Employee is one of the most valuable and important assets of a company. Company need to hire the right person for the jobs and provide adequate & competitive benefits & remuneration to its employee. Companies also need to comply will all the legislation regarding contract terms, statutory holidays, Mandatory Provident Fund (MPF) payments, sick and maternity leave, severance and long-service payments, etc.
A “good employer” should embody the three principles of “employee-oriented”, “law-abiding”, and “equal and fair”. Through the adoption of these principles in various aspects of people management, including recruitment, training, occupational safety, staff communication and arrangement for termination of contract, can effectively foster harmonious labour relations in enterprises. With the growing concern for balance between work and family life, family- friendly employment practices have also become an indispensable part of good people management.
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Our experience team knows the legislation. We can provide all aspects of work and consultancy relating to recruitment, drafting employment contracts, employee record maintenance, payroll preparation, MPF enrollment & maintenance, leave arrangements, and preparation of employer’s return.
The Employment Ordinance applies to all employee except for a) a family member who lives in the same dwelling as the employer; b) employee as defined in the Contracts for Employment Outside Hong Kong Ordinance; c) person serving under a crew agreement under the Merchant Shipping (Seafarers) Ordinance or on board a ship which is not registered in Hong Kong, or d) apprentice whose contract of apprenticeship has been registered under the Apprenticeship Ordinance.
All employee s covered by the Employment Ordinance are entitled to basic protection under the Ordinance including payment of wages, restriction of wages deduction and the granting of statutory holidays, etc.
There is no definition on “full-time employment” or “part-time employment” in the Employment Ordinance. However, if an employee has been employed continuously by the same employer for 4 weeks or more, with at least 18 hours worked in each week, it is regarded as being employed under a “Continuous Contract”.
Employee employed under a Continuous Contract are further entitled to such benefits as rest days, paid annual leave, sickness allowance, severance payment and long service payment, etc.
Employment contract can be made orally or in writing. It must include a) wage, b) wage period, c) length of notice required to terminate the contract, and d) if the employee is entitled to an end of year payment, the end of year payment or proportion and the payment period.
Employers are required to keep proper records for each employee for at least 7 years.
Employee Compensation Ordinance applies to all full time or part-time employee who are under contracts of service or apprenticeship, including employee working outside Hong Kong.
Employers must take out employees’ compensation insurance policies to protect both employers and employees. The full cost of the insurance policy must be bear by the employer. Employer is not allowed to make any deduction from the earnings of an employee to defray the cost of insuring against his liability to pay compensation.
If an employee sustains an injury or dies as a result of an accident arising out of and in the course of his employment, the employer is liable to pay compensation under the Employee Compensation Ordinance.
An employee employed under a continuous contract is entitled to one rest day in every period of seven days. Rest days cannot co-inside with statutory holidays. A rest day is defined as a continuous period of not less than 24 hours during which the employee is entitled to abstain from working for the employer.
An employee, irrespective of his length of service, is entitled to the following 13 days of statutory holidays:
All statutory holidays should be paid. If an employee is required to work on statutory holiday, the employer must give notice and arrange an alternative holiday. However, employer cannot make any form of payment in lieu of a statutory holiday.
An employee is entitled to 7 days' annual leave with pay after serving every period of 12 months under a continuous contract. Entitlement of paid annual leave will increase progressively to a maximum of 14 days according to the length of service of the employee.
Employment contract is not allowed to have any terms to forego all or any of the employee's annual leave entitlement, including payment of wages in lieu of any annual leave days. However, the law allows an employee to choose to accept payment in lieu of that part of his leave entitlement which exceeds 10 days.
An employee is entitled to pro-rata annual leave pay on completion of 3 months but less than 12 months' service in a leave year if his employment contract is terminated unless the employee is dismissed by summary dismissal
An employee employed under a continuous contract is entitled to sickness allowance if:
Paid sickness days are accumulated at the rate of two paid sickness days for each completed month of the employee's employment during the first 12 months, and four paid sickness days for each completed month of employment thereafter. Paid sickness days can be accumulated throughout the whole employment period, but shall not exceed 120 days at any one time.
Employer is not allowed to terminate the contract of an employee on his paid sickness day except in cases of summary dismissal due to serious misconduct.
An employee is eligible for 14 weeks’ paid maternity leave if she has been employed under a continuous contract for not less than 40 weeks immediately before the commencement of scheduled maternity leave.
In case the length of employment service under a continuous contract is less than 40 weeks immediately before the commencement of scheduled maternity leave, the employee is eligible for 14 weeks’ maternity leave without pay if the employee has given notice of pregnancy and her intention to take maternity leave to her employer after the pregnancy has been confirmed.
Male employee employed under continuous contract is entitled to 5 days paternity leave for each confinement of his spouse if he is the father of a new-born child or a father-to-be.
An eligible male employee may take paternity leave at any time during the period from 4 weeks before the expected date of delivery of his child to 14 weeks beginning on the actual date of delivery of his child. He may take all 5 days of paternity leave in one go or on separate days.
"Wages" means all remuneration, earnings, allowances, tips and service charges, however designated or calculated, payable to an employee in respect of work done or work to be done. Allowances including travelling allowances, attendance allowances, commission and overtime pay are within the definition of wages.
Employer must pay wage above the Statutory Minimum Wage (SMW) to any employee. Effective from 1 May 2019, the SMW rate is $37.5 per hour.
Wages is due to be paid to employee on the last day of the wage period. Employer should pay wages as soon as practicable, but in any case not later than 7 days after the end of wage period. Employer is required to pay interest on the outstanding amount if he fails to pay wages with 7 days when it becomes due. Wages can be paid to employee by cash, cheque, bank transfer, etc.
Employee’s portion of the MPF contribution can be deducted from the wages payable to the employee.
Mandatory Provident Fund (MPF) provides the workforce with basic retirement protection. Except for exempt persons, employees and self-employed persons aged 18 to 64 are required to join an MPF scheme under the Mandatory Provident Fund Schemes Ordinance (MPFSO).
Besides the Occupational Retirement Schemes (ORSO schemes) and Statutory pension or provident fund schemes for civil servants, there are 3 different types of MPF schemes:
Employers are legally obliged to enrol new employees in the MPF scheme they are participating in. Employers are required to enrol both their full-time and part-time employees who have been employed for a continuous period of 60 days or more in an MPF scheme within the first 60 days of their employment. (For casual employee under the Industry Scheme, employer is required to enroll the employee within the first 10 days of employment.)
Self-employed persons (SEPs) are required to enrol themselves in an MPF scheme and open an SEP account within the first 60 days of becoming self-employed.
Employer is required to report to the Inland Revenue Department remuneration paid to employee by submitting annual Employer’s Return (BIR56A andIR56B) each year. The BIR56A and IR56B is usually sent by IRD to employer in April. The employer is required to complete and return it to IRD within one month.
If there is remuneration paid to persons other than employee, the company is required to file IR56M together with IR6036A and submit to IRD together with the BIR56A.
When there is a new employment, the employer is required to file the IR56E within 3 months of commencement of employment of the employee.
On termination of service of an employee, IR56F is required to be filed 1 month prior to the cessation of employment.
If the employee is going to leave Hong Kong for good or for a substantial period of time, employer should file a IR56G at least 1 month before the expected departure date.
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