practice area articles
Hong Kong—Special administrative region of the people’s republic of china
By Paul Hastings Professional
Back to International Employment Law
KEY DEVELOPMENTS FOR 2020
COVID-19 employee measures
From late January 2020, the Hong Kong Government has permitted civil servants to work from home where feasible. The Government has also encouraged employers in the private sector to allow employees to work from home where circumstances permit. In a number of the industrial sectors most affected by the coronavirus outbreak, employees have been asked to voluntarily agree to take accrued annual leave as well as unpaid leave to help protect jobs.
Statutory Maternity Leave to be increased from 10 Weeks to 14 Weeks
An amendment to the Employment Ordinance is expected to be passed in 2020. The amendment proposes to extend maternity leave from the current 10 weeks to 14 weeks.
The payment for the additional four weeks of maternity leave is to be paid at the rate of four-fifths of a female employee's average daily wages. Employers will receive a subsidy from the Government for the additional four weeks of maternity leave pay, up to a maximum of HKD 36,822 (approximately $4,750 USD) for each employee.
Abolishment of the MPF Offset Mechanism
A proposal first mooted in 2018 to permit employees to be paid a statutory severance or long-service payment, as well as a mandatory retirement fund payment (Mandatory Provident Fund (MPF)), has been inching forward to being enacted into law.
Currently, employers are permitted to reduce the amount of mandatory MPF retirement fund payment an employee receives by reference to the amount of statutory severance or long-service payment that the employer has paid an employee.
The Government has announced a target date of 2022 for enacting the necessary legislation and for the law to come fully into effect by 2024.
KEY DEVELOPMENTS FOR 2019
Abolition of off-setting in relation to the Mandatory Provident Fund
In an attempt to improve retirement protection for employees, the Government is proposing to abolish the employer’s right to off-set an employee’s entitlement to a severance or long service payment on termination of employment against the contributions that the employer has made to the Mandatory Provident Fund (“MPF”) by 2024. The Government has proposed that it intends to subsidize small to medium size companies to minimise the financial impact.
Increased maternity and paternity pay
The Employment (Amendment) Bill 2018 came into force on 18 January 2019. This increases statutory paternity leave from three to five days. To comply with International Labour Standards, the government is increasing statutory maternity leave from 10 weeks to 14 weeks. The increased statutory maternity leave is already in effect for civil servants but it will not apply to other sectors until late 2019.
Reinstatement or re-engagement of an employee who has been unreasonably and unlawfully dismissed
From 19 October 2018, if an employee has been unreasonably and unlawfully dismissed he/she may make a claim for reinstatement or re-engagement to the Labour Tribunal.
An unreasonable and unlawful dismissal may arise where an employee is dismissed without a valid reason (i.e. for a reason other than the conduct of the employee; the employee’s capability/qualification for performing the job; the employee’s redundancy or other genuine operational requirements of the business; the employer’s compliance with legal requirements; or for any other reason of substance). A dismissal will be regarded as unlawful if an employee is dismissed in circumstances which contravene statutory provisions relating to: pregnancy and maternity leave; paid sick leave; after a work-related injury and before determination/settlement and/or payment of compensation under the Employees' Compensation Ordinance; or by reason of the employee exercising trade union rights or giving evidence for the enforcement of relevant labour legislation.
Where an employee has been found to have been unreasonable and unlawfully dismissed, the Labour Tribunal may make an order for reinstatement or re-engagement without the need to secure the employer’s agreement.
If the employer fails or refuses to reinstate or re-engage the employee as required by the order, the employer will be liable to pay a further sum, amounting to three times the employee’s average monthly wages (subject to a cap of HKD72,500). It is an offence if the employer fails to pay this sum to the employee without a reasonable excuse.
KEY DEVELOPMENTS FOR 2018
Statutory Rights of Employees to be Reinstated or Re-Engaged
A bill, which is currently before Hong Kong’s Legislative Council, proposes to empower tribunals and courts to order the mandatory reinstatement or re-engagement of former employees thereby excluding any need for an employer and a former employee to mutually agree to such an order.
It is further proposed that an employer will be entitled to refuse to comply with any such court order by paying the former employee a sum equivalent to the lesser of three months of their average wages or USD 9,300.
Abolition of Pension Scheme Contribution Off-Setting Against Statutory Severance Payment and Statutory Long Service Payment
The Hong Kong administration has undertaken to introduce legislative measures in 2018 to abolish the current right of employers to off-set their pension scheme contributions against employees’ statutory severance payments and statutory long service payments.
Regulation of Working Hours and Overtime
There is no legal requirement requiring employers to pay employees overtime. In practice, employment contracts typically provide details of working hours, whether overtime is expected, and if so whether it is to be paid or unpaid.
The Hong Kong administration has announced that in 2018 it proposes to regulate the working hours of low-income employees who earn USD1,400 or less a month. Employment contracts will need to expressly provide the maximum working hours to be worked; and where employees work more than their maximum working hours an employer will be required to pay employees overtime pay at rates not less than their working hour pay.