Hong Kong

According to Sections 2 and 4 of the Employment Ordinance (Cap. 57) (“EO”) in Hong Kong, an employee means a person who is engaged under a contract of employment, to an employer of such employee and to a contract of employment between such employer and employee. However (subject to the protection against anti-union discrimination in Part IVA of EO), the EO does not apply to:-

(a) a family member who lives in the same dwelling as the employer;

(b) an employee as defined in the Contracts for Employment Outside Hong Kong Ordinance;

(c) a person serving under a crew agreement under the Merchant Shipping (Seafarers) Ordinance, or on board a ship which is not registered in Hong Kong; and

(d) an apprentice whose contract of apprenticeship has been registered under the Apprenticeship Ordinance, other than certain provisions of the Employment Ordinance.

2. What is an employment contract?

According to Section 2 of EO, an employment contract means any agreement, whether in writing or oral, express or implied, whereby one person agrees to employ another and that other agrees to serve his employer as an employee and also a contract of apprenticeship.

3. What is a continuous contract?

As defined in the First Schedule to the EO, a continuous contract of employment means an employment contract under which an employee works continuously for the same employer for 4 weeks or more, with at least 18 hours in each week.

Employees employed under a continuous contract, whether temporary or part-time, are entitled to all the statutory benefits under the EO.

4. What does an employment contract need to contain?

An employment contract will normally contain express terms of the employment. According to Section 44(1) of EO, before a person enters his employment, the employer shall, in a manner intelligible to such person, inform him of the conditions of the employment with regard to the following:-

(a) wages and the wage period;

(b) the end of year payment or proportion of the end of year payment and the payment period (if applicable); and

Any term of an employment contract that purports to extinguish or reduce any rights, benefits or protection conferred upon the employee by the EO is void (Section 70 of EO).

5. Is there a legal requirement to provide an employee with a written contract and if so, when does this have to be provided?

Where the contract of employment is in writing, the employer shall provide such person with a copy of the contract immediately after it is signed or immediately after the procedure to validate the contract is completed where such procedure is required (Section 44(3) of EO).

Where the contract of employment is not in writing, if before such employment is entered into, the employer receives a written request from such person for the terms of the employment in writing, the employer shall forthwith deliver to him a notice in writing containing such conditions (Section 44(2) of EO).

An employer who fails to comply with the above requirements is liable to prosecution and, upon conviction, to a fine of HK$10,000 (Section 63D of EO).

6. Under what circumstances should an employer pay severance payment to his employee?

An employer should pay severance payment when an employee has been employed under a continuous contract for 24 months or more and is dismissed by reason of redundancy or is laid off (Section 31B(1) of EO).

7. How is redundancy defined?

According to Section 31B(2) of EO, an employee shall be taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to the fact that:

(a) his employer has ceased, or intends to cease, to carry on the business:

(i) for the purposes of which the employee was employed by him; or

(ii) in the place where the employee was so employed; or

(b) the requirements of that business for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where the employee was so employed, have ceased or diminished or are expected to cease or diminish.

8. What is the meaning of lay-off?

According to Section 31E(1) of EO, where an employee is employed under a contract on such terms and conditions that his remuneration depends on his being provided by the employer with work of the kind he is employed to do, he shall be taken to be laid off where the total number of days on each of which such work is not provided for him by the employer exceeds:-

(a) half of the total number of normal working days in any period of 4 consecutive weeks; or

(b) one-third of the total number of normal working days in any period of 26 consecutive weeks,

and he is not paid a sum equivalent to the wages which he would have earned if work had been provided on the days on which no work was provided.

9. How is the amount of severance payment calculated?

As set out in Section 31G of EO, for monthly paid employees, the amount of severance payment equals to:

(Monthly wages x 2/3) x reckonable years of service

For daily-rated/piece-rated employees, the amount of severance payment equals to:

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10. Under what circumstances should an employer pay long service payment to his employee?

According to Sections 31R and 31RA of EO, an employer is liable to pay long service payment to an employee if the employee has been employed for 5 years or more under a continuous contract and:-

(a) is dismissed and the employer is not liable to pay severance payment;

(b) terminates his contract for being certificate by a medical practitioner as permanently unfit for the job; or

(d) dies.

11. How is the amount of long service payment calculated?

According to Section 31V of EO, the calculation of the amount of long service payment is similar to severance payment.

12. Do you have laws against discrimination, if so, what types of discrimination do you have and how are they defined?

Discrimination on the grounds of:-

(a) sex, marital status and pregnancy (Sex Discrimination Ordinance (Cap.480)(“SDO”));

(b) disability (Disability Discrimination Ordinance (Cap. 487) (“DDO”)); and

is prohibited in Hong Kong.

Discrimination can be broadly divided into 3 areas:-

(1) Direct discrimination (including harassment):

Ø occurs when a person is treated less favorably than another person of the opposite sex, or with a different marital status, or who is not pregnant (Section 5(1)(a), 7(1)(a) and 8(1)(a) of SDO), or without a disability (Section 6(a) of DDO) or without a family status (Section 5(a) of FSDO).

(2) Indirect discrimination:

Ø occurs when a person applies to another person a requirement or condition which he applies or would apply equally to a person in the opposite sex (Section 5(1)(b) of SDO), or with different marital status (Section 7(1)(b) of the SDO), or not pregnant (Section 8 SDO), or without a disability (Section 6(b) of DDO) or without a family status (Section 5(b) of FSDO), as the case may be, but the proportion of the woman/man, or person with the relevant marital status, or the pregnant woman, or the person with disability, or the person with the relevant family status that can comply is considerably smaller and is not justifiable and which is detrimental to the person because he/she cannot comply with it.

(3) Victimisation:

Ø where a person is treated less favourably on the grounds that he/she has brought proceedings, given evidence or information in connection with the proceedings, done anything under or by reference to EO, or alleged that the discriminator or any other person has committed an act which would amount to a contravention of EO (Section 9 of SDO, Section 7 of DDO, Section 6 of FSDO).

Furthermore, it is also unlawful for an employer to discriminate against applicants and employees. It is unlawful for a person, in relation to employment by him at an establishment in Hong Kong, to discriminate against a woman/man (or person with different marital status, pregnant woman, person with disability or with a family status):-

(a) in the arrangements he makes for the purpose of determining who should be offered that employment;

(b) in the terms on which he offers her that employment; or

(Section 11(1) of SDO, Section 11(1) of DDO, Section 8(1) of FSDO)

It is also unlawful for a person, in the case of a woman/man (or person with different marital status, pregnant woman, person with disability or with a family status) employed by him/her at an establishment in Hong Kong, to discriminate against him/her:

(a) in the way he/she affords his/her access to opportunities for promotion, transfer or training, or to any other benefits, facilities or services, or by refusing or deliberately omitting to afford his/her access to them;

(b) in the terms of employment he affords her; or

(Section 11(2) of SDO, Section 11(2) of DDO, Section 8(2) of FSDO)

13. Do you recognise harassment and how is this defined?

(a) Sexual harassment for the purpose of SDO

According to Section 2(5) of SDO (for the purposes of SDO only), a person (howsoever described) sexually harasses another person if-

(1) the person-

(i) makes an unwelcome sexual advance, or an unwelcome request for sexual favours, to him/her; or

(ii) engages in other unwelcome conduct of a sexual nature in relation to him/her,

in circumstances in which a reasonable person, having regard to all the circumstances, would have anticipated that he/she would be offended, humiliated or intimidated; or

(2) the person, alone or together with other persons, engages in conduct of a sexual nature which creates a sexually hostile or intimidating work environment for her.

According to Section 2(7) of SDO, “conduct of a sexual nature” includes the making of a statement of a sexual nature to a man/woman, or in his/her presence, whether the statement is made orally or in writing.

(b) Harassment for the purpose of the DDO

According to Section 2(6) of DDO, a person (howsoever described) harasses another person if the person engages in unwelcome conduct (which may include an oral or written statement) on account of another person’s disability, or on account of the disability of an associate of that person, in circumstances in which a reasonable person, having regard to all the circumstances, would have anticipated that such person would be offended, humiliated or intimidated by that conduct.

14. What can an employee do about discrimination?

Claims for damages, in respect of a contravention of the various anti-discrimination Ordinances in Hong Kong, are pursued as claims in tort before the District Court.

Each Ordinance provides that the District Court, on a finding of a breach of the respective Ordinances concerned, shall have the power to (Section 76 of SDO, Section 72 of DDO and Section 54 of FSDO):-

(1) order certiorari, mandamus or prohibition;

(2) declare that the respondent has engaged in conduct, or committed an act, that is unlawful, and order that the respondent shall not repeat or continue such unlawful conduct or act;

(3) order that the respondent shall perform any reasonable act or course of conduct to redress any loss or damage suffered by the claimant;

(4) order that the respondent shall employ or re-employ the claimant;

(5) order that the respondent shall promote the claimant;

(6) order that the respondent pay to the claimant damages by way of compensation for any loss or damage suffered by reason of the respondent's conduct or act;

(7) order that the respondent shall pay to the claimant punitive or exemplary damages; or

(8) order declaring void in whole or part and either ab initio or from such date as may be specified in the order, any contract or agreement made in contravention the SDO or the DDO.

15. What is unlawful dismissal?

Unlawful dismissal occurs where an employee has been employed under a continuous contract for a period of 24 months or more and the employee is dismissed other than for a “valid reason” (Section 32A(1)(a) of EO). If an employee is dismissed by reason of one the following “valid reasons”, the employee is not entitled to any remedies:-

(a) the conduct of the employee;

(b) the capability or qualification of the employee for performing his work;

(d) it would be contrary to the law to allow an employee to continue to work in his original position or to continue with the original terms in his employment contract; or

(e) any other reason of substance in the opinion of the Court or Labour Tribunal.

16. What can an employee do about an unlawful dismissal?

An employee who wishes to claim for remedies must serve a written notice to the employer in respect of his claim within 3 months from the effective date of termination of employment or variation of contract. The deadline may be extended for a further period of up to 6 months if it is approved by the Commissioner for Labour.

If any employee wishes to file a claim with the Labour Tribunal, he must do so within 9 months from the effective date of termination of employment or the variation of contract.

17. If the dismissal is found to be unlawful, what compensation can the employee obtain?

(a) Order for reinstatement or re-engagement of the employee (Section 32N of EO):-

(1) Reinstatement: An order requiring the employer to treat the employee in all respects as if he had not been dismissed or as if there had been no variation of the terms of the employment contract.

(2) Re-engagement: An order requiring the employer, his successor or an associated employer to re-engage the employee in employment on terms comparable to his original terms of employment or in other suitable employment.

(3) An order for reinstatement or re-engagement can only be made with the agreement of both the employer and the employee.

(b) Award of terminal payments (Section 32O of EO):-

(1) Terminal payments will only be awarded if no order for reinstatement or re-engagement is made.

(2) The award of terminal payment is a discretionary remedy. The Labour Tribunal may make an award of terminal payments as it considers just and appropriate in the circumstances.

(3) The EO provides for the amount which may be included as terminal payments in a very convoluted manner. In essence, the amount of terminal payments will in effect be equivalent to the pro rata amount of long service payment which the employee would have been entitled to receive had he completed 5 years’ service with the employer, e.g. if he is unreasonably dismissed after being employed for 3 years, then he may receive 3/5^th of the long service payment he would be entitled to receive had he been employed for 5 years.

(4) As in the case of severance payment or long service payment, the amount of terminal payments shall be reduced by the employer’s contributions to any provident fund or the Mandatory Provident Fund where appropriate (Section 32O (7) and (8) of EO).

(3) Compensation (Section 32P of EO):-

(1) Compensation will only be awarded if no order for reinstatement or re-engagement is made, but can be awarded whether or not terminal payments are awarded.

(2) The award of terminal payment is a discretionary remedy. The Labour Tribunal may make an award of terminal payments as it considers just and appropriate in the circumstances. The Tribunal shall take into account of the circumstances of the claim, including:-

Ø the circumstances of the parties;

Ø the length of service;

Ø the manner of dismissal;

Ø the loss sustained by the employee;

Ø possibility of the employee obtaining new employment;

Ø any fault of the employee; or

Ø other payments (including terminal payments) which the employee may be entitled to receive.

(3) The maximum amount that can be awarded as compensation under Section 32P of EO is HK$150,000.00.

18. Do you have collective/trade union law? If so, what rights does an employee have? Does the employer have to accept collective/trade union law?

There is no collective/trade union law in Hong Kong. However, employees in Hong Kong are protected against anti-union discrimination.

In Hong Kong, every employee shall have the following rights (Section 21B(1) of EO):-

(a) to be a member or an officer of a trade union;

(b) 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 (“appropriate time” means time which either is outside his working hours, or during working hours by arrangement and with the consent of the employer);

An employer shall not (Section 21B(2) of EO):-

(1) prevent or deter an employee from exercising any of the above rights;

(2) dismiss, penalise or discriminate against an employee for exercising the above rights;

(3) make it a condition of employment that an employee must not exercise the above rights.

Any employer who contravenes the above shall be liable to prosecution and upon conviction, to a fine of HK$100,000.

19. Can an individual from another country come and work in your country? If so, is there immigration controls/work permits that need to be applied for? What criteria are used for any such applications?

Any person without the right of abode or right to land in Hong Kong, must obtain a visa before coming to Hong Kong for the purpose of taking up employment.

The application should ideally be made prior to an individual’s entry to Hong Kong. However applications can be made after entry if necessary, even though employment may not commence until approval has been given by the Immigration Department of Hong Kong.

Applicants may submit their visa applications to the nearest Chinese diplomatic and consular mission in their place of residence. For visa applications other than from China, the applicants may send their applications to the Hong Kong Immigration Department directly or through the sponsor in Hong Kong.

When considering an application, the Immigration Department will usually examine 3 core areas:-

(a) How beneficial the business of the employer is to Hong Kong economy, trade and industry;

(b) How indispensable the proposed employee is to that business;

Actual advertising is usually not requested (unless applying under the Supplementary Labour Scheme). However, the employer may be required to make a statement to the effect that they have taken appropriate steps to look for a local worker to fill the position.

It normally takes 4 to 6 weeks to process an entry visa application. An entry visa label will be issued to the sponsor who will be asked to send it to the applicant.

20. What is the tax position for a foreign employee?

Salaries tax is imposed on all income arising in or derived from Hong Kong from an office or employment or any pension.

“Income arising in or derived from Hong Kong” includes all income derived from services rendered in Hong Kong.

Income includes, inter alia, the value of quarters provided rent free by an employer or the excess of this value over the rent actually paid by the employee to his employer for the quarters. The value of quarters to be included in assessment is 10% (8% and 4% for not more than 2 bedrooms and 1 bedroom respectively in a hotel, hostel or boarding house) on total income (after deducting outgoings, depreciation, etc.) from the employer or any person associated with the employer. Where an employer refunds all or part of the rent paid by an employee, the place of residence is deemed to have been provided by the employer either rent free or for an amount equal to the difference between the rent paid and the amount refunded.

Income also includes, inter alia, any gain realised by the exercise of, or by the assignment or release of, a right to acquire shares, whether the shares are in the employing company or another.

Severance payments and long service payments that are required to be paid under the EO are not assessable to salaries tax, as they are not payments for services rendered but for termination of the employment.

The Mandatory Provident Fund Scheme Ordinance (Cap. 485) (the “MPF Ordinance”) came into effect on 1^st December 2000. Under the MPF Ordinance, employees and employers are required to make MPF contributions at the rate of 5% each on the employee’s salary income, on a monthly basis, on a minimum earning of HK$5,000 to a maximum earning of HK$20,000 per month.

Full or partial exemption of income or relief from tax may be available under the following conditions:-

(1) income attributable to services rendered outside Hong Kong is exempt from salaries tax if you have a source of employment outside Hong Kong.

(2) You are exempt from salaries tax for a year of assessment if you rendered all your services outside Hong Kong in that year of assessment, unless you are a civil servant, or a crew member of a ship or an aircraft.

(3) Income from services rendered in Hong Kong during visits not exceeding a total of 60 days in the year is also excluded from tax.

(4) If you have paid tax of substantially the same nature as Hong Kong salaries tax to a territory outside Hong Kong in respect of income relating to services rendered in that territory, that part of the income which has already been subject to foreign tax will be exempt from salaries tax.

In Hong Kong, there are no taxes on interest, investment income or capital gains. There are also no social security taxation or medical levies.

21. Are employees protected in the event of a sale or a purchase of a business? If so, what rights do employees have and what can they do about it? What does an employer have to do in the event of a sale or a purchase of a business which includes employees?

(1) In the case of transfer of business:

If, by agreement with the employee, the new owner renews the employee’s contract of employment or re-engages him under a new contract of employment, it shall have effect as if the renewal or re-engagement has been a renewal or re-engagement by the previous owner (Section 31Z of EO).

If the new owner offers to renew the employee’s contract or to re-engage him under a new contract on the same terms or no less favourable terms, and the employee unreasonably refuses to accept such offer, the employee is not entitled to any remedies. (However, this does not apply to cases where the takeover is by way of acquisition of shares in the share capital of the target company.)

(2) In the case of acquisition of shares:

The procedures for renewal or re-engagement are not applicable.

However, long service payments may still be payable for those employees who are dismissed upon any restructuring. There will also be contingent liability for long service payment for the ongoing employees.

22. What is the position regarding agents in your country, briefly outline how agents are dealt with and what documentation is required?

Every industry has its own regulations regarding its agents. Therefore, it is wise for anyone seeking to come to work in Hong Kong as an agent to check and see whether they need to apply to become a member of a particular body in the industry.

For example, there are specific requirements for being an estate agent in Hong Kong. In order to practise as an estate agent, he must first be licensed. To acquire an estate agent licence, a person must:-

(a) be at least 18 years of age;

(b) fulfill the “fit and proper” requirements, that is, he/she must:

(1) be financially sound;

(2) be mentally fit;

(3) have not been convicted of any fraud, corruption or other dishonest acts;

(4) have not been convicted under the Estate Agents Ordinance (Cap.511) in respect of which he has been sentenced to imprisonment; and

(5) have not been a director or officer of a company disqualified for holding a licence for estate agency work, or was not a director or officer at a date when the company was so disqualified; and the Authority otherwise considers the applicant a fit and proper person to hold a licence.

(d) have passed the relevant qualifying examination prescribed by Estate Agent Authority in Hong Kong within 12 months immediately prior to the date of application for the licence.

A licensed estate agent may perform estate agency work in the capacity of a sole proprietor, a partner, or a director in effective control of the business, or he may perform estate agency work as an employee of a licensed estate agent.