Employment and employee benefits in Hong Kong: overview

A Q&A guide to employment and employee benefits law in Hong Kong.

The Q&A gives a high level overview of the key practical issues including: employment status; background checks; permissions to work; contractual and implied terms of employment; minimum wages; restrictions on working time; illness and injury; rights of parents and carers; data protection; discrimination and harassment; dismissals; redundancies; taxation; employer and parent company liability; employee representation and consultation; consequence of business transfers; intellectual property; restraint of trade agreements and proposals for reform.

To compare answers across multiple jurisdictions, visit the Employment and Employee Benefits: Country Q&A tool.

The Q&A is part of the global guide to employment and employee benefits law. For a full list of jurisdictional Q&As visit www.practicallaw.com/employment-guide.


Scope of employment regulation

1. Do the main laws that regulate the employment relationship apply to:
  • Foreign nationals working in your jurisdiction?

  • Nationals of your jurisdiction working abroad?

Laws applicable to foreign nationals

The Employment Ordinance (EO) is the main employment legislation in Hong Kong. It guarantees certain minimum benefits, including:

  • Paid annual leave.

  • Paid sick leave.

  • Paid maternity and paternity leave.

  • Minimum notice of termination and a right to make a payment in lieu of notice.

Subject to limited exceptions, the EO applies to all employees working in Hong Kong, regardless of their nationality. Observing the terms of the EO is generally considered to be mandatory, although it is not specifically expressed to be an overriding statute.

Employees who are employed by foreign employers and seconded to Hong Kong are often employed under contracts expressed to be governed by foreign laws. However, there are currently conflicting High Court decisions on whether a choice of law clause in an employment contract can validly exclude the application of the EO. In the interlocutory decision of HSBC Bank PLC v Stephen Wallace (HCA 2422/2007), the court took the view that the EO did not override the express choice of English law in the employment contract. In Cantor Fitzgerald Europe & Ors v Boyer & Ors (HCA 1160/2011), the court disagreed, interpreting broadly the scope of the EO, as set out in section 4. It noted, in particular, that the EO is expressed as applying to "every employee engaged under a contract of employment, to an employer of such employee and to a contract of employment between such employer and employee", subject to three limited exceptions. Further, it noted that nothing in section 4 nor the applicable definitions excluded the application of the EO to contracts of employment governed by a foreign law. Although this issue is not yet finally determined, until this is the case, employers should expect that employees working in Hong Kong are likely to be entitled to the rights and benefits provided under the EO and other employment-related laws, regardless of any express choice of governing law in the employment contract.

Other mandatory laws that are likely to apply to an employment relationship, regardless of the contractual choice of law provisions are as follows:

  • Minimum Wage Ordinance (MWO). This ordinance provides for a minimum wage for most workers in Hong Kong.

  • Personal Data (Privacy) Ordinance (PDPO). This ordinance regulates an employer's collection, use and disclosure of an employee's personal data (including personal data contained in e-mails and phone calls).

  • Mandatory Provident Fund Schemes Ordinance (MPFSO). Subject to very limited exceptions, this ordinance requires employers to enrol employees in Hong Kong in a Mandatory Provident Fund (MPF) Scheme (that is, a retirement scheme), to which the employer and employee must make certain contributions. Foreign nationals are exempt if they hold an employment visa and:

    • are posted in Hong Kong to work for a period not exceeding 13 months; or

    • belong to a retirement scheme outside of Hong Kong.

  • Occupational Retirement Schemes Ordinance (ORSO). This ordinance establishes a registration system and provides for the regulation of certain retirement schemes.

  • Occupational Safety and Health Ordinance (OSHO). This ordinance imposes a duty on all employers, as far as is reasonably practical, to ensure the safety and health in the workplace of its employees. The OSHO covers most industrial and non-industrial workplaces in Hong Kong (see Question 27).

  • Employees' Compensation Ordinance (ECO). If an employee suffers an injury arising out of and in the course of employment in Hong Kong (or overseas, if the travel is authorised by the employer), the employer is usually liable to compensate the employee under the ECO. Eligible family members of an employee killed in an accident at work can also be entitled to compensation. All employers must maintain valid employees' compensation insurance policies to cover their liabilities under the ordinance and at common law.

  • Companies (Winding Up and Miscellaneous Provisions) Ordinance (CWUMPO). On winding up of a Hong Kong company (including a Hong Kong subsidiary of a foreign company), employees' claims for wages and other entitlements are given priority over other unsecured creditor claims.

  • Sex Discrimination Ordinance (SDO), Disability Discrimination Ordinance (DDO), Family Status Discrimination Ordinance (FSDO) and Race Discrimination Ordinance (RDO). All legislate against various forms of discrimination (see Question 17).

  • Basic Law and Hong Kong Bill of Rights Ordinance. These safeguard certain rights of individuals, although they have limited application in the context of employment law.

  • Labour Tribunal Ordinance (LTO). This ordinance empowers the Labour Tribunal to hear and resolve disputes relating to employment contracts as well as alleged breaches of the EO. It potentially covers disputes involving foreign nationals or Hong Kong residents working abroad (see below, Laws applicable to nationals working abroad).

  • Prevention of Bribery Ordinance (POBO). The POBO applies to employees, particularly to those who receive or solicit bribes from third parties (for example, an employee who receives bribes from a supplier of goods in return for placing orders with that supplier). In some cases, employees may also be subject to anti-corruption legislation in other jurisdictions.

Laws applicable to nationals working abroad

Hong Kong employment law only applies to nationals working abroad if the employee's employment contract is expressly governed by Hong Kong law or has a substantial connection with Hong Kong. Factors that may be relevant in determining whether there is a substantial connection include, for example:

  • Whether the employee's placement outside Hong Kong is temporary or permanent.

  • Residency of the employee and the employee's family.

  • Currency of pay and place of payment.

  • Location of the management.

  • Location where the contract was concluded.

The Contracts for Employment Outside Hong Kong Ordinance (CEOHKO) applies to Hong Kong nationals who are recruited by an employer that is neither based in Hong Kong nor undertakes any business in Hong Kong to perform primarily manual work or whose wages do not exceed HK$20,000 per month.


Employment status

2. Does the law distinguish between different categories of worker? If so, what are the material differences in entitlement to statutory employment rights and are there any maximum time periods for which each category of worker can be engaged?

Categories of worker

In Hong Kong, the key distinction in employment law is between "continuous" and "non-continuous" employment. To qualify as continuous employment, the employee must have worked 18 or more hours per week for the same employer for at least four consecutive weeks. It does not matter if the employment relationship was governed by separate, successive employment contracts, only that the employee works the requisite number of hours in each of the weeks.

Entitlement to statutory employment rights

All employees (whether they are continuously employed or not), are entitled to a basic level of protection. Basic statutory rights include:

  • Protection from discrimination.

  • Entitlement to statutory holidays.

  • Payment of salary.

Continuous employees are entitled to a greater level of statutory employment rights. For example, continuous employees are entitled to:

  • Rest days.

  • Paid annual leave.

  • Paid maternity or paternity leave.

  • Sickness allowance.

  • Severance or long service pay (where other necessary conditions are satisfied).

Time periods

Hong Kong employees need to have worked for the same employer during each of the previous four weeks for at least 18 hours in each of those weeks, to qualify for additional employment rights under the Employment Ordinance.

There are no maximum engagement periods.



3. Are any grants or incentives available for employing people? Do any filings need to be made when employing people?

Grants or incentives

There are certain grants, for example, if an employer employs a:

  • Person aged between 15 and 24 without a university degree under the Youth Work Experience and Training Scheme, the employer can be entitled to a monthly training subsidy of HK3,000 per trainee (if it provides on the job training for six to 12 months).

  • Worker over the age of 40 under the Employment Programme for the Middle-aged (EPM), the employer can be entitled to a monthly allowance once the employee has completed a period of on the job training (usually three months, but this may be extended to up to six months with the prior approval of the Labour Department). If the monthly salary of the employee is:

    • HK$6,000 or more, the monthly training allowance is HK$3,000.

    • Less than HK$6,000, the monthly training allowance is HK$2,000.

  • Person with a disability with employment difficulties who is referred by the Selective Placement Division of the Labour Department under the Work Orientation and Placement Scheme, the employer can be entitled to an allowance of up to HK$35,000 payable over a period of up to eight months.

  • Person under the Work Trial Scheme, the employee can be entitled to an allowance of HK$6,900 (of which the participating employer is only required to contribute HK$500 per month), on satisfactory completion of a one month work trial.

Under the Work Incentive Transport Subsidy Scheme, low income earners can apply for a transport subsidy of up to HK$600 per month to help defray the cost of transport to and from work.


Form IR56E must be filed with the Inland Revenue within three months of the employee starting employment.


Background checks

4. Are there any restrictions or prohibitions on carrying out background checks in relation to applicants?

Prospective employers must always obtain an applicant's consent in order to use the applicant's personal data (for example, name, address and date of birth) to conduct background checks. This includes informing the applicant on or before collecting the personal data of both the:

  • Purpose for which the personal data is being collected.

  • Classes of persons to whom the personal data will be transferred.

Personal data regarding an applicant that is collected from public sources must not be used to conduct background checks, unless the data has been made publicly available for that purpose or the applicant has otherwise consented to such use.

Prospective employers must also be mindful of any applicable discrimination laws and must not retain data obtained during a background check for any longer than is necessary (usually no more than two years, in the case of unsuccessful applicants).

Employers can contact an applicant's former employers for references.


Permission to work

5. What prior approvals do foreign nationals require to work in your country?

Unless a person is a Hong Kong permanent resident, he/she generally requires a visa to enter Hong Kong for employment purposes. An application for a visa to work can be made under the General Employment Policy (GEP). The GEP does not apply to residents of the People's Republic of China (China) or to nationals of Afghanistan, Cambodia, Cuba, Laos, Korea, Nepal or Vietnam.

An individual who holds a Chinese passport and meets the GEP criteria can apply under the GEP if he/she both:

  • Has permanent residence overseas.

  • Had been residing overseas (that is, outside of China, Hong Kong and Macau) for at least one year immediately before the submission of the application.

Other Chinese nationals may apply under the Admission Scheme for Mainland Talents and Professionals (ASMTP). The criteria and mode of application under the ASMTP are broadly the same as those under the GEP (see below).

An individual who is not a Hong Kong citizen but who obtained a degree or higher qualification in Hong Kong in a full-time, locally-accredited programme can apply under the Immigration Arrangements for Non-Local Graduates (IANG) to work in Hong Kong. This application is relatively straightforward. The processing time under this scheme is around two weeks.


Procedure for obtaining approval. A visa under the GEP can be obtained by application to the Hong Kong Immigration Department, or through a Chinese embassy abroad, before the employee or prospective employee enters Hong Kong. The employer must demonstrate that:

  • The employee:

    • possesses special skills, knowledge or experience of value which is not readily available in Hong Kong;

    • has no known criminal record;

    • has a good educational background in the relevant field; and

    • has a confirmed offer of employment and is employed in a job relevant to that employee's skills, which cannot be readily taken up by the local workforce.

  • There is a genuine job vacancy.

  • The remuneration package is broadly commensurate with the prevailing market level for professionals in Hong Kong.

The relevant application forms can be downloaded from the website of the Hong Kong Immigration Department. Completed application forms, together with the relevant supporting documents, can be submitted in person or by post. The application must also be sponsored by the Hong Kong-based employer.

The visa will usually be granted for two years, but can be renewed for one or more three-year periods. The employee does not need to leave Hong Kong to apply for a renewal.

There is no requirement in Hong Kong to obtain a work permit as well as a visa.

Cost. The cost of a GEP work visa application is currently HK$190.

Time frame. The processing time for a GEP work visa is usually around four weeks from receipt of all relevant documents.


Restrictions on managers and directors

6. Are there any restrictions on who can be a manager or company director?

Age restrictions

Individual directors must be at least 18 years old.

Nationality restrictions

There are no nationality restrictions on company directors or managers.


An individual who is a company secretary must ordinarily reside in Hong Kong.


Regulation of the employment relationship

7. How is the employment relationship governed and regulated?

Written employment contract

Hong Kong law does not require an employment contract to be in writing. It is possible to have an oral employment contract.

Implied terms

The Employment Ordinance (EO) and the common law imply a number of terms into employment contracts. Certain statutory entitlements apply to all employment contracts (whether written or oral). The statutory benefits conferred on employees cannot be reduced or excluded by the terms of an employment contract, and a contract term purporting to do so is void. Common law entitlements can generally be varied or excluded entirely by agreement.

Some of the key terms implied by the EO that cannot be contracted out of (to the detriment of the employee) concern:

  • The right to pay wages in lieu of notice of termination.

  • Restrictions on the employer's right to suspend the employee.

  • The employee's entitlement to rest days, statutory holidays, annual leave and sick leave.

Some terms implied by the common law are the employee's duty:

  • To obey lawful orders within the scope of employment.

  • Of good faith towards the employer.

  • Not to disclose trade secrets or confidential information.

Terms may also be implied into an employment contract through industry practice or prior conduct.

Collective agreements

Collective agreements are rare in Hong Kong, due to the low incidence of trade union membership among employees.

8. What are the main points to consider if an employer wants to unilaterally change the terms and conditions of employment?

The general rule is that a variation to the terms of an employment contract requires the agreement of both the employer and the employee. In some cases, the contract may grant the employer the power to vary certain terms (possibly within certain limits or by following a set process). If the employer unilaterally varies a term of the employment contract without the express right to do so, it is in breach of the contract. If the variation amounts to a serious breach of the contract, the employee can terminate the employment contract without notice and seek compensation from the employer for constructive dismissal.

An employee who has been constructively dismissed is entitled to all applicable statutory benefits (see Question 19, Severance payments) which may include:

  • A payment in lieu of notice.

  • A severance or long service payment (if conditions are satisfied).

  • Accrued annual leave.

  • Proportional end of year payment.

The employee may also be able to claim common law damages, but the employee must be able to prove this loss and must take all reasonably practicable steps to mitigate it.

If there is no valid reason for the variation of the terms and conditions of employment, an employee (who is continuously employed) can also make a claim under Part IV of the Employment Ordinance (Employment Protection) (see Question 20, Protection against dismissal).


Minimum wage

9. Is there a national (or regional) minimum wage?

The Minimum Wage Ordinance (MWO) came into effect on 1 May 2011. As of 1 May 2015, the statutory minimum wage (SMW) rate is set at HK$32.50 per hour

The SMW applies to most employees (regardless of age, whether they are full-time, part-time or casual employees). The SMW does not apply to live-in domestic workers, student interns or work experience students. The MWO also includes special arrangements for disabled employees, including that they can opt to be paid less than the SMW in accordance with an assessment of their productivity.


Restrictions on working time

10. Are there restrictions on working hours? Can an employee opt out on either an individual or collective basis?

Working hours

There are generally no restrictions on working hours, except in relation to young persons (that is, those below 18 years old). For those employees, the maximum working period is usually eight hours per day or 48 hours per week.

The Hong Kong Government has established a Standard Working Hours Committee to advise the government on working hours, including whether a statutory standard working hours regime should be implemented. The Committee's recommendations are expected in early 2016.

Rest breaks

Employees continuously employed for at least 18 hours in each of four consecutive weeks are entitled to at least one rest day per week. This is in addition to annual leave and statutory holidays (see Question 11).

Shift workers

There are no special restrictions applicable to the working hours or rest breaks for shift workers.


Holiday entitlement

11. Is there a minimum paid holiday entitlement?

Minimum holiday entitlement

The Employment Ordinance (EO) prescribes certain minimum holiday entitlements.

In addition to rest days, statutory holidays, sick leave and other statutory leave entitlements, employees who have been employed under a continuous contract for one year are entitled to paid annual leave. The amount of leave depends on the length of service, starting at seven days after one year of employment up to a maximum of 14 days after nine years' service.

Public holidays

The EO specifies 12 statutory holidays that must be granted to all employees. If the employee has been employed continuously for three months and works at least 18 hours a week, he/she will be entitled to paid leave on a statutory holiday. The statutory holidays include Christmas, Easter, Lunar New Year and HKSAR Day (when Hong Kong celebrates the handover to Chinese sovereignty). There are five additional general holidays specified in the General Holidays Ordinance, which are only guaranteed to certain employees (such as civil servants). However, many employers also treat these as paid holidays.


Illness and injury of employees

12. What rights do employees have to time off in the case of illness or injury? Are they entitled to sick pay during this time off? Who pays the sick pay and, if the employer, can it recover any of the cost from the government?

Entitlement to time off

The Employment Ordinance provides that employees that are employed continuously accumulate sick leave in the form of a sickness allowance at the rate of two paid sick days per month during the first year of employment and four paid sick days each month thereafter. The maximum sickness allowance that can be accumulated is 120 days.

It is unlawful to dismiss an employee who is absent from work on statutory sick leave. However, this prohibition does not apply if the employee is validly dismissed summarily.

Entitlement to paid time off

Employees are entitled to 80% of their average daily wages (as calculated over the previous 12 months), provided they are off sick for four consecutive days and have accrued enough sick days to cover the period in question. Special rules apply to women who are pregnant or who have recently given birth. An employee who is on paid sick leave cannot be lawfully dismissed except in very limited circumstances.

Recovery of sick pay from the state

Employers are not able to recover sickness allowance from the state.

Compensation for workplace injury

If an employee is injured at work, he/she is entitled to compensation under the ECO and possibly also at common law. The Employees' Compensation Ordinance (ECO) requires employers to take out an insurance policy to cover the employer's liability for work injuries, whether under the ECO or at common law. Failure to do so is an offence.

It is unlawful for an employer to dismiss an employee who has made a claim for compensation under the ECO until the claim has been determined (unless the Commissioner for Labour consents to the dismissal).


Statutory rights of parents and carers

13. What are the statutory rights of employees who are:
  • Parents (including maternity, paternity, surrogacy, adoption and parental rights, where applicable)?

  • Carers (including those of disabled children and adult dependants)?

Maternity rights

A female employee who is employed under a continuous contract and who has given notice of her intention to take maternity leave is entitled to ten weeks' maternity leave, and an additional period of not more than four weeks on the grounds of illness or disability resulting from the pregnancy (Employment Ordinance). If the employee has more than 40 weeks' service at the time of taking maternity leave, she will be entitled to ten weeks' paid maternity leave, calculated at 80% of the employee's average monthly wages over the previous 12 months. Maternity leave can begin between two and four weeks before the expected date of birth of the child.

An employee who is pregnant and who has given notice of her pregnancy to her employer cannot generally be lawfully dismissed from the date on which she is confirmed pregnant by a medical certificate until the expiry of her maternity leave. This prohibition does not apply if the employee is dismissed summarily or is dismissed during the first 12 weeks of her probationary period (see Question 17). Wrongful termination results in liability for compensation and amounts to an offence. If a pregnant employee is dismissed by her employer before she notifies the employer of her pregnancy, the employer must withdraw the dismissal if she gives such notice immediately thereafter.

It is unlawful to discriminate against an employee because of pregnancy (see Question 17).

Paternity rights

Male government employees employed under a continuous employment contract are eligible to take five days' paternity leave on full pay on the birth of each child.

Male employees in the private sector who are employed under a continuous contract are entitled to three days' paternity leave in connection with the birth of their child. Leave can be taken at any time (on single or consecutive days) during the period commencing four weeks before the expected date of birth and ending ten weeks after the actual date of birth.

If the employee has more than 40 weeks' service at the time of taking paternity leave, he will be entitled to paid paternity leave, calculated at 80% of the employee's average monthly wages over the previous 12 months.

Surrogacy rights

There are no special rules for surrogate parents under Hong Kong employment law.

Adoption rights

There are no special rules relating to adoption under Hong Kong employment law.

Parental rights

There are no special rules granting parental rights under Hong Kong employment law.

Carers' rights

There is no specific statutory entitlement to leave for the purpose of caring for a dependant, spouse or a close family member. However, it is unlawful for an employer to discriminate against an individual on the ground of their disability or the disability of an associate (that is, the spouse or a relative of that person), or on the ground of an individual's family status (for example, if they have responsibility for the care of an immediate family member). In practice, many employers allow employees to take paid or unpaid leave to handle family emergencies.


Continuous periods of employment

14. Does a period of continuous employment create any statutory rights for employees? If an employee is transferred to a new entity, does that employee retain their period of continuous employment? If so, on what type of transfer?

Statutory rights created

Subject to meeting length of service thresholds, individuals employed under a continuous contract (that is, who work not less than 18 hours per week, over four or more consecutive weeks) are entitled to certain benefits under the Employment Ordinance (EO), including:

  • Rest days, sickness allowance, annual leave and statutory holidays.

  • A pro rata, end-of-year payment if the employee has worked for at least three months (excluding probation) in the relevant bonus year and has a contractual right to receive an end-of-year payment.

  • Maternity or paternity leave in connection with the birth of a child, for which the employee is entitled to be paid provided that he/she has been in continuous employment for 40 weeks or more.

  • Severance payment in the event of redundancy, provided the employee has been in continuous employment for two years or more.

  • Long service payment on termination, provided the employee has been in continuous employment for five years or more.

An employee is not entitled to receive both severance and long service pay.

In practice, once an employee achieves "continuous employment" status, it is fairly difficult for him/her to lose that status. This is because a period of continuous employment will not be broken where the employee works less than 18 hours in any week, due to:

  • Annual leave, maternity leave or other leave taken by mutual arrangement of the employer and employee.

  • Sickness or injury.

  • Strikes or lock-outs.

Consequences of a transfer of employee

A transfer of employment from one employer to another as a result of a sale or transfer of the trade, business or undertaking in which an employee is employed will generally not break the employee's period of continuous service. In such a case, the employee's period of service with the transferor must be recognised by the transferee.

In essence, the employee's continuity of employment is effectively preserved and the period of service with the original employer counts as service with the new employer. Similar rules apply in situations involving intra-group transfers of employment or business restructuring (see Question 24, Harmonisation of employment terms).


Fixed term, part-time and agency workers

15. To what extent are temporary and agency workers entitled to the same rights and benefits as permanent employees? To what extent are part-time workers entitled to the same rights and benefits as full-time workers?

Temporary workers

Temporary employees have the same protections under the labour laws in Hong Kong as permanent employees provided they satisfy the minimum requirements (see Question 14, Statutory rights created).

Provided they satisfy the minimum requirements, the cost of terminating the employment of a fixed term employee is generally the same as for a permanent employee (see Question 14, Statutory rights created and Question 19). However, unless the parties agree otherwise, the relationship will terminate on the expiration of the fixed term and no payment in lieu of notice will be payable.

Agency workers

There are no specific laws relating to protections for agency workers in Hong Kong. Agency workers will receive the same protections as permanent employees, provided they satisfy the minimum requirements (see Question 14, Statutory rights created).

Contractors who do not amount to employees do not have the same protections as employees under the labour laws. In the event that a contractor is deemed to be an employee, this may lead to a claim by the individual for unpaid entitlements (for example, paid annual leave entitlements and employer MPF contributions).

Part-time workers

There are no specific laws relating to the protection of part-time workers in Hong Kong. A part-time worker will enjoy the same statutory entitlements as a full-time worker, provided that he/she is engaged under a continuous contract (that is, he/she works 18 hours or more, over four or more consecutive weeks) (see Questions 2 and 14, Statutory rights created).


Data protection

16. Are there any requirements protecting employee privacy or personal data? If so, what are an employer's obligations?

Employees' data protection rights

The collection and use of personal data in Kong Kong is governed by the Personal Data (Privacy) Ordinance (PDPO) (see Question 1). The PDPO applies to personal data (that is, any data that relates to, and identifies a living individual, and is in a form which is reasonably practical to access and/or process). The PDPO:

  • Regulates the way in which personal data collected by employers can be used.

  • Regulates the monitoring of employee e-mails and phone calls at work.

  • Gives employees the right to access their personal data held by an employer.

Employers' data protection obligations

The PDPO prohibits an employer from acting or engaging in a practice that contravenes a data protection principle unless the act or practice is allowed under the ordinance. The principles govern:

  • The means of data collection.

  • The data's accuracy.

  • The data's usage.

  • The data's security in relation to unauthorised access.

  • Openness of policies and practice of data users.

  • Access to data.


Discrimination and harassment

17. What protection do employees have from discrimination or harassment, and on what grounds?

Protection from discrimination

The Disability Discrimination Ordinance (DDO), Sex Discrimination Ordinance (SDO), Family Status Discrimination Ordinance (FSDO) and Race Discrimination Ordinance (RDO) (see Question 1) prohibit an employer from discriminating against any employee (or job applicant) or apprentice by reason of the individual's gender, marital status, pregnancy, disability, family status, race, descent, colour or national or ethnic origin. There are some limited exceptions. For example:

  • The SDO allows a gender to be specified where a job is to be performed outside Hong Kong and local laws or customs dictate that the particular job cannot be performed by the opposite gender.

  • The RDO allows a race to be specified in the context of recruitment where the job involves the provision of services to a particular racial group, and the provision of such services can most effectively be provided by a member of that racial group or require familiarity with the language, culture and customs of, and a sensitivity to the needs of that racial group.

  • The DDO provides that an employer will not unlawfully discriminate against an individual who suffers from a disability, if he/she declines to offer employment to or dismisses that individual (or subjects him/her to any other detriment) where, because of that person's disability, he/she is unable to carry out the inherent requirements of the role unless services or facilities were provided, the provision of which would impose unjustifiable hardship on the employer.

An employer can be vicariously liable for an employee's action that breaches discrimination legislation.

Anyone who believes that they may have been discriminated against in contravention of the provisions of the SDO, DDO, FSDO or RDO has two options to bring a formal complaint:

  • Lodge a complaint with the Equal Opportunities Commission (EOC).

  • Commence proceedings against the employer in the District Court.

Once a complaint is lodged with the EOC, the EOC has the power to conduct an investigation into the complaint, issue a report into its findings and encourage the parties to settle the complaint by way of conciliation. The EOC is also empowered to offer legal assistance to persons who have lodged complaints with the EOC.

There is no formal time limit for issuing a complaint to the EOC but the EOC can decide not to conduct an investigation if more than 12 months have elapsed since the alleged discriminatory act.

It is not necessary for a complainant to lodge a complaint with the EOC first before commencing proceedings in the District Court but in practice most actions are commenced by complaint to the EOC.

The District Court has broad powers to award remedies including:

  • Making an order that the employer not repeat or continue the discriminatory act or conduct.

  • Making an order for employment, re-employment or promotion of the employee.

  • Making an order that the employer pays damages for loss and injury to feelings.

The time limit for bringing a claim in the District Court under the SDO, DDO, FSDO or RDO is 24 months from the latest of either:

  • The date of the discriminatory act.

  • The date a report is issued by the EOC in relation to the discriminatory act.

Protection from harassment

The above ordinances also protect employees against:

  • Victimisation.

  • Sexual harassment and harassment on the ground of disability or race.

  • Vilification.



18. Do whistleblowers have any protection?

There are currently no laws specifically protecting employees or workers from employer retaliation because they have reported wrongdoing by their colleagues/employer, whether internally or externally. Instead, there are piecemeal laws and codes of conduct offering certain protections to whistleblowers in various particular situations. For example, employees who disclose certain information may be protected from allegations regarding breach of confidentiality where that disclosure:

  • Concerns allegations of bribery or corruption in the public or private sectors under the Prevention of Bribery Ordinance and/or the Banking Ordinance.

  • Concerns allegations of crimes, including money laundering, under the Organised and Serious Crimes Ordinance, the Drug Trafficking (Recovery of Proceeds) Ordinance and/or the United Nations (Anti-Terrorism) Ordinance.

  • Involves a breach of law, rules, regulations or codes administered by the Securities and Futures Commission, and the person making the disclosure is a licensed person under the Securities and Futures Ordinance.

  • Is in the public interest.

In addition, it is unlawful to terminate an employee or otherwise discriminate against an employee on the ground that he/she has:

  • Made a complaint or given or agreed to give evidence in relation to:

    • the enforcement of the Employment Ordinance;

    • a breach of any statutory duty regarding safety at work; or

    • a workplace accident.

  • Taken part in the activities of a trade union (at an appropriate time).

  • Alleged that a person has committed an act of unlawful discrimination, harassment or vilification, or has given evidence or information in connection with any proceedings relating to discrimination, harassment or vilification.

Some operations in Hong Kong may be subject to the US Foreign Corrupt Practices Act (FCPA). While employees of such operations do not have an express obligation under the FCPA to report or disclose FCPA violations to any regulatory authority, any voluntary disclosures made in this context (whether internal or external) may be protected.


Termination of employment

19. What rights do employees have when their employment contract is terminated?

Notice periods

The Employment Ordinance (EO) stipulates minimum notice periods for termination of employment, but the parties can agree to longer notice periods. In each case, either of the parties can make a payment to the other of wages in lieu of notice (such payment must be calculated by reference to the average daily or monthly wages of the employee over the preceding 12-month period). If one or more of the grounds for summary dismissal set out in section 9 of the EO are satisfied, the employee can be dismissed summarily, and no notice or payment in lieu of notice is required.

During probation. During the first month of probation either party can terminate the employment without notice or payment in lieu of notice. During the remaining period of probation, seven days' notice or payment in lieu must be given.

After probation. On expiry of any probationary period, either party can terminate by giving the agreed period of notice, which must not be less than seven days. If there is no agreed notice period, one month's notice is required for employees who are employed under a continuous contract (that is, who work at least 18 hours per week over the preceding four or more consecutive weeks). In other cases, the common law requires the parties to give "reasonable" notice.

Summary dismissal. Under the EO, an employer is entitled to dismiss an employee summarily (without notice), where the employee:

  • Wilfully disobeys a lawful and reasonable order.

  • Is guilty of misconduct.

  • Is guilty of fraud or dishonesty; or

  • Is habitually neglectful in his/her duties.

Summarily dismissal can also be permitted in certain circumstances at common law.

Certain employees are protected from dismissal (see Question 20, Protected employees).

Severance payments

The term severance payment has a specific meaning under the EO (see below). A continuous employee may be entitled to some or all of the following payments on termination of their employment:

  • Accrued wages. These are wages owed for the period of employment up to the date of termination.

  • A payment in lieu of notice. This is payable to the employee if the employment relationship is terminated by employer "buying out" the whole or part of the notice period. (If the employee elects to "buy out" the notice period, such payment must be made to the employer, failing which it can be deducted from the employee's final pay.)

  • A payment for any untaken annual leave. Under the EO, an employee is entitled to a payment in lieu of any untaken annual leave accrued in respect of each completed leave year. Provided he/she has worked more than three months of the current leave year and has not been dismissed summarily, he/she will also be entitled to a payment in lieu of his/her (pro-rated) untaken entitlement for the current leave year.

  • Any accrued end-of-year payment. If the employee's contract of employment provides for an annual bonus or payment (which is not payable only at the employer's discretion), the employee is entitled to a proportion of that bonus/payment on termination of employment, provided the employee has worked more than three months of the year to which the bonus relates, has not resigned and has not been dismissed summarily. The employee is also entitled to be paid a bonus that has accrued in respect of the previous bonus year, but which remained unpaid at the date of dismissal (regardless of the reason for dismissal).

  • A severance payment. An employee who is made redundant after having been employed continuously for at least two years will be entitled to a severance payment. The amount is calculated by multiplying the employee's last month's wages and the period of continuous employment (in years, including any fraction of a year). Monthly wages above HK$22,500 are disregarded for this purpose, and the maximum payment is HK$390,000. The severance payment can be reduced by the total amount of gratuities paid to the employee based on length of service, or by the then current value of benefits accrued in respect of that employee in an MPF or ORSO scheme, which are attributable to contributions made by the employer over the same employment period. A severance payment may not be payable in certain cases if the employee unreasonably refuses a re-employment offer or has been dismissed summarily.

  • A long service payment. This is payable to an employee who is dismissed after having been employed continuously for at least five years, resigns after having reached 65 years of age or having been certified by a medical practitioner as having become permanently unfit for the role for which he/she was employed. The formula for calculating a long service payment is the same as that for calculating a severance payment, and the same rights of set-off apply. No long service payment is payable if the employee is entitled to a severance payment, unreasonably refuses a re-employment offer in certain cases, or is dismissed summarily.

Other types of payments may also become payable on termination of employment under the particular terms of the employment contract.

As a general rule, an employer must pay all sums due to the employee on termination as soon as is practical (and in any event within seven days) after dismissal. Exceptions to this rule are as follows:

  • Severance payments must technically be made within two months after an employee claims such payment, although most employers pay the severance payment at the same time as other termination payments.

  • Annual payments or bonuses (if any) that are to be calculated by reference to the profits of the employer must be paid within seven days from the day on which such profits are ascertained.

  • If the employer is aware that, following the dismissal, the employee will be leaving Hong Kong permanently or for a period of one month or more, the employer must withhold any payments due to the employee for a period of one month, or until clearance from the Inland Revenue Department is obtained (whichever occurs first).

Procedural requirements for dismissal

Other than the requirement to give the relevant period of notice (or payment in lieu), legislation in Hong Kong does not prescribe any particular procedures that must be observed to dismiss an employee lawfully. However, several recent court decisions have highlighted the importance of ensuring that employees are afforded procedural fairness in the processes leading up to dismissals for misconduct or on grounds of unsatisfactory performance.

While there is no requirement for the notice of termination to be in writing (and the EO expressly permits oral notice), most employers do give notice in writing and employment contracts often require written notice. Where an employee is entitled to a severance payment or long service payment, the employer must provide a written statement indicating how the payment has been calculated.

There is no statutory obligation to give an employee a reason for dismissal. However, if the employee has been employed continuously for two years, and brings a claim in the Labour Tribunal alleging that he/she has been dismissed without "valid reason", the onus will be on the employer to show that there was a valid reason for terminating the employee's employment (see Question 20, Protection against dismissal).

Employers must notify the Inland Revenue Department of the dismissal (using Form IR56F or IR56G, as appropriate) either one month before the dismissal or as soon as possible thereafter. If an employee's working visa is sponsored by the employer, the employer must also notify the Immigration Department of the dismissal.

20. What protection do employees have against dismissal? Are there any specific categories of protected employees?

Protection against dismissal

Part IV of the Employment Ordinance (EO) enables an employee to make a claim to the Labour Tribunal in the following cases:

  • He/she has at least two years' service under a continuous contract and is dismissed without "valid reason".

  • His/her contract is varied to his/her detriment without his/her consent and without "valid reason".

  • He/she has been dismissed in contravention of certain statutory prohibitions (see below, Protected employees).

The EO recognises the following as "valid reasons":

  • The employee's conduct.

  • The employee's capability or qualifications for the job.

  • Redundancy or other genuine operational reasons.

  • Continued employment would be unlawful.

  • Any other reason of substance sufficient to warrant the dismissal/variation.

The remedies available to an employee under Part IV of the EO are relatively limited. An order for re-instatement or re-engagement can only be made if the parties agree. Otherwise (except where a specific prohibition applies, see below, Protected employees), the Labour Tribunal can only make an award for "terminal payments", which are, in effect, any unpaid statutory and contractual entitlements to which the employee is entitled on termination of employment.

Protected employees

The EO prohibits an employer dismissing an employee in the following circumstances:

  • The employee is pregnant or is on statutory maternity leave (see Question 13, Maternity rights).

  • The employee is on statutory sick leave (see Question 12).

  • The employee has been injured at work and a claim for compensation under the ECO is pending, unless the Commission for Labour's consent to the dismissal has been obtained (see Question 12).

In addition, it is unlawful to dismiss an employee for any of the following reasons:

  • The employee has made a complaint or given (or agreed to give) evidence in relation to:

    • the enforcement of the EO;

    • a breach of any statutory duty regarding safety at work;

    • a workplace accident; or

    • unlawful discrimination, harassment or vilification.

  • The employee is a trade union member or officer, or participates in any trade union activity (including any strike).

  • The employee has done or is required to do jury service.

  • The employee is of a certain gender, is pregnant, has a particular marital status, is of a particular race, has family responsibilities or is disabled (see Question 17, Protection from discrimination).



21. How are redundancies/layoffs defined, and what rules apply on redundancies/layoffs? Are there special rules relating to collective redundancies?

Definition of redundancy/layoff

Redundancy is defined in the Employment Ordinance as occurring where:

  • An employer has ceased (or intends to cease) to carry on the business in which an employee was employed.

  • An employer has ceased (or intends to cease) to carry on business in the place where the employee was employed.

  • The requirements of the business for employees to carry out work of a particular kind either generally or in the place where the employee was employed have ceased or diminished, or are expected to cease or diminish.

For the purposes of determining whether an employee is entitled to a statutory severance payment, the employee will be presumed to have been dismissed by reason of redundancy unless the contrary is proved.

Procedural requirements

There are no specific procedural rules (such as consultation or other requirements) that must be followed in relation to a redundancy (or collective redundancies).

Redundancy/layoff pay

An employee who is made redundant is entitled to a statutory severance payment (see Question 19, Severance payments).

Collective redundancies

There are no particular requirements that apply specifically to collective redundancies.


Employee representation and consultation

22. Are employees entitled to management representation (such as on the board of directors) or to be consulted about issues that affect them? Is employee consultation or consent required for major transactions (such as acquisitions, disposals or joint ventures)?

Management representation

Employees are not entitled to management representation on the board of Hong Kong companies.

Major transactions

Share sales. Employers are not required to consult with employees before transactions such as acquisitions, disposals or joint ventures.

Asset sales. In a transaction that involves a transfer of business assets (rather than shares in the target company), the employer should consider consulting with the employees whose employment is to be transferred to the new owner. The employees' consent will be required for the transfer of their employment to the new business owner (see Question 24, Harmonisation of employment terms).

23. What remedies are available if an employer fails to comply with its consultation duties? Can employees take action to prevent any proposals going ahead?


There is no requirement to consult with employees and therefore no available remedies for employees if an employer fails to consult them.

Employee action

Employees cannot take action to prevent any proposals going ahead.


Consequences of a business transfer

24. Is there any statutory protection of employees on a business transfer?

Automatic transfer of employees

In Hong Kong, employment is not automatically transferred in the event of a business transfer. The employment relationship between the seller and each employee will remain in place unless the employee:

  • Accepts an offer of employment with the buyer.

  • Chooses to resign.

  • Is dismissed by the seller (that is, on grounds of redundancy).

If an employee accepts an offer of employment with the buyer, the Employment Ordinance provides that the employee's preceding period of employment with the seller will count as a period of employment with the buyer (that is, the business transfer will not break the employee's continuity of employment).

Protection against dismissal

If an employee's employment is terminated by the seller (either because the buyer does not make an offer to that employee, or the employee refuses such offer), the employee may be entitled to a severance payment see Question 19, Severance payments).

No statutory severance payment is payable if all of the following conditions are met:

  • An offer was made by the buyer to the employee not less than seven days before the date of termination of employment with the seller (or if payment was made in lieu, the date up to which wages must be calculated).

  • Employment with the buyer pursuant to that offer was to take effect immediately on termination of employment with the seller.

  • The offer was for suitable employment and its terms and conditions were the same or not less favourable than the terms offered by the seller.

  • The employee unreasonably refused the offer.

If an employee has five or more years of service at the time of dismissal and is not entitled to a statutory severance payment because the above conditions are satisfied, he/she may still be entitled to a long service payment.

Harmonisation of employment terms

Where the new owner of the business wishes to employ some or all of the employees of the newly acquired business, it is usually desirable to offer new employees the same terms as those offered to the buyer's existing workforce.

There is no requirement that the buyer offers employment under the same terms. However, if the terms offered are less favourable than the employee's existing terms:

  • The employee can refuse to accept them.

  • The employee may be entitled to a severance payment if he/she is dismissed by the seller.


Employer and parent company liability

25. Are there any circumstances in which:
  • An employer can be liable for the acts of its employees?

  • A parent company can be liable for the acts of a subsidiary company's employees?

Employer liability

Employer's vicarious liability in tort. As a general rule, an employer can be held vicariously liable for all torts committed by an employee in the course of employment or where his/her tortious act has a "close connection" with that employment.

In determining whether there is a "close connection", the court will consider "whether the employee's tort was so closely connected with his employment that it would be fair and just to hold his employer vicariously liable". Factors that are likely to be relevant to the assessment include whether:

  • The act in question is part of, or reasonably incidental to, the employee's normal duties.

  • The employer expressly or impliedly authorised the employee to do the act in question.

  • It is normal and foreseeable that the employee will do the act in question in the course of his/her employment.

  • It is an established practice of the workplace.

  • The risk of liability for the act in question was created by the employer's business activities.

Vicarious liability does not imply that the employer has full liability for the employee's act. The court can apportion the damages between the employer and the employee if it is just and equitable to do so. This can happen if, for example, the employee did not act reasonably during employment.

Contracts concluded by employees. As a general rule, an employer will only be bound by a contract entered into by an employee if that employee was authorised to act as the employer's agent. However, an employer can also be bound by a contract where an employee purports to execute the contract on behalf of the employer in the following cases:

  • His/her authority to do so can be implied from the circumstances (for example, by virtue of the nature of the contract and the position held by the employee).

  • The employer ratifies the contract.

  • The employer is aware that the employee is entering into a contract on the employer's behalf and does not interfere.

Parent company liability

As a parent company has no direct employment relationship with its subsidiary company's employees, the parent company cannot be held vicariously liable for those employee's actions.


Employer insolvency

26. What rights do employees have on the insolvency of their employer? Is there a state fund which guarantees repayment of certain employment debts?

Employee rights on insolvency

The Companies (Winding Up and Miscellaneous Provisions) Ordinance provides that, on a winding up, debts relating to employee's entitlements must be paid out of the assets of the company ahead of debts owed to other unsecured creditors.

The failure of an employer to pay an employee's wages when due is an offence under the Employment Ordinance. Where the offence is committed with the consent, connivance or neglect of any person serving in a managerial capacity, or is attributable to neglect on the part of any director, manager, secretary or other similar officer, that person may also be prosecuted for, and convicted of, the offence.

State guarantee fund

Where an employer becomes insolvent or bankrupt and has failed to pay employee entitlements, the employees can apply to receive an ex-gratia payment from the Protection of Wages on Insolvency Fund (Fund). The Fund is serviced by an annual levy of HK$250 on each business registration certificate issued.

Any ex-gratia payment made out of the Fund can comprise an amount to compensate the employee for:

  • Any arrears in wages due in respect of the four months leading up to the employee's last day of service, any outstanding payment for certain type of leave taken by the employee, and any unpaid end-of-year payment (up to a maximum of HK$36,000).

  • A payment in lieu of any untaken annual leave or statutory holiday entitlement owing to the employee as at the last day of employment (up to a maximum of HK$10,500).

  • Wages in lieu of notice (up to a maximum of one month's wages or HK$22,500, whichever is less).

  • Severance payments (up to a maximum of HK$50,000, and half of that part of the applicant's entitlement in excess of HK$50,000).

Generally, an application for payment out of the Fund must be made within six months of the last day of employment.


Health and safety obligations

27. What are an employer's obligations regarding the health and safety of its employees?

Employers must take reasonable care for the health and safety of their employees, including providing first aid equipment and conducting fire drills (Occupational Safety and Health Ordinance (OSHO)). The OSHO covers all conceivable workplaces, with a few exceptions such as aircraft or vessels in public places, and places where self-employed persons work.

In addition, employers must comply with the Factories and Industrial Undertakings Ordinance (FIUO) (where applicable) and the Employees' Compensation Ordinance (ECO). For example:

  • Under the FIUO, the proprietor and the employees must ensure the safety of certain industrial worksites, including factories, construction sites and repair workshops. Subsidiary legislation under the FIUO caters for hazardous activities on different types of worksites.

  • The ECO requires employers to provide compensation to employees who were injured in accidents arising out of or during the course of employment. Employers must also take out insurance to cover the employer's liability (under the ECO or the common law) for workplace injuries (see Question 12, Compensation for workplace injury).


Taxation of employment income

28. What is the basis of taxation of employment income for:
  • Foreign nationals working in your jurisdiction?

  • Nationals of your jurisdiction working abroad?

Foreign nationals

Foreign nationals working in Hong Kong are subject to Hong Kong salaries tax, if their employment income is derived from Hong Kong. Income is generally derived from Hong Kong if the employee has a Hong Kong employment. Some of the factors that will be taken into account in determining whether the employee has a Hong Kong employment are:

  • The employment contract was negotiated, entered into, and is enforceable in Hong Kong.

  • The employer is resident in Hong Kong.

  • The employee is remunerated in Hong Kong.

If the employee has a Hong Kong employment, but parts of the duties are performed outside Hong Kong, certain year-by-year relief or exemptions may apply. For example:

  • If the employee mainly works outside Hong Kong and only visits Hong Kong for 60 days or less in the relevant year, the employee is exempt from tax on his/her employment income.

  • Where the employee works outside Hong Kong, the employee is exempt from salaries tax on any income that is taxable outside Hong Kong of substantially the same nature as salaries tax, as a result of the employee's provision of services in the country imposing the tax.

If the foreign national continues to be employed by an overseas employer and is assigned to work in Hong Kong for a few years, he/she is likely to continue to be a non-Hong Kong employee and only income attributable to services provided in Hong Kong is subject to salaries tax (subject to the 60-day exemption mentioned above).

Nationals working abroad

Nationals working abroad will be subject to salaries tax on their employment income if they have a Hong Kong employment. If the employee has a Hong Kong employment contract, but mainly works outside Hong Kong and only visits Hong Kong for 60 days or less in the relevant year, the employee is exempt from tax on his/her employment income. In addition, where the employee has a Hong Kong employment and works outside Hong Kong, the employee is exempt from salaries tax on any income chargeable to tax outside Hong Kong of substantially the same nature as salaries tax, as a result of the employee's provision of services in the country imposing the tax.

If the national is seconded to, and becomes an employee of, an overseas employer, he/she is likely to become a non-Hong Kong employee, with only income attributable to services provided in Hong Kong subject to salaries tax (subject to the 60-day exemption mentioned above).

29. What is the rate of taxation on employment income? Are any social security contributions or similar taxes levied on employers and/or employees?

Rate of taxation on employment income

Salaries tax is calculated on the employees' net chargeable income, that is, assessable income after deductions and allowances. In the tax year 2015/2016, the net chargeable income is charged at progressive rates of up to 17%. However, the total amount taxed is subject to a ceiling of 15% of the net total income, which is assessable income after deductions but before allowances.

Social security contributions

Both the employer and employee must make contributions under the Mandatory Provident Fund (MPF) scheme. Mandatory contributions are made monthly by the employer and the employee, and are currently the lower of:

  • 5% of the employee's relevant income.

  • HK$1,500.

The employer must deduct the employee's contribution from his/her monthly wages and submit it, together with the employer's contribution, to the MPF fund.



30. Is it common to reward employees through contractual or discretionary bonuses? Are there restrictions or guidelines on what bonuses can be awarded?

While there is no statutory requirement in Hong Kong to reward employees through bonuses, it is very common for an employee to receive an annual bonus. In many industries, a bonus (often equal to one month's pay) will be paid around the Lunar New Year. This type of bonus is often referred to as a "13th month payment", "Chinese New Year bonus", "double pay" or "end-of-year payment".

However, in some sectors (such as investment banking), employees are more likely to be paid a bonus calculated by reference to their performance and/or the employer's financial performance. These bonuses can be substantial and are often an important incentive for employees, and are one of the most frequent causes of employment disputes.

Where a bonus is an annual payment or annual bonus and is not discretionary in nature, the bonus will be subject to the end-of-year payment regime set out in the Employment Ordinance (EO). Whether a bonus is truly "discretionary" will not only depend on the terms used in the bonus provision, but on how the bonus scheme operates in practice. If in fact bonuses are granted each year automatically by reference to a pre-determined formula and no discretion is exercised, a court may take the view that the bonus is subject to the end-of-year payment regime in the EO.

The main consequence of a bonus being classified as an end-of-year payment is that, on termination of employment, an employee will be entitled to be paid:

  • A bonus for the previous bonus year, if that bonus has not been paid at the date of termination.

  • A proportion of the bonus for the year in which his/her employment ended, provided that the employee:

    • was employed for at least three months of that bonus year;

    • did not resign; and

    • was not dismissed summarily.


Intellectual property (IP)

31. If employees create IP rights in the course of their employment, who owns the rights?

If an employee creates IP rights in the course of employment, the employer is generally the first owner of those rights, unless expressly agreed otherwise. If an employee creates a protectable work outside of the terms of employment, but in breach of a duty owed to the employer, the employer may be entitled in equity to the copyright, and can call for its assignment. The scope of employment should be carefully defined, as this is the basis on which the right automatically vests with the employer.

In any event, if IP rights are important to an employer, these rights should be expressly dealt with, either in the employment contract or some other agreement.


Restraint of trade

32. Is it possible to restrict an employee's activities during employment and after termination? If so, in what circumstances can this be done? Must an employer continue to pay the former employee while they are subject to post-employment restrictive covenants?

Restriction of activities

It is possible to restrict an employee's activities during employment and after termination.

During employment, an employee owes various implied duties to his/her employer, including:

  • A duty of loyalty, that is, to act in the employer's best interest at all times.

  • A duty to keep confidential sensitive business information, such as trade secrets.

These implied duties can be reinforced and supplemented by express contractual provisions. For example, an employer can expressly prohibit an employee from being involved with other businesses or similar occupations during employment. It is also common for employment contracts to prohibit expressly the misuse or disclosure of confidential information.

Post-employment restrictive covenants

Under the common law, an employee has a continuing obligation not to disclose trade secrets (or similar) of their former employer. However, this obligation is quite limited, and it is therefore common for employment contracts (and even separation agreements) to include express covenants aimed at protecting the business interests of the employer after the employment ends. These typically include obligations not to:

  • Use or disclose confidential information of the employer.

  • Entice other employees to leave.

  • Solicit or attempt to solicit the employer's customers.

  • Work in a competing business.

As a general rule, the courts in Hong Kong will only enforce such covenants if the restrictions they impose are no more than is necessary to protect the legitimate business interests of the employer. Any attempt by the employer to protect itself against mere competition is likely to be unenforceable.

Business interests that have been recognised by the courts as interests that an employer may have a legitimate interest in protecting include, for example, the protection of:

  • Confidential and proprietary information (such as client lists, secret formulas and so on).

  • The employer's customer connections.

  • The stability of the workforce.

In considering whether to enforce a particular covenant, the court will assess whether the restriction is reasonable in scope, duration and geographical boundaries. Reasonableness is a matter of fact to be assessed on a case-by-case basis.

It is not necessary to provide any remuneration to an ex-employee who is subject to post-employment restrictions.


Proposals for reform

33. Are there any proposals to reform employment law in your jurisdiction?

In 2013, the government established a Standard Working Hours Committee to (among other things) advise the Government on whether a "standard working hours" policy should be implemented in Hong Kong. The recommendations of the Committee are expected to be released in early 2016.

In 2014, the Equal Opportunities Commission conducted a public consultation on a range of matters relating to the current regime for protection against discrimination and harassment in Hong Kong, for the purpose of making recommendations to the government on improving legislation in this area. It is anticipated that its report will be published by the end of 2015.

There have been proposals to abolish the "continuous contract" requirement under the Employment Ordinance (EO). If implemented, this would require employers to look carefully at existing arrangements for employees working part-time.

A further proposal has been made to align the number of statutory holidays and general holidays. There are currently 17 general holidays, of which only 12 are statutory holidays. Under the EO, employees are only entitled to leave on a statutory holiday, but many employers (particularly in white collar sectors) grant leave to employees on all 17 general holidays.

There have also been amendments proposed to enable the Labour Tribunal to make a compulsory order for the reinstatement or re-engagement of an employee who has been dismissed unlawfully and without a valid reason. Currently, an order for reinstatement or re-engagement can only be made if both parties agree.


Online resources

Department of Justice Bilingual Laws Information System

W www.legislation.gov.hk/eng/home.html

Description. This website is an electronic database of the legislation of Hong Kong. It is established and updated by the Department of Justice.

Labour Department

W www.labour.gov.hk

Description. This website provides information relating to the various employment-related legislation administered by the Labour Department.

Contributor profiles

Gareth Thomas, Partner

Herbert Smith Freehills

T +852 2101 4025
F +852 2845 9099
E gareth.thomas@hsf.com
W www.herbertsmithfreehills.com

Professional qualifications. England and Wales, 1993; Hong Kong, 1998

Areas of practice. Employment; commercial litigation; insurance.

Recent transactions

  • Advising one of the world's largest container shipping companies on a complex cross-border High Court claim brought by a former employee (a managing director) over his dismissal and counterclaim against the employee for breach of fiduciary duties.
  • Advising one of the largest Asia-based independent private equity firms on a dispute involving the dismissal of a senior partner. Advising on negotiations and drafting complex termination documents.
  • Advising a global recruitment company seeking to restrain a team of ex-employees who resigned to start up a competing business in breach of their restrictive covenants.
  • Advising a global manufacturing company on a Labour Tribunal claim arising from the termination of the employee's employment for gross misconduct (making unauthorised payments to state-owned entities in the PRC).
  • Assisting numerous clients with updating and standardising their employment documentation (including employment contracts, restrictive covenants and share schemes).
  • Drafting service agreements, updating staff handbooks and negotiating employment terminations.

Languages. English

Gillian McKenzie

Herbert Smith Freehills

T +852 2101 4222
F +852 2845 9099
E gillian.mckenzie@hsf.com
W www.herbertsmithfreehills.com

Professional qualifications. Victoria, 2008; Hong Kong, 2013

Areas of practice. Employment.

Recent transactions

  • Advising a financial services firm on its procedures for handling disciplinary matters.
  • Advising an international bank on the requirements of the Personal Data (Privacy) Ordinance in connection with the handling of employee personal data.
  • Advising an events management company on strategy for enforcing post-employment non-solicitation covenants against a departing employee.
  • Assisting a large online travel company to ensure that its payroll processes comply with the requirements of the Employment Ordinance and other Hong Kong legislation.
  • Advising an industrial services provider on the harmonisation of employee terms following an acquisition.
  • Assisting clients navigate equal opportunity and discrimination issues.

Languages. English

{ "siteName" : "PLC", "objType" : "PLC_Doc_C", "objID" : "1247401040950", "objName" : "Employment and Employee Benefits Hong Kong", "userID" : "2", "objUrl" : "http://us.practicallaw.com/cs/Satellite/us/resource/7-503-4336?qo=&qe=", "pageType" : "Resource", "academicUserID" : "", "contentAccessed" : "true", "analyticsPermCookie" : "2-510c3b96:15155b05366:-6ffe", "analyticsSessionCookie" : "2-510c3b96:15155b05366:-6ffd", "statisticSensorPath" : "http://analytics.practicallaw.com/sensor/statistic" }