HONG KONGLabor Laws

One Country, Two Systems

The sovereignty over Hong Kong was transferred from the United Kingdom to China in 1997, and Hong Kong is currently a part of the People's Republic of China. However, Hong Kong, as the Hong Kong Special Administrative Region, continues to maintain a legal system based on the laws of the United Kingdom in the same manner as its days under British governance (One Country, Two Systems policy¹). Thus, the basic concept of labor-related laws in Hong Kong is based on common law and not on the continental law adopted in mainland China and other countries. Thus, it could be said that the labor-related laws of Hong Kong relatively give importance to the convenience of economic activities of companies (employers) under the government's basic policy of aiming for economic development in Hong Kong.

*Overview of Common Law and Civil Law
Common Law is a legal system mainly in use in the UK and in nations formerly part of the British Empire (USA, Canada, Australia, New Zealand, etc.), which emphasizes decisions based upon traditions, customs, and precedent.
On the other hand, civil law developed on the European continent in nations, such as France and Germany, and as a legal system compared to common law, civil law places emphasis on statutes. Japan uses a civil law legal system.

Provisions under the Employment Ordinance

The basic law governing the labor system in Hong Kong is the Employment Ordinance (Hong Kong Legislation, Chapter 57), and this Ordinance prescribes the basic matters related to employment, including the contents of employment contracts, wages, holidays, allowances, maternity/childcare protection, end-of-year allowance, and termination (dismissal) in Hong Kong.

Note that, in cases where foreign laws and the Employment Ordinance or other employment-related laws in Hong Kong overlap, while the court has not rendered a clear decision regarding the application thereof, excluding certain exceptions, it is interpreted that the Employment Ordinance and other employment-related laws apply to all employees who executed an employment contract in Hong Kong and work in Hong Kong, irrespective of the nationality of the employee.

Conditions for dismissal

When an employer is to dismiss an employee, the employer may do so pursuant to the work rules or the employment contract by providing prior notice as per the notice period under the employment contract. If there is no specific provision regarding the notice period, the employer may dismiss an employee by giving one month's prior notice or by paying one month's worth of salary if it is after the probation period. When an employee corresponds to any one of the following cases, the employer may summarily dismiss the employee without any prior notice or payment of one month's worth of salary:

1. Willfully disobeys a lawful and reasonable order
2. Misconducts himself/herself
3. Commits fraudulent or dishonest act
4. Habitually neglectful of assigned duties

It could be said that the government's policy is relatively favorable for companies. However, employers are prohibited from dismissing certain employees, for instance, a pregnant employee, and employees taking sick leave.

Right to participate in trade union and right to strike

In Hong Kong, employees are legally entitled to participate in trade unions and strikes, and there are regulations preventing employers from discriminating against an employee depending on the participation or non-participation in a trade union or dismissing an employee on the grounds of having participated in a strike.

Mandatory Provident Fund (MPF)

In Hong Kong, the Mandatory Provident Fund (MPF) scheme was introduced as statutory social insurance in which the employer and the employee, respectively, contribute funds. MPF is managed by registered management companies (insurance companies, etc.), and are used as funds for the retirement allowance of employees.

Acquisition of visa

In order for a foreign national to work in Hong Kong, unless the person is a permanent resident, the foreign national is required to acquire a work visa, and the foreign national must benefit Hong Kong. Meanwhile, the government is aiming to promote the economic activities of foreign nationals through training visas and investment/entrepreneur visas. Nevertheless, ever since the revision of the General Employment Policy (GEP) in 2015, the visa screening policy of the Immigration Department has been tightened, and it would be safer to have a credible agent, such as a law firm, complete the application procedures on behalf of the applicant. Moreover, a screening period of four to six weeks is normally required until the application is permitted, and because any work performed during the foregoing period will correspond to illegal work, preparations for the application should be made sooner rather than later.

Labor-related statutes

According to the website　（http://www.labour.gov.hk/eng/legislat/contentA.htm） of the Labor Department, The government of the Hong Kong Special Administrative Region, the key labor-related statutes in Hong Kong are as follows:

• Employment Ordinance (Hong Kong Legislation, Chapter 57)
• Factories and Industrial Undertakings Ordinance (Hong Kong Legislation, Chapter 59)
• Employees' Compensation Ordinance (Hong Kong Legislation, Chapter 282)
• Occupational Safety and Health Ordinance (Hong Kong Legislation, Chapter 509)
• Minimum Wage Ordinance (Hong Kong Legislation, Chapter 608)

In addition to the above, there are, for instance, the Trade Unions Ordinance (Hong Kong Legislation, Chapter 332) as the law related to trade unions, the Labor Tribunal Ordinance (Hong Kong Legislation, Chapter 25) as the law related to the labor tribunal, the Occupational Safety and Health Ordinance (Hong Kong Legislation, Chapter 509) and the Employees' Compensation Ordinance (Hong Kong Legislation, Chapter 282) as the laws related to occupational safety and health and occupational illness, and the Sex Discrimination Ordinance (Hong Kong Legislation, Chapter 480), Disability Discrimination Ordinance (Hong Kong Legislation, Chapter 487), Family Status Discrimination Ordinance (Hong Kong Legislation, Chapter 527), and Race Discrimination Ordinance (Hong Kong Legislation, Chapter 602) as the law related to the protection of the socially vulnerable. In addition, amendments were passed into law on June 20, 2020, for each of these ordinances on discrimination, whereby prohibition of related workplace harassment has been enhanced. Among them, the amendment to protect breastfeeding female employees from harassment under the Sex Discrimination Ordinance came into force on June 19, 2021.²

Among the above, the Employment Ordinance prescribes the basic matters related to labor in Hong Kong.

Employment Ordinance

The Employment Ordinance prescribes the basic matters related to employment, including the contents of an employment contract, wages, holidays, allowances, maternity/childcare protection, end-of-year allowance, and termination of an employment contract (dismissal) in Hong Kong. The key provisions of the Employment Ordinance are explained below.

1. Applicable scope

   The Employment Ordinance applies to all employees with the following exceptions:

   • A family member of the employer and an employee who lives in the same dwelling as the employer
   • An employee who works outside of Hong Kong (foreign nationals, employees working away from home, and others)
   • A person serving under a crew agreement or on board a ship that is not registered in Hong Kong
   • A student or an apprentice registered under the Apprenticeship Ordinance (provided, however, that certain provisions of the Employment Ordinance are applicable)

   All employees covered by the Employment Ordinance, irrespective of their hours of work, are entitled to basic protections under the Ordinance, including payment of wages, restrictions on wage deductions, and the granting of statutory holidays.

   An employee who has been employed continuously by the same employer for four weeks or more with at least 18 hours worked in each week is regarded as being employed under a continuous contract and is further entitled to such benefits as rest days, paid annual leave, sickness allowance, severance pay, and long service pay.

2. Detailed rules concerning conditions of employment

   Before employment begins, an employer must clearly inform each employee of the following conditions of employment under which the person is to be employed with regard to:

   1. the breakdown of wages, overtime pay, and various allowances;
   2. the wage period;
   3. the length of notice period required to terminate the contract; and
   4. the matters related to an end-of-year pay (if eligible).

   Particularly with regard to (i) above, because wages are used as the basis for calculating the various allowances, it is necessary to reach a detailed and clear agreement regarding wages between labor and management.

   In the absence of any express agreement to the contrary, every employment contract that is a continuous contract is deemed to be a contract for one month and renewable from month to month.

   While the employment contract does not necessarily have to be in writing, it goes without saying that it would be desirable to conclude a written employment contract. If the employment contract is in writing, the employer is required to give one copy of the written contract to the employee for retention and reference.

   Furthermore, when an employer is to change the conditions of employment, the employer is required to promptly notify the employees of such effect and obtain their consent.

3. Wages

   Refer to Section 4 "Overview of the wage system (bonus, retirement benefit, overtime pay) in Hong Kong" described later.

4. Rest days, statutory holidays, and paid annual leaves

   1. 1. Rest day

         A rest day is defined as a continuous period of not less than 24 hours during which an employee is entitled to abstain from working for the employer, and an employee employed under a continuous contract is entitled to at least one rest day in every period of seven days.

         Rest days are appointed by the employer as being regular or irregular, and for regular rest days, the employer should inform the employees of the arrangement once, and for irregular rest days, the employer must inform the employees of the arrangement for that month before the beginning of each month. Furthermore, an employer may substitute some other rest day with the consent of the employee, in which case it must be within the same month before the original rest day or within 30 days after it.

         An employer must not compel an employee to work on a rest day, except in the event of a breakdown of machinery or plant or for any other unforeseen emergency. Moreover, when an employer requests that an employee work on a rest day, the employer is required to substitute some other rest day within 30 days after the original rest day and notify the employee of the arrangement within 48 hours after the employee is required to work.

         An employer who without a reasonable excuse fails to grant rest days to the employees is liable for prosecution and, upon conviction, to a fine no more than $50,000 ("$" means Hong Kong dollars, the same shall apply hereinafter). The same applies when an employer compels the employees to work on their rest days.

         An employee, excluding persons under the age of 18 employed in industrial undertakings, may work voluntarily on a rest day. Nevertheless, any condition in an employment contract that makes payment of any type of annual bonus conditional on an employee agreeing to work on rest days is void. Whether a rest day is paid or not is to be agreed upon by the employers and employees.

      2. Statutory holidays

         An employee, irrespective of the length of service, is entitled to the following statutory holidays:

         1. First day of January
         2. Lunar New Year's Day
         3. Second day of the Lunar New Year
         4. Third day of the Lunar New Year
         5. Ching Ming Festival
         6. Labor Day (May 1)
         7. Birthday of the Buddha (Effective from 2022)
         8. Tuen Ng Festival
         9. Hong Kong Special Administrative Region Establishment Day (July 1)
         10. Day following the Chinese Mid-Autumn Festival
         11. Chung Yeung Festival
         12. National Day (October 1)
         13. Chinese Winter Solstice Festival or Christmas Day (at the option of the employer)
         14. The first weekday after Christmas Day (effective from 2024)

         In this regard, the Employment (Amendment) Ordinance 2021 was announced on July 16, 2021, to seek to progressively increase the number of statutory holidays (SHs) from the existing 12 days to 17 days from 2020 to 2030 ³. Specifically, the changes are as follows:

         Newly added statutory holiday	Effective date
         Birthday of the Buddha	January 1, 2022
         First weekday after Christmas Day	January 1, 2024
         Easter Monday	January 1, 2026
         Good Friday	January 1, 2028
         Day following Good Friday	January 1, 2030

         If the employer requires the employee to work on a statutory holiday, the employer must grant an alternative holiday in accordance with the rules or an agreement.

         An employee having been employed under a continuous contract for not less than three months immediately preceding a statutory holiday is entitled to holiday pay. An employer is required to pay the holiday pay to the employee no later than the day on which the employee is next paid wages after that statutory holiday. While the amount of holiday pay is a sum equivalent to the average daily wages earned by an employee in the preceding 12-month period, it should be noted that rest days, statutory holidays, annual paid leaves, and other leaves are to be excluded from the foregoing calculation, and the amounts paid during the foregoing periods also need to be excluded from the foregoing calculation.

         Moreover, an employer is also prohibited from making any form of payment to the employee in lieu of granting a holiday (so-called "buy-out").

         An employer who without a reasonable excuse fails to grant statutory holidays or alternative holidays or fails to pay holiday pay to an employee is liable for prosecution and, upon conviction, to a fine no more than $50,000.

      3. Paid annual leaves

         An employee who has been employed for 12 months or longer under a continuous contract may, after being employed for 12 months or longer, is entitled to paid annual leaves from 7 days to a maximum of 14 days during the following 12 months period according to the length of service as shown below:

         Years of service

         Annual leave entitlements

         1

         7

         2

         7

         3

         8

         4

         9

         5

         10

         6

         11

         7

         12

         8

         13

         9 or above

         14

         The days of paid annual leave should be designated by the employer after confirmation with the employee or representative and reported to the employee in writing at least 14 days before the designated date (this period may be shortened based on an agreement). As a general rule, paid annual leave must be granted for an unbroken period, and if the employee so requests, the employer may grant the paid annual leave in the following manner:

         Leave entitlement not exceeding 10 days

         Up to 3 days can be granted separately; the balance should be granted consecutively.

         Leave entitlement exceeding 10 days

         At least 7 days should be granted consecutively

         Furthermore, an employee may choose to accept payment in lieu of the part of leave entitlement that exceeds 10 days. Upon obtaining the employer's consent, an employee may also obtain paid annual leaves in excess of the leave entitlement.

5. Sickness allowance

   An employee employed under a continuous contract is entitled to the sickness allowance if the following conditions are fulfilled:

   1. The employee took sick leave for four consecutive days or more. (However, when a female employee takes leave for a pregnancy checkup or other reasons related to confinement, such female employee may acquire the leave one day at a time [i.e., does not need to be consecutive].)
   2. The employee submitted an appropriate medical certificate.
   3. The employee has accumulated a sufficient number of paid sickness days (see below).

   Paid sickness days are accumulated at the rate of 2 paid sickness days for each month during the first 12 months, and 4 paid sickness days for each month from the 13th month onward but shall not exceed 120 days.

   An employer should keep the following records in relation to the sick leave of the employees:

   1. The date of commencement and termination of the employment contract of each employee
   2. All paid sickness days accumulated by each employee
   3. Paid sickness days taken by each employee and deducted from the total number of paid sick days
   4. Sickness allowance paid and the sickness days with respect to which the sickness allowance was paid

   The record must be signed by the employee within seven days of the return to work from paid sick leave, and the employee has the right to inspect the record.

   An employer who without a reasonable excuse fails to pay the sickness allowance to an employee is liable for prosecution after inspection and, upon conviction, to a fine of $50,000 or less.

6. Maternity/childcare protection

   A female employee employed under a continuous contract is entitled to take maternity leave under the following conditions by notifying her employer in advance:

   • Maternity leave for a continuous period of 14 weeks
   • If confinement occurs later than the expected date of confinement, a further period equal to the number of days from the day after the expected date of confinement to the actual date of confinement
   • The employee may enjoy an additional period of leave for not more than four weeks on the grounds of illness or disability due to the pregnancy or confinement

   The date of commencement of maternity leave is as follows.

   When the employer's consent has been obtained

   Arbitrary date that is 2 to 4 weeks before the expected date of confinement

   When the employee does not decide on the date, or fails to obtain the employer's consent

   4 weeks before the expected date of confinement

   When the confinement occurs before the scheduled maternity leave

   Actual date of confinement
   (However, in this case, the employee is required to give notice of the date of confinement and her intention to take 10 weeks' maternity leave to her employer within 7 days of her confinement)

   A female employee who has been employed under a continuous contract for not less than 40 weeks before the commencement date of the maternity leave may, by reporting the intention to take maternity leave and serving a notice of pregnancy, receive a maternity leave pay in an amount corresponding to 80% of the average daily wage.

   In this regard, the period of maternity leave was previously a continuous 10 weeks; however, it was extended to a continuous 14 weeks by Employment (Amendment) Ordinance 2020 (which took effect on December 11, 2020). This is a measure to enhance the protection of female employees, but on the other hand, employers will have to pay four weeks more maternity leave pay to the employees on leave, which could in a way increase the burden on the employer. Therefore, a scheme that allows employers to apply to the government for reimbursement of the 11th to 14th weeks’ maternity leave pay, subject to a cap of $80,000 per eligible employee (Reimbursement of Maternity Leave Pay (RMLP) Scheme) was also announced.⁴

   In addition, the above amendments also enhance the protection of female employees by changing the definition of miscarriage under the Employment Ordinance. Previously, only after the 28th week of pregnancy was defined as a miscarriage thereunder making the person eligible for sick leave and the sickness allowance, but after the amendment, after the 24th week of pregnancy has come to fall under the definition of a miscarriage. Hence, the scope of protection of female employees has expanded.

   An employer who fails to grant maternity leave to a pregnant employee or fails to pay maternity leave pay to an eligible pregnant employee is liable for prosecution and, upon conviction, to a fine of $50,000.

   If a female employee has been employed under a continuous contract and has served a notice of pregnancy to the employer, as a general rule, the employer may not dismiss that employee; provided, however, that the employer is not prohibited from dismissing a pregnant employee under the following circumstances:

   • The employee is summarily dismissed due to serious negligence.
   • The employee is dismissed for reasons other than pregnancy during the probation period of not more than 12 weeks.

   If an employer breaches the foregoing regulations, the employer is liable for prosecution and, upon conviction, to a fine of $100,000. Furthermore, the employer must to pay the following sums of money to the dismissed employee within seven days after the day of termination:

   • Payment in lieu of notice
   • A further sum equivalent to one month's wages as compensation
   • If the employee was entitled to take maternity leave, 14 weeks' worth of maternity leave pay

   In addition to the above, the employer may not cause a pregnant employee to engage in hazardous or harmful work.

7. Paternity leave/allowance

   By the amendment in 2019,⁵ a male employee is entitled to five days' paternity leave (three days before the amendment) for each confinement of the spouse/partner if he is the father of a newborn child born on or after January 18, 2019, or a father-to-be has been employed under a continuous contract and has given the required notification to the employer. In the foregoing case, the employee must notify the employer in advance and report the specific dates of paternity leave.

   Furthermore, a male employee is entitled to paternity leave pay in an amount corresponding to 80% of the average daily wages if he has been employed under a continuous contract for not less than 40 weeks immediately before the day of paternity leave and has provided the required document to the employer within 12 months after the first day of paternity leave taken, or if he ceases to be employed, within 6 months after cessation of employment.

   Note that the relevant provisions under the Personal Data (Privacy) Ordinance (Cap. 486) must be observed in the disclosure and use of personal data of the mother of the employee's child for the purpose of granting or claiming paternity leave and paternity leave pay. It should be noted that an employer is required to remind the employees to obtain the consent of the child's mother before disclosing personal data.

   Furthermore, an employer must at all times keep a record setting out the wage and employment history of each employee covering the period of employment during the preceding 12 months, and depending on circumstances, the record must also include particulars of the periods of paternity leave that the employee has taken together with details of the payments made with respect to such periods.

8. Employment protection

   The part on Employment Protection of the Employment Ordinance aims at discouraging employers from dismissing or varying the terms of the employment contract of employees in order to evade liability under the Ordinance. Conditions for seeking protection and claiming remedies are as follows.

   Situation	Conditions	Remedies
   Unreasonable dismissal	The employee has been employed under a continuous contract for a period of not less than 24 months. The employee is dismissed other than for a valid reason*1 as specified in the Ordinance.	The employee may claim one of the following: ・An order for reinstatement or re-engagement; or ・An award of terminal payments*2
   Unreasonable variation of the terms of the employment contract	The employee has been employed under a continuous contract. The terms of the employment contract are varied without the employee's consent. The employment contract does not contain an express term which allows such a variation. The terms of the employment contract are varied other than for a valid reason*1 as specified in the Ordinance.
   Unreasonable and unlawful dismissal	The employee is dismissed other than for a valid reason*1 as specified in the Ordinance. The dismissal is in contravention of the law.	The employee may claim one of the following: ・An order for reinstatement or re-engagement; or ・An award of terminal payments*2 and/or award of compensation*3 not exceeding $150,000

   
   

   Based on the above, terminal payments may include the following:

   1. Wages and other payments that the employee is entitled under the employment contract
   2. Payment in lieu of notice
   3. End-of-year pay
   4. Maternity leave pay
   5. Severance pay and long service pay
   6. Sickness allowance
   7. Rest day pay
   8. Paid annual leave
   9. Payments prescribed under the Employment Ordinance and the employment contract

   In determining the award of compensation, the Labor Tribunal will consider the circumstances of a claim including

   1. the circumstances of the employer and the employee,
   2. the period of employment of the employee,
   3. how the dismissal took place,
   4. the loss sustained by the employee as a result of the dismissal,
   5. the possibility of the employee obtaining new employment,
   6. whether the employee should bear any fault for the dismissal, and
   7. any payments that the employee is entitled to receive with respect to the dismissal (including terminal pay).

   It should be noted that the foregoing employment protection does not apply, as an exemption, to the following employment discrimination.

   • Sex discrimination (to be handled pursuant to the Sex Discrimination Ordinance)
   • Disability discrimination (to be handled pursuant to the Disability Discrimination Ordinance)
   • Family status discrimination (to be handled pursuant to the Family Status Discrimination Ordinance)
   • Race discrimination (to be handled pursuant to the Race Discrimination Ordinance)
   
   

   Regarding this section, the provisions related to the jurisdiction of Labor Tribunal were newly added in the Employment Ordinance by the amendment in 2018. The Labor Tribunal shall have jurisdiction to inquire, hear and determine a claim made by an employee under the Employment Ordinance which is giving more protection for the employee.

9. Protection against Anti-union Discrimination Right of an Employee in Participating in Trade Unions

   Every employee shall have the following rights:

   1. To participate in a trade union and become a member or an officer of a trade union
   2. To take part in the activities of the trade union at any appropriate time,* if the employee is a member or an officer of a trade union
   3. To associate with other persons for the purpose of forming or applying for the registration of a trade union
      *Appropriate time means, as a general rule, outside working hours, or during working hours by arrangement and with the consent of the employer.

   Consequently, in order to protect the foregoing rights of employees, an employer is required to observe the following:

   1. The employer shall not prevent or deter an employee from exercising any of the above rights.
   2. The employer shall not dismiss, penalize, or discriminate against an employee for exercising the above rights.
   3. The employer shall not prohibit an employee from exercising the above rights under the conditions of employment.

   Any employer who contravenes the above shall be liable for prosecution and, upon conviction, to a fine no more than $100,000.

In Hong Kong, unlike Japan, the creation and submission of work rules are not obligated, irrespective of the number of employees. Nevertheless, because it is not possible to regulate the entire relationship between the employer and the worker (employee) in the employment contract, it goes without saying that it would be better, for preventing trouble, to prescribe work rules, clearly prescribe rules between labor and management in advance, and have the employee sign such rules.

As the contents to be included in the work rules, while certain subjects may be based on Japanese work rules, it is necessary to customize the work rules based on the laws of Hong Kong pursuant to the contents of the Employment Ordinance described in Section 2 above. The following provisions are often found in the work rules prepared in Hong Kong.

1. Employment
   Period of employment contract, premature cancellation, mandatory retirement, promotion, transfer, etc.
2. Workplace, work hours
3. Compensation
   Wages, overtime pay, bonus, various allowances (housing allowance, education expenses, meal expenses, transportation expenses, measures to be taken in emergencies (typhoons, blackouts, etc.))
4. Holidays
   Statutory holidays, paid annual leaves and other leaves (sick leave, childcare leave, etc.), arrangements regarding substitute measures, method of application and acquisition of such leaves, etc.
5. Welfare matters related to medical expenses and dental expenses, employee discounts, dining hall, recreational facilities, etc.
6. Matters related to the cultivation and training of employees
   New employee training, overseas training, etc.
7. Health and safety
   Smoking, drinking and use of drugs in the workplace, job-related accidents and compensation, measures to be implemented in case of fires, etc.
8. Measures to be implemented in adverse weather
   Measures to be implemented in cases of warnings, such as typhoons or storms
9. Communication
   Method of notification, contact network, etc.
10. Service rules
    Matters related to outfit, attendance and leaving, lateness, work behavior, corruption, theft/fraud, conflict of interest, confidentiality, actions outside of work hours, use of computers, etc.
11. Discipline
12. Equality of opportunity of employees
13. Protection of personal information
14. Guidelines on sexual harassment

Wages

Under the Employment Ordinance of Hong Kong, "wages" mean all remuneration, earnings, allowances, and the like payable to an employee with respect to work done or work to be done. Travelling allowances, attendance allowances, commissions, and overtime pay are within the definition of wages.

However, wages do not include the following:

• The value of any accommodation, education, food, utility, or medical expenses provided by the employer
• Employer's contribution to a retirement scheme
• Commissions, attendance allowances, or attendance bonuses of a gratuitous nature or payable only at the discretion of the employer
• Nonrecurrent travel expenses or the value of any discount in travel expenses, or travel expenses incurred by the employment
• Special expenses incurred by the employee by the nature of the employment
• End-of-year pay or annual bonus of a gratuitous nature or payable only at the discretion of the employer
• Gratuities payable on completion or termination of an employment contract

Because the Employment Ordinance of Hong Kong does not include any provisions related to restrictions on standard working hours or overtime work hours, overtime pay is included in the concept of wages. Thus, in order to avoid trouble between labor and management, it would be desirable to clearly and specifically prescribe the conditions of employment in the employment contract and the work rules. There is information that the government is recently considering introducing standard working hours. Thus, it must be noted that the regulation may be changed in the future.

1. Storage of records

   Every employer must at all times keep a record setting out the wages and employment history of each employee covering the period of employment during the preceding 12 months and 6 months after resignation.

   This record of wage and employment history includes the following information:

   1. Name and identity card number of the employee
   2. Date of commencement of employment
   3. Job title
   4. Wages paid with respect to each wage period (hourly, daily, monthly)
   5. Wage calculation period
   6. Total number of hours worked in each wage period (if applicable)
   7. Periods of annual leave, sick leave, maternity leave, childcare leave, and holidays entitled and taken
   8. Amount of end-of-year pay and the period to which it relates
   9. Period of notice required for termination of the employment contract
   10. Date of termination of the employment contract

   An employer who fails to keep the above record is liable for prosecution and, upon conviction, to a fine no more than $10,000. Officers of the Labor Department may inspect the above record, question any person, or seize anything that may appear to be evidence of an offence under the Employment Ordinance. If an employer fails to comply with the requirements of the officers of the Labor Department, it should be noted that the employer is liable for prosecution and, upon conviction, to a fine no more than $100,000 and to imprisonment for one year or less.

2. Payment of wages

   An employer is required to pay wages to an employee on the last day of the wage calculation period or within seven days from such last day of the wage calculation period. If an employer fails to pay the wages during the foregoing period, the employer is required to pay overdue interest.

   An employer who willfully and without a reasonable excuse fails to pay wages to an employee when it becomes due is liable for prosecution and, upon conviction, to a fine no more than $350,000 and to imprisonment for three years or less. An employer who willfully and without a reasonable excuse fails to pay interest on the outstanding amount of wages to the employee is liable for prosecution and, upon conviction, to a fine no more than $10,000.

Payment of paid annual leave

The daily rate of annual leave pay is the sum equivalent to the average daily wages earned by an employee in the preceding 12-month period, and the employer is required to pay the annual leave pay no later than the normal payday immediately after the period of annual leave taken. The calculation of the average daily wages is as follows:

Average daily wages
= (wages earned by an employee in the preceding 12-month period - excluded wages*) ÷ (365 - exclusion period*)

*Excluded wages and exclusion period

When a part or all of the wages were not paid with respect to the following, an employee has to exclude the total amount thereof and the corresponding period from the calculation of average daily wages:

1. Leaves prescribed in the Employment Ordinance (rest day, statutory holiday, annual leave, sickness day, maternity leave, paternity leave, sickness leave)
2. Sick leave due to work injuries under the Employees Compensation Ordinance
3. Leave taken with the agreement of the employer
4. Any normal working day on which the employee was not assigned any work from the employer

An employer who without a reasonable excuse fails to grant annual leave to an employee is liable for prosecution and, upon conviction, to a fine no more than $50,000.

Sickness allowance and maternity leave pay

The amount of sickness allowance is 80% of the average daily wages, and an employer is required to pay the sickness allowance to the employee no later than the normal payday immediately after the sickness leave.

Furthermore, a female employee who has been employed under a continuous contract for not less than 40 weeks before the commencement date of the maternity leave may, by reporting the intention to take maternity leave and serving a notice of pregnancy, receive maternity leave pay in an amount corresponding to 80% of the average daily wage.

In relation to the COVID-19 pandemic, the following amendments have been made to the sickness allowance effective as of June 2022:

The Hong Kong government may issue orders under the Disease Prevention and Control Ordinance (Chapter 599 of the Laws of Hong Kong Ordinance) for compulsory isolation or quarantine to be carried out on the affected citizens, and if the employees who are issued such orders are unable to work at the quarantine site, and then the employee had had no choice but taking paid or unpaid leave. In contrast, the Employment (Amendment) Ordinance 2022⁶ allows employees to receive the sickness allowance if the following conditions are met:

• The employee has been continuously employed by the same employer for at least four consecutive weeks and 18 hours per week or more in accordance with the employment contract.
• The employee has been issued with an isolation or quarantine order in accordance with the Disease Prevention and Control Ordinance.
• Absence from work for more than four consecutive days is required to obey the order.
• The employee has a sufficient number of sick leave days accrued.
• The employee has a government-issued document stating the employee's name (or information identifying the employee), the details of the order, and the start and ending dates.

The sickness is not a case of deliberate infection.
In addition, the dismissal of the above-mentioned employee or an adverse change in the terms and conditions of employment on the grounds of absence due to the order would be regarded as an unfair dismissal or an unfair change in the terms and conditions of employment.

On the other hand, for the time being, except in exempt cases, if an employee fails to provide evidence of vaccination within 56 days of a legitimate vaccination request meeting the prescribed requirements, the company may validly dismiss the employee.

End-of-year pay

An employee is eligible for an end-of-year pay if the person has been employed under a continuous contract for a prescribed calculation period (period specified in the employment contract, or a lunar year if it is not specified). If the amount is not specified in the employment contract, the amount shall be a sum equivalent to the average monthly wages.

An employee is eligible for a pro-rata end-of-year pay if the person has been employed under a continuous contract for not less than three months within a prescribed calculation period and satisfies the following conditions:

1. The employee continues to be employed after the expiry of the payment period.
2. The employee is dismissed by the employer (except in cases of summary dismissal due to the employee's serious misconduct).

Any probation period, subject to a maximum of three months, is excluded from the calculation of the qualifying service for the pro-rata end-of-year pay, when a specific agreement has been reached regarding the probation period. However, excluding the probation period, if an employee has fulfilled the eligibility requirement of no less than three months' employment in a payment period, then the whole employment period (including the probation period) shall be taken into account in calculating the pro-rata end-of-year pay.

Minimum wage

Conventionally, there has been no legislation to regulate the minimum wage in Hong Kong, but the Minimum Wage Ordinance was passed for the first time in the Legislative Council on July 17, 2010, by which the minimum wage of $28 per hour was prescribed (enforced on May 1, 2011). Then the minimum wage (wage per hour) was raised to $34.5 per hour as a result of keeping pace with the statutory minimum monthly wage that was raised from $13,300 to $14,100 from May 1, 2017, and further raised to $37.5 per hour from May 1, 2019. The statutory minimum monthly wage was further raised to $16,300, and the wage per hour was raised to $40 per hour from 1 May 2023.

The Minimum Wage Ordinance prescribes the following matters:

• Amount of minimum wage shall be reviewed once every two years.
• Irrespective of work hours or training hours, one hour of shift duty shall be used as the standard.
• While job-related transportation time is included in the work hours, commuting time is not included.
• As an exception, the minimum wage system does not apply to housekeepers and interns whose number of workdays is 60 days or less.

Prosecution due to non-payment of wages

If an employer fails to pay wages, the end-of-year pay, maternity pay, severance pay, long service pay, sickness allowance, holiday pay, allowance for annual leave, and/or other payments, but even after a decision is rendered by the Labor Tribunal or the Minor Employment Claims Adjudication Board, the employer still fails to make such payment within 14 days after the date of the decision, the said employer is liable for prosecution under the Employment Ordinance and, upon conviction, to a fine no more than $350,000 and to imprisonment for three years or less.

With respect to this point, according to the Employment Ordinance, it should be noted that if wages are not paid within one month after they become due, an employee may deem the employment contract to be terminated by the employer without notice and is entitled to payment in lieu of notice in addition to other statutory and contractual termination payment.

Ordinary dismissal

When an employer or an employee terminates the employment contract, the employer or the employee is required to give the other party due notice or payment in lieu of notice. The specifics are as indicated below.

Summary dismissal

An employer may summarily dismiss an employee without notice or payment in lieu of notice if the employee, in relation to the employment,

1. willfully disobeys a lawful and reasonable order,
2. is found to have misconduct,
3. is found guilty of fraud, or
4. is habitually neglectful of assigned duties.

With respect to this point, under the Basic Law of Hong Kong, taking part by an employee in a strike is not lawful grounds for an employer to terminate the employee's employment contract without notice or payment in lieu.

Moreover, because summary dismissal is a serious disciplinary action, it only applies to cases where an employee has committed very serious neglect or misconduct or fails to improve after the employer's repeated warnings.

In order for an employee to terminate the employment contract without prior notice (or payment in lieu of notice), one of the following conditions must be satisfied:

1. The employee becomes physically weakened because of illness or violence, and it is determined that the continuation of work by the employee is difficult.
2. The employee is being abused by the employer.
3. The employee has been employed for not less than five years and is certified by a registered medical practitioner or a registered Chinese medicine practitioner as being permanently unfit for the type of work.

Severance pay and long service payment

Severance pay and long service pay are monies to be paid by an employer to an employee who was dismissed or resigned under certain conditions. Needless to say, an employee will not be simultaneously entitled to both long service pay and severance pay.

Eligibility of severance pay is as follows.

Eligibility for long service pay is as follows.

The method of calculation of severance pay and long service pay is as follows:

• With regard to monthly paid employees, (i) last month wages × 2/3 × years of service, or (ii) $22,500 × 2/3 × years of service, whichever is less. In the case of (i) above, an employee may also elect to use the average wages in the last 12 months for the calculation rather than the last month's wages.
• With regard to daily-rated/piece-rated employees, any 18 days' wages chosen by the employee out of the last 30 normal working days × years of service, or $22,500 × 2/3 × years of service, whichever is less. Service of an incomplete year should be calculated on a pro-rata basis.

An employer who without a reasonable excuse fails to pay a severance pay to an employee is liable for prosecution and, upon conviction, to a fine no more than $50,000.

An employer who willfully and without a reasonable excuse fails to pay long service pay to an employee is liable for prosecution and, upon conviction, to a fine no more than $350,000 and to imprisonment for three years or less.

Employees whose dismissal is prohibited

Employees who may not be dismissed as prescribed under laws are employees who fall under the following categories.

An employer dismissing an employee under the above circumstances is liable for prosecution and, upon conviction, to a fine no more than $100,000.

Mandatory Provident Fund Schemes

In Hong Kong, the Mandatory Provident Fund (MPF) scheme was introduced in December 2000 as statutory social insurance in which the employer and the employee, respectively, contribute funds. This MPF is managed and operated by insurance companies and trust subsidiaries of banks approved by the Mandatory Provident Fund Schemes Authority (MPFA).

Eligible employees are employees of ages 18 to 65 who are employed by an employer in Hong Kong and who will be employed for 60 days or longer. However, the following persons may be excluded from the application:

• Employees who have worked for less than one year, and persons participating in a pension scheme outside of Hong Kong (e.g.: participation in the Japanese Welfare Pension system)
• Housekeepers
• Persons participating in a statutory pension scheme (government employees, and the like)

Note that foreign nationals who are not locally hired in Hong Kong, such as Japanese expats, are not obligated to participate in this scheme. Moreover, if an employee's monthly income is less than the stipulated lower limit (monthly amount of $7,100), the employee is exempted from making contributions.

Amount of contribution

Both the employer and the employee are required to respectively deposit 5% of the employee's monthly income (when the monthly amount is more than $30,000, $1,500 is to be deposited as the upper cap of the mandatory contribution) with the registered MPF management company. Note that the employer currently may use (apply) the MPF contribution for an employee for the severance pay or the long service pay at the time of resignation or retirement of the employee.⁷ However, on 9 June 2022, Parliament passed a resolution to abolish the MPF offsetting arrangement in 2025, and it was announced in April 2023 that this abolition would take effect on 1 May 2025. This will be an increased burden for employers, which will also be subsidized by the government as a remedy for the employers.

The employee's monthly income refers to the entire amount of salary that is paid on a monthly basis, excluding the housing allowance, and the end-of-year payment, bonus, overtime pay, and commuting expenses are also included therein. However, retirement allowance and long service pay are excluded.

Furthermore, the employer and the employee may voluntarily make additional contributions in addition to the mandatory contributions, and the employer's contributions and the employee's contributions may also be respectively deposited with different MPF management companies.

It should be noted that, when an employer fails to contribute to the MPF without due cause, the employer is liable for prosecution and, upon conviction, to a fine no more than $100,000 and to imprisonment for six months or less.

In addition, MPF for self-employed persons is as follows.

Receiving the fund

The eligible age for receiving MPF is from 65 years of age. In the following cases, an early payment could be permitted as exceptions:

• Persons who are 60 years of age or older and wish to apply for the early retirement plan
• Persons who will permanently leave Hong Kong
• Employees who have passed away, or suffered severe impairment.

When an employee changes jobs, the employee may choose to continue to keep the current funds in the same MPF account, or transfer such funds to the MPF management company of the new employer.

When a foreign national is to work in Hong Kong, the foreign national must bring about benefits for Hong Kong or have special skills, knowledge, or experience not readily available in Hong Kong, or be able to substantially contribute to the Hong Kong economy. The categories of visas in Hong Kong are broadly classified into the following types in the Immigration Department website (http://www.immd.gov.hk/eng/services/index.html）.

Note that, in addition to the above, the Hong Kong government established the Capital Investment Entrant Scheme (CIES) and issued visas as residence permits for foreign investors from October 2003 upon screening and confirming that the applicant had net assets of a certain amount or greater; however, this scheme has been suspended since January 15, 2015.

Instead, the Hong Kong government announced in December 2023 that it planned to launch the new CIES in 2024.⁸ This system allows foreign nationals and their family members who meet certain conditions, such as a person with assets and a net worth of $30 million or more, to stay in Hong Kong, and it is expected that the introduction of the new CIES will further enrich the talent pool and attract more new capital to Hong Kong.

Work visas may be extended by applying with the Immigration Department from four weeks before the expiration of the visa.

In addition to the above, Hong Kong has recently introduced a short-stay visa waiver scheme⁹ for specific business sectors. In June 2020, parties, arbitrators, lawyers, and others involved in international arbitration proceedings in Hong Kong were allowed to stay in Hong Kong for up to 14 days without a visa¹⁰ in order to promote participation in the proceedings, even if a visa was originally required. The scheme was extended to the medical, higher education, cultural arts, sports, and other sectors in June 2022. From February 2023, this scheme has been extended to two more sectors: finance and development/construction.