Transferring employees on an outsourcing in Hong Kong: overview

A Q&A guide to outsourcing in Hong Kong.

This Q&A guide gives a high level overview of the rules relating to transferring employees on an outsourcing, including structuring employee arrangements (including any notice, information and consultation obligations) and calculating redundancy pay.

To compare answers across multiple jurisdictions, visit the Transferring employees Country Q&A tool.

This Q&A is part of the multi-jurisdictional guide to outsourcing. For a full list of jurisdictional Q&As, visit www.practicallaw.com/outsourcing-mjg.

For the general rules relating to outsourcing, visit Outsourcing: Hong Kong overview.

Rizuko Soo, Edwards Wildman Palmer LLP
Contents

Transfer by operation of law

1. In what circumstances (if any) are employees transferred by operation of law?

Initial outsourcing

Hong Kong law does not have specific provisions for transferring employees to other employers by operation of law.

Change of supplier

Hong Kong does not have specific laws covering transfer of employees in a change of supplier situation.

Termination

Following a probationary period, unless an employment agreement provides otherwise, either an employer or employee can terminate a contract of employment by giving the other party one month's prior notice or making payment to the other party in lieu of notice.

 
2. If employees transfer by operation of law, what are the terms on which they do so?

Employees are not transferred by operation of law.

 

Redundancy pay

3. How is redundancy pay calculated?

Where an employee has been employed under a continuous contract for at least 24 months and is dismissed by reason of redundancy, that employee is eligible for severance pay at the rate of two-thirds of their last month's wage multiplied by years of service. The maximum amount of severance payment is HK$390,000.

 

Harmonisation

4. To what extent can a transferee harmonise terms and conditions of transferring employees with those of its existing workforce?

This is not applicable under Hong Kong law.

 

Dismissals

5. To what extent can dismissals be implemented before or after the outsourcing?

Where an employee has been continuously employed for at least 24 months, the employee can make a claim against the employer for:

  • Unreasonable dismissal if the dismissal was wrongful.

  • Unreasonable and unlawful dismissal if the dismissal contravened Hong Kong law.

The Labour Tribunal can order re-instatement or an award of terminal payment against the employer.

 

National restrictions

6. To what extent can particular services only be performed by a local national trained in your jurisdiction?

While there is no specific legislation requiring particular services to be performed by a locally trained person, there are services that can only be performed by licensed or registered persons. These include professions such as medicine, dentistry, contractors, law, accountancy and financial advisers.

 

Secondment

7. In what circumstances (if any) can the parties structure the employee arrangements of an outsourcing as a secondment?

Generally, there are no restrictions on secondment if the employer is properly registered in Hong Kong and the secondee is authorised to work in Hong Kong.

 

Information, notice and consultation obligations

8. What information must the transferor or the transferee provide to the other party in relation to any employees?

There is no specific requirement for exchange of information in relation to employees. However, privacy law relating to personal data concerning employees must be complied with before any information is disclosed.

 
9. What are the notice, information and consultation obligations that arise for the transferor and the transferee in relation to employees or employees' representatives?

There are no specific requirements regarding transfer of employees in an outsourcing situation. However, where employees are terminated and are then hired by an outsourcing service provider, care should be taken to comply with employment requirements regarding dismissal of employees (see Question 5).

 

Online resources

Inland Revenue Department

W www.ird.gov.hk

Description. The Commissioner of Inland Revenue (who also holds the statutory appointments of Collector of Stamp Revenue and Estate Duty Commissioner) is responsible for the administration of tax and public revenue-related Ordinances and the Rules and Regulations made under these Ordinances.

Hong Kong Labour Department

W www.labour.gov.hk

Description. The Labour Department aims to provide comprehensive employment services, foster harmonious labour relations, promote and safeguard employees' rights and benefits, as well as occupational health and safety.

Hong Kong Monetary Authority

W www.hkma.gov.hk

Description. The HKMA is the government authority in Hong Kong responsible for maintaining monetary and banking stability.

Hong Kong Office of the Commissioner of Insurance

W www.oci.gov.hk

Description. The Office of the Commissioner of Insurance is the insurance regulator in Hong Kong, empowered by the Insurance Companies Ordinance to oversee the financial conditions and operations of authorised insurers.

Office of the Privacy Commissioner for Personal Data

W wwwpcpd.org.hk

Description. The Office of the Privacy Commissioner for Personal Data is an independent statutory body set up to oversee the enforcement of the Personal Data (Privacy) Ordinance.

Securities and Futures Commission (SFC)

W www.sfc.hk

Description. The Securities and Futures Commission (SFC) is an independent statutory body set up to regulate the securities and futures markets in Hong Kong.



Contributor profile

Rizuko Soo

Edwards Wildman Palmer LLP

T +852 3150 1984
F +852 2116 9330
E rsoo@edwardswildman.com
W www.edwardswildman.com

Professional qualifications. England and Wales, Barrister, 1998; Malaysia, Advocate and Solicitor, 1999; Singapore, Advocate and Solicitor, 2002; Hong Kong, Solicitor, 2009

Areas of practice. Business law; mergers and acquisitions; joint ventures; privatisations; debt and equity capital markets; funds; private equity; initial public offerings; regulatory and compliance; debt restructuring and financing.

Non-professional qualifications. Bar Vocational Course, BPP Law School; LL.B, University of Sheffield; Postgraduate Law Course, Singapore

Recent transactions

  • Acted on an initial public offering by Sunbridge Group Limited on the Australian Securities Exchange, to raise up to A$10 million.

  • Acted for various Hong Kong and Singapore listed or private companies in relation to their group restructuring, acquisition/disposal of shares/assets/hotel and office building within Asia.

  • Acted in various types of bonds, warrants and/or convertible bonds transactions issued by Hong Kong and Singapore companies as well as financial institutions.

  • Acted for various US Companies (including NASDAQs) in relation to their inbound investment in the People's Republic of China (PRC) markets.

Languages. English, Malay, Mandarin

Professional associations/memberships. Gray's Inn, London; Singapore Academy of Law; The Law Society of Singapore; The Law Society of Hong Kong; Bar Council of Malaysia.

Publications

  • "Impact of Technological Advances on Intellectual Property Rights" and "Tackling Unsolicited Electronic Messages in Hong Kong", 2007 (author).

  • "Hong Kong - a New Mecca? – Following Chief Executive Donald Tsang' s recent pronouncements, what are the prospects for Hong Kong becoming an Islamic finance hub?", Hong Kong Securities Institute, January/February 2008 (contributor).


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