Hire in Hong Kong

Severance payments are applicable to employees only if they meet both of the following criteria:

• Employed for a minimum of 24 months
• Dismissed due to redundancy or laid off

The severance pay amount equals two-thirds of one month’s pay for each year of employment or two-thirds of HK$ 22,500, whichever is less. The total severance pay is capped at HK$ 390,000. Deductions are made for any contractual gratuity based on length of service and a portion of a retirement scheme payment attributable to employer contributions.

The long service payment serves as recognition for employees dismissed outside of redundancy scenarios due to their extended tenure. Eligibility for long service payment requires a minimum of five years of employment, subject to specific conditions.

The calculation of long service pay follows the same formula as severance pay, capped at a maximum entitlement of HK$ 390,000. Deductions include any contractual gratuity based on length of service and a portion of a retirement scheme payment linked to employer contributions.

The standard practice for working hours in Hong Kong ranges from 40 to 50 hours per week, typically distributed over five days, with specifics to be outlined in the employment contract.

Hong Kong’s labor laws do not prescribe specific regulations for overtime work or mandatory overtime pay. However, if the employment contract specifies compensation for overtime work, the employer is obliged to fulfill this commitment or may face fines for withholding wages. Overtime payment is treated equivalently to regular wages and is safeguarded against defaults. When calculating entitlements, any offered overtime pay should be factored into the computation.

Before the commencement of the contract, employers and employees must collaboratively negotiate working hours and conditions related to overtime. These details should be explicitly documented in the contract, and employers are obligated to adhere to these terms under the risk of fines imposed by the Labor Department.

In Hong Kong, the mandatory notice period is typically 30 days; however, for higher-ranking positions, this duration may extend.

Termination notice periods are stipulated in the contract but must be a minimum of seven days, with the common practice being one month. In the absence of a specific contract, the notice period defaults to one month.

Upon termination, employees are entitled to the following:

**Accrued wages and unused annual leave:**
Employees receive outstanding wages and payments for accrued but unused statutory annual leave up to the termination date unless the contract specifies otherwise.

**End of year payments:**
If an employee is contractually entitled to an annual bonus, they receive a proportional payment for the year of dismissal. This is applicable unless the bonus is solely discretionary or the employee has not worked continuously for at least three months during the payment period. In the absence of a specified end-of-year payment in the employment contract, an amount equivalent to the monthly average wage is granted.

**Severance pay:**
Employees with a continuous contract of at least 24 months are entitled to severance pay if dismissed due to redundancy or layoff.

**Long service pay:**
Employees with a minimum of five years of service (excluding retirees) are entitled to long service payment upon dismissal, provided the employer is not obligated to pay severance.

Under the Employment Ordinance (EO), employees have the right to file a claim for “unreasonable dismissal” at the Labor Tribunal, given they have served under a continuous contract for a minimum of 24 months and have been dismissed or experienced contract modifications without their consent. Employers must provide a valid reason for dismissal or modification, including the employee’s conduct, qualifications, redundancy, or other genuine operational requirements.

In Hong Kong, it’s customary for many employers to issue a 13th month bonus ahead of Chinese New Year. However, a prevailing trend is emerging, with some opting for a performance-related bonus in lieu of the traditional practice. Multinational corporations (MNCs) typically grant discretionary bonuses.

When a bonus is an annual, non-discretionary payment, it falls under the end-of-year payment framework outlined in the Employment Ordinance (EO). The determination of a bonus being genuinely “discretionary” relies not only on the bonus provision’s language but also on its operational aspects. If bonuses are routinely granted each year automatically based on a predetermined formula without any discretion exercised, a court may deem the bonus subject to the EO’s end-of-year payment regulations.

The primary consequence of categorizing a bonus as an end-of-year payment is that, upon termination of employment, an employee is entitled to:

• A bonus for the preceding bonus year if it remains unpaid at the termination date.
• A portion of the bonus for the year in which employment concluded, provided the employee satisfies the following conditions:
• Was employed for at least three months of that bonus year.
• Did not resign.
• Was not summarily dismissed.

Providing a housing allowance for high-ranking executives is a prevalent practice in Hong Kong, akin to the legal rent scheme observed in Japan.

Employees anticipate receiving their payslips monthly, accessible through the website, in PDF format, or as a hard copy.

According to the Minimum Wage Ordinance in Hong Kong, employers are required to maintain records of the total working hours for any employee earning a monthly salary below HK$16,300.

In the first year of employment, the entitlement to annual leave is seven days, with an accumulation rate of one additional day for each completed year, reaching a maximum of 14 days:

• First year: seven days
• Second year: eight days
• Third year: nine days
• Subsequently, up to a maximum of 14 days.

Employers hold the right to determine the timing of annual leave, providing a 14-day written notice to the employee. Annual leave must be granted within 12 months following the end of the leave year. While most employers allow leave to be taken as it accrues, a leave year may align with the employee’s employment anniversary or a date chosen by the employer for a unified leave year, often the calendar year.

Employees can carry forward all unused annual leave for 12 months after the preceding leave year, as permitted by the Employment Ordinance (EO).

The holiday pay received by employees equals their average wage over the past 12 months. Additionally, employees have the option to receive a payment in lieu of any accrued and untaken statutory annual leave from the preceding year. They are also entitled to payment for any outstanding annual leave upon cessation of employment.

Employees are eligible for paid sick leave, calculated at four-fifths of their average wage over the preceding 12 months. To qualify for paid sickness allowance under the Employment Ordinance (EO), an employee must have been continuously employed for at least one month immediately preceding a sickness day.

During the initial 12 months of employment, sick leave entitlement accrues at the rate of two paid sickness days for each completed month. Afterward, it accumulates at four paid sickness days per month, reaching a maximum of 120 paid sickness days. This entitlement, however, applies only to periods of sickness lasting at least four consecutive days, distinctly separate from annual leave.

To claim statutory sickness allowance, an employee must furnish a medical certificate from a qualified medical practitioner or registered dentist for each sickness day. Failure to provide such documentation releases the employer from liability for payment on that specific day.

Considering the somewhat restrictive nature of statutory sickness allowance, many employers choose to offer a contractual sickness benefit that surpasses statutory provisions. This may include compensating sick leave at full pay or providing employees with an upfront entitlement to a specified number of days instead of accruing sick leave on a monthly basis.

A female employee engaged in continuous employment (for a minimum of four weeks and at least 18 hours per week) immediately preceding the anticipated commencement of maternity leave (ML) is entitled to maternity leave as per the Employment Ordinance (EO) or as stipulated in the mutually agreed terms with the employer – whichever is more favorable.

Statutory maternity leave under the EO spans 14 weeks. Employers, having fulfilled payment for the initial 14 weeks’ ML Pay on the regular payday, can seek reimbursement for the 11th to 14th weeks’ ML Pay disbursed under the EO, capped at $80,000 per employee.

To qualify for paid ML, the employee must meet the following criteria:’

• Be employed for a minimum of 40 weeks immediately preceding the anticipated ML commencement date.
• Provide the required notice.
• Adhere to the specified medical certificate submission requirements.

Maternity leave pay is calculated at four-fifths of the employee’s average wage over the preceding 12-month period. The supplementary four weeks of statutory ML pay are subject to a cap of $80,000 per employee.

Male government employees with continuous employment contracts have the privilege of taking a five-day paternity leave at full pay upon the birth of each child.

In the private sector, male employees under continuous contracts are entitled to a three-day paternity leave related to the birth of a child. This leave can be utilized at any time, whether on individual days or consecutively, within the period starting four weeks before the expected date of birth and concluding ten weeks after the actual birth date.

If the employee has accumulated over 40 weeks of service when availing paternity leave, he is eligible for a payment corresponding to each day of leave. This payment is computed at 80% of the employee’s average daily wages over the preceding 12 months.

Female employees are entitled to 26 weeks of maternity leave, which can begin as early as eight weeks before the expected delivery date. The remaining weeks can be taken after childbirth. For women expecting their third child or more, the paid maternity leave duration is 12 weeks, with six weeks before and six weeks after the expected delivery date. Maternity leave is granted with full pay if the employee has completed at least 80 days of service with the employer in the 12 months before her expected delivery date. Maternity benefits are paid at the average daily wage rate for the duration of the absence from work. Additionally, female employees receive a medical bonus of INR 3,500 if health benefits are not provided by the employer. If a woman’s job allows, she may work from home after utilizing maternity benefits, based on mutual agreement between her and the employer.

The law also provides for adoption leave of 12 weeks for women adopting a child under three months old. A commissioning mother, who provides her egg for embryo implantation in another woman, is entitled to 12 weeks of leave from the date the child is handed over to her. The woman giving birth, known as the host or surrogate mother, is not eligible for this leave.

Employers are required to inform female workers of their rights under the Act at the time of appointment, both in writing and electronically.

While paternity leave is offered to government employees, it is not mandated in the private sector, and its provision is at the discretion of the employer.

Approval for leave related to marriage, the death of a relative, family care, etc., is typically granted, and specific regulations are not explicitly outlined in the Employment Ordinance (EO). Decisions regarding such leave are left to the discretion of the company.

The level of trade union participation in Hong Kong varies according to the industry.

Hong Kong hosts several labor organizations and trade unions, but closed shops are not a prevalent practice. These unions are primarily established on a trade-specific basis, while larger corporations with significant employee numbers may have in-house labor unions. The membership of trade unions in Hong Kong is relatively modest when compared to counterparts in Europe and the United States.