice be maintained.

7. EMPLOYEE REPRESENTATION
7.1 Trade unions

In Hong Kong, there is no statutory recognition procedure under which trade unions are awarded recognition. Trade unions are, however, required to be registered under the Trade Union Ordinance, which provides a wide immunity to trade unions, their officers and members and employees from civil action in respect of acts done in contemplation of a trade dispute which leads to torts or interference with contract only on the ground of the trade dispute. The Employment Ordinance also protects employees’ right to take part in trade union activities, and protects employees who have so taken part from being terminated or discriminated.

7.2 Collective bargaining

Hong Kong law does not provide for or oblige collective bargaining.

8. INFORMATION AND CONSULTATION
8.1 Collective dismissals

There is no obligation as to consultation with appropriate representatives of employees when the employer proposes redundancies. This has been encouraged by the Labour Department, particularly in less healthy economic times; but it is not a legal requirement under current law.

A Court of First Instance decision in 1999 (Vincent v SCMP HCA 6233/1999), however, interpreted the unreasonable dismissal provisions of the Employment Ordinance in such a way which would have required employers to establish that its decision to dismiss was a ‘reasonable response’. This could have required employers to consider consulting employees beforehand as part of their efforts to establish that their decision to dismiss was reasonable. This case has, however, been overturned by both the Court of Appeal and Court of Final Appeal, and therefore under current law there is no need to consider any specific procedure, including consultations, with employees.

8.2 Transfers of undertakings

Hong Kong does not have any European-type ‘TUPE’ legislation providing for automatic transfer of employees of a business or undertaking where the employment is intended to be transferred to another undertaking as result of a transfer of an undertaking or measures taken in connection with the transfer. The employer should, however, inform the employee so affected of:

  • The termination of employment (under Hong Kong law a transfer of employment involves a termination and a re-hire) by giving the agreed (or where no agreement was reached, statutory) notice of termination.
  • If the employer wishes to avoid the making of statutory severance payment where the employee rejects the new offer of employment, it should request the transferee undertaking to offer a new employment on no less favourable terms than the existing terms of employment. Such an offer is required to be given to the employee not less than seven days before the termination of employment in order to avoid the liability of making severance payment. On the other hand, if the employee accepts an offer from the transferee undertaking, the liability for severance payment in respect of years of service before the transfer falls on the transferee undertaking (even where it is not on no less favourable terms or is offered less than seven days before the termination). Liability for long-service payment cannot be avoided but where the employee accepts the new offer, liability again transfers to the transferee undertaking.
9. EQUAL OPPORTUNITIES
9.1 Discrimination and harassment

Discrimination on the grounds of sex, pregnancy, marital status and family status is unlawful. (The Race Discrimination Bill gazetted on 21 November 2006 introduces legislation which will make unlawful discrimination (or harassment, victimisation or vilification) on the grounds of race. At the time of writing, the Bill was being considered by the legislative committee (which has the power to amend a gazetted bill before bringing it into force)).

The structure of the anti-discrimination legislation is almost identical across all of the strands of discrimination. Discrimination is prohibited during recruitment, employment, on termination of employment and post-employment.

There are four types of behaviour that are unlawful:

  • Direct discrimination: where a person has been treated less favourably than another and the reason for that less favourable treatment is on one of the prohibited grounds.
  • Indirect discrimination: when an employer applies a provision, criterion or practice which is to the detriment of a considerably larger proportion of those in the protected group than others not in that group. The provision, criterion or practice must be to the detriment of the person in the protected group, and must not be capable of objective justification.
  • Victimisation: less favourable treatment as a result of the employee complaining of discrimination, bringing proceedings for discrimination or otherwise acting by reference to discrimination legislation.
  • Harassment: it is unlawful for a person to sexually harass a job applicant or an employee. The meaning of sexual harassment is provided under the Sex Discrimination Ordinance.

Discrimination will not be unlawful if being of a particular sex is a ‘genuine occupational qualification’.

Employers are liable for their employees’ acts carried out in the course of their employment whether or not done with the employer’s knowledge or approval. The employer may, however, have a defence if it can show that it has taken such steps as were reasonably practicable to prevent the employee from doing such acts.

Compensation for claims of discrimination is unlimited.

9.2 Disability discrimination

Discrimination against disabled people is prohibited during recruitment, employment, on termination of employment and post-employment.

A person directly discriminates against a disabled person if, on the ground of the disabled person’s disability, he treats the disabled person less favourably than he treats or would treat a person not having a disability. Direct discrimination cannot be justified.

A person indirectly discriminates against a disabled person if:

  •  
    • he applies to the disabled person a requirement or condition which he applies or would apply equally to a person without a disability but which is such that the proportion of
    • persons with a disability who can comply with it is considerably smaller that the proportion of persons without a disability who can comply with it; and
  • he cannot show that the treatment in question is justifiable; and
  • the disabled person suffers detriment because he cannot comply with it.

The employer may have a defence if it can show that the employee is unable to carry out the inherent requirements of the particular job without reasonable adjustment or that a person without disability is a genuine occupational qualification for that particular job.

9.3 Trade union discrimination

Under the Employment Ordinance it is unlawful to refuse to discriminate against an employee by reason of his exercising his rights to take part in trade union activities or associating with other persons for the purpose of forming or applying for registration of a trade union.

9.4 Maternity leave

All employees who have worked not less than 40 weeks are entitled to unpaid maternity leave. Employees who have been continuously employed for a period of not less than 40 weeks are entitled to paid maternity leave.

Statutory maternity leave pay equals to four-fifths of the employee’s monthly wages.

An employee’s terms and conditions are preserved during the period of leave.

Employees are entitled not to be dismissed or subjected to a detriment for reasons relating to pregnancy, maternity or maternity leave.

9.5 Parental leave

Under Hong Kong law, there is no entitlement to parental leave.

9.6 Paternity leave

Under Hong Kong law, there is no entitlement to paternity leave.

9.7 Adoption leave

Under Hong Kong law, there is no entitlement to adoption leave.

9.8 Right to request flexible working

There is no statutory right to request flexible working in Hong Kong.

10. DISCIPLINE AND TERMINATION

10.1 Disciplinary procedures

In Hong Kong, there are no statutory disciplinary or dismissal procedures.

10.2 Grievance procedures

In Hong Kong, there are no statutory grievance procedures.

10.3 Termination by employee

An employee does not need to have any ground for terminating an employment contract. Under the Employment Ordinance the only requirement is usually that the employee serves notice or makes payment in lieu. (This obligation to give notice or make payment in lieu may fall away in certain limited circumstances such as where the employee fears for his safety or where the employee has been ‘constructively dismissed’.)

This creates a right of ‘buy-out’ which can be exercised by eg a new employer seeking to poach from a competitor. If an employee chooses not to comply with requirements in relation to the serving of notice, the employee will be required to pay the employer a sum equal to the amount of wages which would have accrued to the employee during the required notice period.

10.4 Termination by employer

Employees with less than two years’ service

Employees only acquire the right not to be dismissed without a ‘valid reason’ after they have completed two years’ service. This means that before they have completed two years’ service, an employer does not have to have a specific reason for dismissing an employee. In practice, however, if the employer makes all payments due on termination pursuant to Part VIA of the Employment Ordinance, it will not be necessary to show a ‘valid reason’ exists (see the section below for meaning of ‘valid reason’ and further detail as to remedies).

Employers must ensure that any reason for dismissal does not fall within any of the grounds on which discrimination is prohibited. Generally, any proceedings in relation to an unlawful discriminatory act are required to be brought within 24 months after the act complained of was done. Assuming that the reason for dismissal is not discriminatory, the only requirement is that the employer serve the employee with any relevant contractual or statutory period of notice.

If the notice period has not been agreed in the employment terms, the individual will be entitled to receive one month’s notice.

If an employer fails to serve the requisite contractual notice, an employee will be entitled to a sum equivalent to the amount of wages which would have accrued to the employee during the relevant notice period.

In exceptional circumstances, if an employee is guilty of a repudiatory breach of contract (such as gross misconduct), the employer can lawfully dismiss without giving notice.

Employees with two years’ service or more

An employee who has been employed continuously for not less than two years has, in theory, the statutory right not to be dismissed without a ‘valid reason’. The employer must be able to show that the reason for dismissal was one of the five ‘valid’ reasons set out in the Employment Ordinance, namely:

  • capability and qualifications;
  • conduct;
    • redundancy – dismissal is by reason of redundancy if it is wholly or mainly attributable to:
      • the fact that his employer has ceased or intends to cease to carry on the business for the purposes of which the employee was employed by it or to carry on that business in the place where the employee was employed; or
      • the fact that the requirements of that business for employees to carry out work of a particular kind or for employees to carry out that work in the place where the employee was employed have ceased or diminished or are expected to cease or diminish;
  • contravention of a duty or restriction imposed by or under an enactment; or
  • some other substantial reason.

Remedies for dismissal without a ‘valid reason’

If a dismissal is held to be without a ‘valid reason’ a tribunal can order reinstatement or re-engagement or award of terminal payments.

Terminal payments refers to statutory entitlements under the Employment Ordinance that the employee has not been paid and that the employee is entitled to on termination, or that he might reasonably be expected to be entitled to on termination had he been allowed to continue with his employment to attain the minimum qualifying length of service required for statutory entitlements.

The tribunal may also award compensation, up to a maximum of HK$150,000 if no order of reinstatement or re-engagement was made and the employee is dismissed in contravention of certain statutory provisions, including the prohibition of termination of employees on paid sick leave or pregnant employees.

Claims under this part of the Employment Ordinance have been limited in number and the protection afforded can be viewed as restricted.

10.5 Redundancy payment

Employees with two years’ service who are made redundant are entitled to a statutory severance payment subject to a maximum of HK$15,000 for each year’s service (prorated for incomplete years). This amount can be offset against retirement benefits attributable to the employer’s contributions.

Employers may pay enhanced severance payments either on a contractual basis or at their discretion.

10.6 Long service pay

Long service pay is calculated in exactly the same way as the severance payment described in section 10.5 above, and becomes payable where an employee has been employed for at least five years and is not entitled to statutory severance pay.

11. PRIVACY

The Personal Data (Privacy) Ordinance (PDPO) sets out the requirements for the collection,

use, disclosure, accuracy, access to and security of personal data.

The PDPO regulates personal data largely through six ‘Data Protection Principles’ (DPPs).

Measures to protect the personal data of employees are also set out in the Code of Practice on Human Resources Management (the HR Code). This is not legally binding but represents ‘good practice’. Employers need to be familiar with both the DPPs and the HR code.

The PDPO and the HR Code require employers to provide job applicants and employees (as well as other individuals, such as customers) with a Personal Information Collection Statement (PICS).

The PICS sets out, among other things, the purposes for collecting personal data, to whom it may be provided, and so on.

The HR Code also suggests that employers have a Personal Data Policy.

The Privacy Guidelines: Monitoring and Personal Data Privacy at Work was introduced on 17 December 2004. This has the objective of promoting the protection of personal data privacy of employees where employee monitoring is carried out at work resulting in the collection of personal data of employees.

The PDPO also provides for individuals to access personal data by submitting a personal data access request. Subject to certain exemptions, personal data held by a data user on an individual may therefore be required to be disclosed. It is therefore important to note that even information which was intended to be confidential may be accessed by an employee through a data access request. The exemptions are limited and it is not uncommon for documents which were not intended to be circulated externally to be required to be disclosed under an employer’s PDPO obligations.

12. FORTHCOMING LEGISLATION

  • Sexual orientation legislation is under consideration. There is no indication of time frame by the government though.
  • The government has been considering the issue of minimum wage in Hong Kong (for workers other than domestic helpers). There has been no decision made, however.

13. USEFUL REFERENCES

Statutes and statutory instruments

Bilingual Laws Information System (BLIS): www.legislation.gov.hk/eng/home.htm

General bodies

Labour Department:
http://www.labour.gov.hk

Discrimination bodies

Equal Opportunities Commission (EOC):
http://www.eoc.org.hk/

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