A successful business largely depends on its employees. By creating working contracts that include the right terms and benefits there will be no misconception and the perfect work-life balance can be created. At Bradford Jacobs, this is our aim, and we support companies in over a hundred countries with creating compliant and balanced labor contracts.
Our team in Hong Kong keeps track of the local laws and regulations on a daily basis to be duly aware of updates that can be implemented in working contracts. By using our PEO and EOR service we can provide compliant labor contracts for employees in Hong Kong including local benefits.
To support your plans in Hong Kong we made this guide including the basics of employment contracts in Hong Kong. After reading this guide you will know everything about social security in Hong Kong, notice periods, and average working hours.
How Do Companies Hire Hong Kong Employees?
If a foreign company is looking to hire resident employees as part of their expansion into Hong Kong, they must comply with recruitment regulations such as tax, social security contributions and local employment laws, as well as collaborate with or adhere to any collective bargaining, trade unions or work council agreements.
Labor law in Hong Kong is based on both employer and employee protection.
In Hong Kong, it is common practice for employment contracts to be presented to employees in writing. There are two contract types to choose from – with the main differences between them being the contract length and benefits entitlement.
The Employment Ordinance is the governing law of employment, and also includes the influence of trade unions and work councils. However, this may vary according to the industry and sector.
To be fully aware of what you can and cannot apply to your employment practices in Hong Kong, it is important for the employer to know the existing labor laws and employee entitlements, as well as collaborate with the appropriate local employment organizations.
Employment Contracts in Hong Kong
In Hong Kong, it is not required for an employment contract to be in writing, but it is strongly encouraged by the Labor Department and is common practice. However, upon the employee’s request, the employer must provide a written document with the terms and conditions of the employment in writing.
If an employment contract is to be in writing, the employee is to be provided with a copy of the signed employment contract, with the following information – wages, the wage period, the length of notice for termination of the employment contract, and end-of-year payments, if applicable.
There are two types of employment contracts:
- An employment contract – Employment contracts provide employees with basic protection under the Ordinance, which includes wage payments, wage deduction restrictions, statutory leave, etc. Every employment contract is implied to be valid for one month and is renewable from month to month until it is deemed a continuous contract.
- A continuous employment contract – Continuous employment contracts, however, entitle employees to all statutory benefits under the Employment Ordinance – rest days, paid annual leave, sickness allowance, severance payments, etc.
A continuous contract of employment is the standard contract for most employment cases and can be defined as a contract in which the employee works for the same employer for 4 weeks or more, and at least 18 hours every week. All benefits are offered to employees – including rest days, paid annual leave, sick allowance, severance payments, long service payments, and extra benefits.
What Laws About Employment Exist in the Hong Kong?
Hong Kong employment law is regulated under The Employment Ordinance, which covers a vast range of employment protection and benefits, such as wage protection, rest days, paid holidays, and annual leave. Other laws pertaining to employment are The Employees’ Compensation Ordinance, Occupational Safety and Health Ordinance, and Factories and Industrial Undertakings Ordinance.
The Employment Ordinance governs a variety of features of employment protection, with certain forms of legislation that must be followed. These include:
- Wages: Under the Employment Ordinance, reference to wages includes all remuneration, earnings, allowances, tips, service charges, commissions, and overtime payments (if it is constant or its monthly average over the past year is not less than 20% of the average monthly wages in that period).
- Working Hours & Days: For both the employment and continuous employment contracts, the working hours and days of the week vary as they are normally arranged between the employer and employee and stated in the contracts. Common practice, however, is 40-50 hours and 5 days a week.
- Rest Days: Under the continuous employment contract, an employee is entitled to at least one rest day in every seven-day period. A rest day is counted as a continuous period of at least 24 hours in which the employee is not available for work.
Rest Days can be appointed by the employer in the employee’s contract, or they can be appointed on a regular/irregular basis according to the business’ needs.
Should the employer need to call employees in on a rest day (in the event of the breakdown of machinery or in case of an unforeseen emergency) the employer must notify the employee at least 48 hours before their rest day and substitute the worked rest day(s) with other day(s) in the same month or within 30 days after the day worked.
- Healthy and Safety: Healthy and safety measures in the workplace are also guaranteed by the Employment Ordinance, with both employers and employees being liable and having to contribute to health and safety in the workplace.
- Sick Leave & Pay: The Employment Ordinance offers employees under a continuous contract two types of protection for sickness – paid sick days and sickness allowance. Paid sick days are an entitlement, which starts at 2 paid days in the first year of employment and increases progressively according to length of employment.
Sickness allowance is an added benefit given to employees by their employers under the following conditions:
- sick leave taken is not less than 4 consecutive days,
- sick leave is supported by a medical certificate, and
- the employee has sufficiently accumulated paid sick days.
Sickness allowance is a daily payment for eligible employees which is counted per day of sickness leave, and should be no less than 4/5 of the average daily full-wages earned by the employees in the last 12 months of employment.
Sickness allowance should be paid no later than the employee’s pay day.
- Data Protection: All relevant checks done, and information given to employers are protected by data protection rights under Hong Kong’s laws. All information required must be given by the employee and with their clear consent.
- Paid Annual Leave Entitlement: Paid Annual leave is granted to employees every year under a continuous contract and after 12 completed months of service. The number of days increases progressively in parallel to the number of completed length of service periods, as follows:
- 1st and 2nd years: 7 days per year
- 3rd - 9th years and onwards: 8 days to 14 days per year (an annual increase of 1 day per year).
The annual leave pay day rate should be the sum equivalent of the average daily full-wages earned by an employee in the 12-month period preceding the leave dates, and should be paid to the employees no less than one working day after the period of annual leave taken.
- Holiday Leave: Employees are entitled to 12 days of statutory holiday leave per year, and employees must be compensated with their average full-day wages.
- Maternity Leave and Protection: In Hong Kong, maternity leave, prohibition of heavy work, and protection from dismissal during pregnancy and pregnancy leave are given to female employees that are employed under a continuous contract of employment.
The employee must present a medical certificate to confirm her pregnancy to her employer. The duration of leave is no less than 10 weeks, with an additional 4 weeks granted in the case of illness or disability due to the pregnancy or childbirth.
Maternity leave should be taken either 2 weeks or 4 weeks before the expected date of childbirth, and should send notice to the employer in advance, as well as get an agreement. Apart from being employed under a continuous employment contract, eligibility for maternity leave pay is granted if the period of employment service is not less than 40 weeks before the commencement of scheduled maternity leave.
The daily rate of maternity leave pay must be no less than 4/5 of the average daily full wages earned in the last year.
- Probation: Probation period depends on the contract agreement, but common practice shows that it can be between 1-6 months (depends on the position and company).
- Termination Notice: Termination Notices depend according to the employment contract, with common practice being one month, both when a contract is and is not used.
- Severance Pay: Severance pay is only eligible for employees that have been working for over 24 months, and only due to redundancy or being laid-off.
How Do You Onboard Hong Kong Employees Internationally?
Considering whether to move existing employees into Hong Kong or recruit new staff in-country is the first phase of a parent company’s plan to onboard employees in a new territory.
You must then deal with obtaining visas and work permits, as well as ensuring compliance with all local laws and regulations at the risk of attracting fines and sanctions from Hong Kong authorities. Your time, money, and resources can be of better use in other areas of your international establishment plan.
The most efficient and effective method of onboarding employees into Hong Kong is through a global recruitment company such as Bradford Jacobs.
Our Professional Employer Organization (PEO) and Employer of Record (EOR) services will manage every stage of the employment process for you – from finding the employee to seeing that their first check is paid on time. We can ensure the right people in the right time to help you get the ball rolling on your business expansion plans.
Translating Hong Kong Employment Contracts
When translating contracts, it is vital to consider the nature of law and legal language, and their accompanying complexities in legal translations. Employers must deal with two legal systems, as well as the cultural and linguistic differences between the source and target languages.
Legal systems have their own cultural, social, and linguistic structures. As such, any incompatibility of these structures between the source and target languages are where the difficulties lie in translation of legal documents. Translating a document without an understanding of the similarities and differences between both systems, the intention behind the translation, the knowledge of the legal writing style of the target language, and the correct legal terminology may result in severe consequences and proceedings.
Partner with Bradford Jacobs
Bradford Jacobs’ comprehensive knowledge of all aspects of Hong Kong employment laws make us the ideal partner for your expansion into one of the strongest economies in the world.
The global reach of our Professional Employer Organization (PEO) recruitment platforms combined with the in-country knowledge of our Employer of Record (EOR) specialist teams guarantee a successful and smooth transition of your employees into your new territory (including onboarding plans, resources, and guides on local culture, customs, and business etiquette).
To learn more about our PEO and EOR packages, contact our team today.