Employment law is ubiquitous. Almost everyone will at some point in their life be an employee. From a humble paper-round to the CEO of a major blue-chip corporation, the core principles of employment law will to a greater or lesser extend apply to all of us.
Our Employment Focus Week aims to provide an overview of the obligations owed by employers and the rights that are granted to employees.
Minimum Rights and Obligations
While employers and employees are free to make their own agreements, in employment law, contract isn’t always king. Across every jurisdiction laws have developed that recognise the inequality that often exists between the employer and the employee, with the purpose of granting certain minimum rights of protection and benefits.
Hong Kong is often regarded one of the most ‘employer-friendly’ jurisdictions with little employee protection.
That being said the core employment legislation, Employment Ordinance grants a number of fundamental rights to employees and, when coupled with the Employees’ Compensation Ordinance, Minimum Wage Ordinance, Personal Data (Protection) Ordinance and various anti-discrimination ordinances and common law constructs, an array of corresponding protections are created for employees.
For employment rights and obligations to apply, there must first be the employee / employer relationship. While this seems obvious, in practice it is not always so straightforward. Directors, shareholders and partners can sometimes look like employees, but aren’t. Even more misunderstood is the distinction between employees and independent contractors (which we have discussed here).
The Employment Ordinance itself doesn’t apply equally to all employees. Most of its statutory rights, such as the right to notice, severance, paid annual leave and holidays and paid maternity, paternity and sickness leave only apply to employees working under a “continuous contract”.
The concept of “continuous contract” is the closest Hong Kong law comes to differentiating between “full-time” and “part-time” employees. Employees work under a “continuous contract” if they have been employed for four weeks or more, working for at least 18 hours each week.
The rights of employees who are not working under a “continuous contract” are generally restricted to those contained in the employment contract (if any) in addition to limited basic protections under the Employment Ordinance, such as the right to receive wages paid on time.
With limited exceptions, such as student interns and domestic helpers, all employees, regardless of whether they work under a “continuous contract” of employment or not are entitled to receive minimum wages as protected under the Minimum Wage Ordinance (currently HK$34.50 per hour). It should be noted, however, that employees with disability are subject to separate requirements.
With the exception of a limited list of exempt employees, all employees between the ages of 18 – 65, whether full-time or part-time, should be enrolled into a statutory mandatory provident fund scheme within the first 60 days of commencing employment.
Subject to minimum and maximum income caps, both the employer and the employee are required to contribute not less than 5% of the relevant monthly income into a mandatory provident fund. The minimum income cap only applies to employees. Currently employees with a minimum monthly income of under HK$7,100 do not need to make MPF contributions. There is no corresponding minimum for employer, who much contribute 5% of the relevant income even if the employee is not required to do so.
The relevant income cap is currently HK$30,000 meaning that for employees with a relevant income of HK$30,000 or more per month, both the employee and employer must each contribute HK$1,500 per month.
The existence of the employee / employer relationship creates the risk for employers of vicarious liability, meaning that the employer may become liable for the acts of its employees. We further discuss the risks of vicarious liability here.
In tomorrow’s article, we will take a deeper dive into the requirements of the Employment Ordinance, looking first at ‘wages’, bonuses and the right to withhold payments from employees.
Our team at Hugill & Ip has extensive experience in dealing with Employment matters – so if you need further advice on these subject and other topics discussed, get in touch with us to find out how we can help.
This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.