I INTRODUCTION

Hong Kong’s employment environment and its employment legislation are well recognised as being generally employer-friendly. The laws in Hong Kong applying to employees with employment in Hong Kong are a combination of statutory and common law. The common law origins of Hong Kong employment law include decisions of the courts of other common law jurisdictions, in particular the English courts.

The principal piece of employment legislation providing protection to employees is the Employment Ordinance (EO). Since its enactment almost 50 years ago, it has not seen any general overhaul of its provisions, but instead has been amended piecemeal to address particular issues as they have arisen. The result is that while the EO provides an important base of protection for employees, when compared with other jurisdictions with more advanced labour laws, Hong Kong has fallen some distance behind.

In addition to the EO, legislation relating to employment also exists in the areas of minimum wages, employee compensation, health and safety and discrimination.

The EO applies to any employee with Hong Kong employment. It prescribes the minimum rights and benefits to be enjoyed by such an employee in Hong Kong. It also contains a no-contracting-out provision, which will render void any term of a contract of employment that purports to extinguish or reduce any right, benefit or protection conferred upon the employee by the EO.

The relevant courts and tribunals in which employment claims can be bought are:

  • a The Minor Employment Claims Adjudication Board – for claims of up to HK$8,000.
  • b The Labour Tribunal – this specialist tribunal seeks to provide a quick, simple, cheap and informal forum for resolving disputes between employers and employees.2 Legal representation is generally not permitted. The Tribunal’s jurisdiction includes claims arising under employment legislation, principally the EO and the Minimum Wage Ordinance.
  • c The District Court – generally, claims falling outside of the Labour Tribunal’s jurisdiction will be heard in this Court.
  • d The High Court – for appeals from the Labour Tribunal, and for claims falling outside of the Labour Tribunal’s jurisdiction exceeding HK$1 million.
  • e The Court of Appeal – for appeals from the District Court or the High Court.
  • f The Court of Final Appeal – for appeals from the Court of Appeal.

ii YEAR IN REVIEW

i EOC public consultation and exploratory study

In March 2016, the Equal Opportunities Commission (EOC) published its Submissions to the Government and its Report on Responses to Public Consultation following its public consultation in 2014 on Hong Kong’s discrimination laws, entitled the Discrimination Law Review. Discrimination in the workplace was just one part of this very wide-ranging review. Overall, the EOC concluded that there are a number of areas where the anti-discrimination legislation should be reformed by amendments to the existing legislation. Areas that it identified as higher priority for implementation included equality for persons with disabilities, including in employment; providing a right to return to work for women after maternity leave; equality for all racial groups in employment; and making an employer liable for the sexual, racial or disability harassment of an employee by a third party, such as a customer, where the employer has notice of the harassment and fails to take reasonable steps to prevent it.

The EOC also concluded that the four anti-discrimination Ordinances should be consolidated into a single Ordinance to simplify the legislation, and, where appropriate, harmonise the protection across different characteristics. This approach would also facilitate any possible additions of protected characteristics in the future.3

In January 2016, the EOC released the findings of its Exploratory Study on Age Discrimination in Employment, which it started in 2014. The study suggested that age discrimination is occurring in the workplace in Hong Kong, and based on this, the EOC made various policy recommendations for the government’s consideration, also urging the government to publicise its guidelines on this area more widely.4 It also encouraged the government to closely monitor the prevalence of age discrimination through regular, large-scale surveys, so as to start public discussion on legislating against age discrimination as soon as possible.

ii Proposed legislation

In terms of new legislation, 2016 has been an uneventful year. A bill was introduced to enable the Labour Tribunal to make an order for reinstatement or re-engagement of an employee unreasonably and unlawfully dismissed (e.g., during pregnancy or maternity leave), and to require the employer to pay a fine for a failure to comply with the order, as well as to criminalise failure to pay a fine. However, the bill was not passed before the end of the legislative session and lapsed. Existing provisions for reinstatement or re-engagement (which go wider than unreasonable and unlawful dismissal) require the mutual agreement of employer and employee for the Tribunal to make such an order.

iii Proposed ending of MPF offset mechanism

It has been reported that the Chief Executive (CE) will shortly announce a proposal to end the offset mechanism that allows employers to deduct severance or long-service payments from the ex-employee’s compulsory Mandatory Provident Fund (MPF) contributions (see Section XII, infra). This was an election pledge of the current CE. Features of this proposal are reported to include a cut-off date, after which employers would no longer be allowed to offset staff severance and long-service payments with MPF contributions; a government subsidy for employers during a 10-year transitional period after the cut-off date, starting at less than 50 per cent of the offset amount, with a progressive reduction over the period to zero; and a reduction from two-thirds to half of an employee’s last monthly salary as the basis for calculating severance and long-service payments (See Section XII, infra).

As a three-month period for consultation for this proposal will be required, it is unlikely that there will be time for the amending legislation to be tabled to the Legislative Council before June 2017, when the tenure of office of the current administration will end. If legislation is enacted, it is likely that it will not take effect until at least 2018.

iv Standard working hours

Since it was set up in April 2013, the Standard Working Hours Committee (SWHC) has been working towards reaching a consensus between business and labour representatives. However, given the absence in Hong Kong of regulation on standard or maximum working hours, overtime limits or overtime pay, which are currently subject to contractual agreement between employer and employee, understandably, this area has been one of some continuing contentiousness between business and unions.

In November 2016, the labour representatives produced their own report that proposed a 44-hour week and for overtime of one-and-a-half times regular wages to be paid. The report also suggested that initially, the number of hours could be set at above 44, but with the eventual goal of achieving a 44-hour week over a period of time that would be open for discussion. The report also accepted that there might be exemptions from these requirements for certain occupations but these were not identified. The SWHC has considered this report and has said that it is hopeful that a consensus in some areas could be reached soon. The next step is for the SWHC to submit to the government its consultation conclusions and recommendations, resulting from a recent comprehensive consultation exercise.

v Draft code of practice for employment agencies

In April 2016, the Labour Department (LD) issued a draft Code of Practice for Employment Agencies for public consultation. The consultation period ended in June 2016, and the LD has yet to publish its conclusions. Employment agencies are regulated by both the EO and separate regulations made under the EO, and require a licence granted by the LD to operate. The activities of some employment agencies in the territory have been newsworthy in recent years, principally owing to overcharging of placees, particularly domestic helpers, or for unlicensed operations, and a number of convictions have been achieved this year by the LD for unlawful activities. The purpose of the draft code is to restate the law applicable to employment agencies and to set the minimum standards that the LD expects of employment agency licensees in the operation of their businesses.

iii SIGNIFICANT CASES

In terms of significant cases decided in 2016, the following two are worthy of mention.

In the Court of Appeal decision in Tadjudin Sunny v. Bank of America, National Association,5 the plaintiff employee claimed her employment was terminated with the intention to avoid her being eligible for a discretionary bonus in the year of termination. Prior to her termination, the plaintiff had received very substantial bonuses for several consecutive years, and had her employment not been terminated, she would have been eligible for the performance incentive programme and would have been awarded a bonus for that year.

The court upheld the decision of the Court of First Instance concluding that termination had not been for a genuine reason, and that where there was a common, reasonable, expectation of both employer and employee that the employer could not exercise its power of termination under the employment contract (or the EO) in order to avoid the employee being eligible for the employer’s performance incentive programme, an anti-avoidance provision would be implied into the contract to give effect to that expectation and prevent the employer from terminating the employment. The court also held that while any amount awarded under the programme was discretionary, this did not mean that the discretion of the bank was unfettered. The discretion had to be exercised in accordance with the principles set out in the programme, and it was not to be exercised in an irrational, perverse or arbitrary manner that was not bona fide.

This decision highlights the importance of employers acting rationally and bona fide when dealing with an employee who is eligible to receive a bonus under an incentive scheme.

In the first instance decision of FWD Life Insurance Co (Bermuda) Ltd v. Cheng Wing Yiu Dumas,6 the plaintiff insurance company sought to recover from the defendants (the employee and his wife) amounts including mortgage loans, bonus payments and personal loans where repayment was triggered by his resignation from the plaintiff company. The employee had claimed entitlement to a sum under the plaintiff’s long service bonus plan (LSB plan), which he also claimed to be entitled to set off against sums claimed by the plaintiff. His entitlement to the LSB turned upon the interpretation of his contract of employment, and the rules of the LSB plan, as the dispute centred on when and how his employment with the plaintiff had been terminated. His contract of employment provided that it would terminate on his retirement and this would be deemed to occur on 31 December in the year that he reached the age of 60. The LSB plan contained provision for accrued but unpaid LSB to be forfeited should the agreements between employer and employee terminate for any reasons other than death or retirement. The employee had reached 60 in November 2013, but sent a letter of resignation on 20 January 2014. The court held that by operation of the agreements involved, the employee, although he may have been unaware of the fact, had been retired by the plaintiff on 31 December 2013, and his purported resignation was in fact an empty gesture. As a consequence, the LSB plan did not operate to forfeit his accrued but unpaid LSB and the employee was entitled to the accrued balance of LSB as at the date of his retirement.

This decision highlights the importance to employers of having a holistic understanding of their employment-related documents and of their operation and impact on one another.

 

iv BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP

i Employment relationship

The normal principles for formation of contracts under Hong Kong law apply to the creation of an employment contract. While there is no requirement for the contract to be in writing, a written contract is always advisable for the employer as there are certain basic minimum compliance requirements for the employer under the employment protection legislation. An employer would be well advised to have clarity around these terms in all circumstances. The employee must also sign the employment contract.

Fixed-term employment contracts are permissible under Hong Kong law, although these generally tend to be seen in the context of specific projects or for the most senior management.

The key provisions recommended for inclusion in an employment contract are:

  • a term;
  • b job title;
  • c scope of job responsibilities and duties;
  • d probation period;
  • e salary;
  • f bonuses (contractual or discretionary);
  • g other benefits such as medical insurance and housing;
  • h annual leave;
  • i sick leave;
  • j period of contractual notice and right to make a payment in lieu of notice;
  • k termination for breach/summary dismissal;
  • l confidential information;
  • m governing law and jurisdiction; and
  • n personal information collection statement (PICS).

The employment contract would usually be entered into before the term of the contract commences, but it should in any event be entered into no later than that time. The parties may amend or change an employment contract at any time after it has been entered into, and should do so in writing. Care should be taken by an employer to ensure that if the employee is giving up any rights, or accepting any new obligations, any change to the contract complies with Hong Kong’s contractual rules requiring the presence of some fresh consideration to ensure the enforceability of the employee’s new obligations. Alternatively, the amendment could be executed as a deed to overcome an absence of consideration. Care should also be taken to ensure that the contract is not changed by oral agreement. This could occur if the elements for a variation were present and satisfied, with the result that an employer may be found to have advertently agreed to an amendment to the contract

ii Probationary periods

Probation periods in employment contracts are permitted under Hong Kong law and it is customary to use these provisions.

The EO provides that whether or not a period of notice is expressly provided in the contract, during the first month of employment while an employee is on probation, the contract may be terminated by either party without notice or payment in lieu of notice. After the expiry of the first month and during the remainder of the probation period, not less than seven days’ notice, or if longer, the agreed notice period, must be given.

iii Establishing a presence

If a company incorporated outside of Hong Kong establishes a place of business in Hong Kong (i.e., a branch), it must apply to the Hong Kong Companies Registry for registration as a non-Hong Kong company within one month of the date of such establishment. It must also register with the Hong Kong Inland Revenue (IRD). If a non-Hong Kong company without a place of business in Hong Kong hires an employee in Hong Kong, the obligation to apply for registration may be triggered by the activities of that employee in Hong Kong if they would amount to the carrying on of a business by the employing company in Hong Kong. Whether a business is being carried on is a factual question that will depend on the circumstances. This possible outcome could be avoided if the company were instead to engage an independent contractor to represent it in Hong Kong, which it would do by entering into a contract with that person clearly describing that person’s status (e.g., as a local agent or consultant) and the scope of the services to be provided.

Before establishing a branch in Hong Kong, or alternatively, appointing an agent in Hong Kong to act on its behalf, the non-Hong Kong company would need to consider whether profits sourced from those activities (whether directly or through an agent) would be subject to Hong Kong profits tax. Hong Kong’s tax system is a territorial one and generally will only tax profits that have been locally sourced. Profits tax is charged if: (1) the person carries on a business in Hong Kong; (2) profits have been earned from that business in Hong Kong; and (3) those profits have arisen in or been derived from Hong Kong (i.e., they must have a Hong Kong source).

Given the nature of Hong Kong’s tax system, questions relating to the creation of a permanent establishment have tended to have less prominence in the determination of any liability for profits tax.

A company that hires employees must provide the following statutory benefits: sickness allowance, annual leave, statutory holidays, rest days, MPF contributions and maternity and paternity leave.

Assessment for salaries tax on the remuneration and benefits paid to or received by the employee is made directly on, and thus the liability for this tax belongs to, the employee, not the employer. The employer must file returns with the IRD reporting the commencement and termination of employment of an employee, as well as an annual return reporting aggregate remuneration and benefits paid to that employee. The employer does not have any tax-withholding responsibilities for the employee’s remuneration, except where the employer is aware that the employee intends to leave Hong Kong for more than one month, such as on termination of employment.

v RESTRICTIVE COVENANTS

Hong Kong law permits the inclusion in employment contracts of post-termination restrictions (restrictive covenants). They typically include the following restrictions:

  • a non-competition with the business of the ex-employer;
  • b non-solicitation of employees of the ex-employer;
  • c non-solicitation of customers of the ex-employer; and
  • d non-dealing with customers of the ex-employer.

The approach of the Hong Kong courts to these types of clauses is at the outset to treat them as unreasonable on the basis that they are in restraint of trade on the employee, and thus unenforceable. To reverse this presumption, the burden of proof is on the employer to demonstrate that the scope of the restriction is no wider than is strictly necessary to protect the legitimate business interests of the employer. In considering whether any such restriction is enforceable, the courts will generally have regard to the following three components:

  • a the scope of the restricted activities;
  • b the duration in time of the restriction; and
  • c the geographical scope of the restriction.

Given the small size of Hong Kong’s territory, the courts have tended to adopt a very restricted approach to the enforceability of these types of clauses, and consequently, the scope for employers to impose these types of restrictions on their employees can be quite limited. Great care therefore needs to be taken in the drafting of the clause wording. It is normal also to include in a contract of employment express non-compete obligations that apply during the contract term.

Commonly, in the case of more senior employees, an employer will include in the contract an express gardening leave provision, to be able to control the activities of the employee once he or she has given notice of resignation. The duration of the gardening leave should be limited to the employee’s period of notice, and any restrictive covenant period should interlock with the gardening leave provision so that the duration of the former is reduced by any period spent on garden leave.

vi WAGES

i Working time

Currently there are no maximum working hours regulations in Hong Kong, nor are there any regulations as to the amount of night work that may be performed, and in either case there are currently no concrete proposals in place for their introduction (but see Section II.iv, supra). However, an employee employed under a continuous contract is entitled to one rest day in every seven days and to all statutory holidays.

Hong Kong has minimum wage legislation and the current minimum wage, which was set at 1 May 2015, is HK$32.50 per hour. The next review is set for May 2017.

ii Overtime

Overtime work is not regulated by legislation. Consequently, the right of an employer to ask an employee to work overtime, the rate of overtime pay and the amount of overtime that the employee may be asked to work, will be determined in each case by the terms of the contract of employment between employer and employee.

vii FOREIGN WORKERS

Any person seeking to work in Hong Kong who does not have the right of abode in Hong Kong (i.e., does not have permanent residence) must first obtain a work visa from the Hong Kong Immigration Department.

There is no requirement for an employer to keep a register of its employees holding work visas, and there is no upper limit on the number of such employees that an employer may have. When applying for a visa, the applicant must demonstrate that he or she is in a job relevant to his or her academic qualifications or working experience that cannot readily be taken up by the local workforce. Typically, this would require the employer to demonstrate that efforts have been made to search for suitable candidates from the local labour market. Successful applicants will normally be permitted to extend their stay in Hong Kong on a two–two–three years pattern without other conditions of stay.

The position as regards liability for salaries taxes and payment of benefits for an employee holding a work visa is the same as for a local employee. An employee holding a work visa whose employment is located in Hong Kong (i.e., generally he or she performs his or her work in Hong Kong), will have the benefit of statutory protection provided under local employment laws. This is likely to be the case even if his contract of employment is governed by a different governing law. An employee holding a work visa may be able to claim an exemption from the MPF scheme if the employee is already a member of a provident or retirement scheme outside of Hong Kong. The exemption will cease to apply if the employee acquires Hong Kong permanent residence status.

viii GLOBAL POLICIES

The application of a company’s global policies to employees working in Hong Kong and in particular its internal discipline rules is not required by law. While this subject will be a matter of policy for the employer, the presence of and adherence to a mature set of disciplinary rules can provide an effective evidential trail to demonstrate due grounds for dismissal of an employee in breach of contract. There is no requirement that these rules be agreed or approved by a representative body (if any) of the employees, nor that they be filed or approved by any government authority. It is not essential for employees to have agreed to the rules, but it is recommended that they be incorporated into the employee’s contract of employment.

In the context of rules relating to discrimination, as mentioned above, Hong Kong has four separate pieces of legislation dealing with this subject. Under each, an employer can incur vicarious liability for acts of discrimination of an employee, regardless of the employer’s knowledge of the act and whether or not done with its approval. The employer will have a defence to a claim for discrimination if it can prove that it took such steps as were reasonably practicable to prevent the employee from doing that act, or from doing in the course of the employee’s employment acts of that description. Given this, it will be important for the employer to include in its internal rules a robust anti-discrimination policy. This should be backed by training for employees, particularly those in the human resources function, on the employer’s anti-discrimination practices. A record should kept of the application of these rules and the policy to be able to demonstrate the defence mentioned above. The EOC has published codes of practice in relation to each of the areas of discrimination covered by the legislation and these should be used as reference points for the drafting of any internal rules on discrimination applicable to Hong Kong-based employees.

There is no requirement that employer’s rules must be written in any particular language. However, it is important that the employer be sensitive to cultural and linguistic differences between employees to ensure that all employees are able to read and understand these rules in their first language.

At the time that the employee signs his or her employment contract, he or she should be asked to sign an acknowledgement that he or she has received a copy of the rules and has read and understood them. The rules would ordinarily be posted on the employer’s intranet, but it is also good policy to distribute a hard copy of the rules to each employee.

IX TRANSLATION

As mentioned above there is no specific requirement that any employment documents must be translated into an employee’s first language. It is, however, recommended that where it is clear that the employee is not proficient in the language of the contract or the document in question, it should be translated into that employee’s first language.

There are no particular formalities required in relation to obtaining a translation, but any translation should be checked and verified by a senior member of staff who is in a position to do so. If an employee is provided with a contract or document in a language that he or she does not fully understand, there may be scope for misunderstanding, which could lead to or exacerbate a claim by that employee.

x EMPLOYEE REPRESENTATION

While legislation permitting the formation of trade unions has existed in Hong Kong for many years, despite the number of unions in Hong Kong, levels of employee union participation have tended to be low. There is no statutory provision in Hong Kong for the recognition of collective bargaining agreements or for works councils of any kind, and there is no requirement for employers to consult employees in scenarios where such a requirement might typically be found in other jurisdictions, such as in the event of termination of employment or business sales or combinations. Instances of industrial action in Hong Kong are uncommon.

xI DATA PROTECTION

i Requirements for registration

The collection, processing, use, disclosure and transfer of personal data is governed by the Personal Data (Privacy) Ordinance (PDPO). It sets out six data protection principles (DPPs) drawn from the 1981 OECD Guidelines and the EU Directive at the time of its enactment in 1996, with some modifications. The employer as a data user will be required to comply with the DPPs and with the PDPO generally. Compliance with the PDPO is generally overseen by the Privacy Commissioner. Employers are not required to register with the Privacy Commissioner.

Personal data is defined in the PDPO to include: (1) any information relating directly or indirectly to a living individual; (2) from which it is practicable for the identity of the individual to be directly or indirectly ascertained; and (3) in a form of which the access to or the processing of, the data is practicable. Data that would typically fall within this definition would include the employee’s name, address, telephone number and passport and identity numbers.

Before an employer may collect any personal data from an employee, it must first provide the employee with a PICS. The PICS would usually be attached to the employee’s offer of employment. This should include explicit statements as to the purposes for which the data is to be used, the classes of persons to whom the data may be transferred and whether it is obligatory or voluntary for the individual to supply the data.

If it is later proposed that the data is to be used for a purpose not expressly included in the PICS, the employer must obtain separate consent from the employee for that use. An employee is entitled to request access to his or her data and to correct it if necessary.

The employer should only retain personal data for as long as is necessary to fulfil its purpose. It is also required to take ‘all practicable steps’ to ensure that personal data held is protected against unauthorised or accidental access, processing, erasure or other use.

ii Cross-border data transfers

While the PDPO contains provision for the regulation of transfers of personal data outside of Hong Kong, this particular provision has never been enacted.7 The DPPs, as described above, require that the employee be informed explicitly of the purpose for which the data is to be used (i.e., in the PICS). If the transfer of the data out of the jurisdiction would be a purpose not falling within the original purposes stated in the PICS, then the consent of the employee must be obtained. In this circumstance there is no requirement for a data protection agreement to be entered into.

iii Sensitive data

No distinction is drawn between different types of personal data.

iv Background checks

Background checks are permitted in Hong Kong, and are commonly carried out against prospective employees. Criminal record checks made with the Hong Kong police are also permitted in limited situations, with the consent of the prospective employee. Hong Kong has legislation for the rehabilitation of offenders under which certain convicted offences will be treated as spent with the lapse of time, but they will remain on the record.

xiI DISCONTINUING EMPLOYMENT

i Dismissal

The usual events by which a contract of employment may be terminated include:

  • a termination by notice by one party to the other;
  • b termination by one party making a payment in lieu of notice to the other; and
  • c termination by the employer by summary dismissal (i.e., for cause).
ii Termination by notice from one party to another

The EO lays down minimum periods of notice that must be given to terminate the contract. Usually, the period of notice in the contract of employment will be longer than that prescribed by the legislation, in which case the longer period will apply.

Hong Kong law does not recognise the concept of termination at will.

iii Termination by one party making a payment in lieu of notice to the other

An employer is permitted to make a payment in lieu of notice to an employee and this can be given either at the time that the notice is given, or at any time during the period of notice. This is a mutual provision, so the employee may also use it to bring his or her employment to an early end. A new employer might also ‘buy out’ the employee from the previous employer.

Assuming that the termination of the employment contract is made in accordance with its terms, the employee will be entitled to receive contractual pay and benefits (with some exceptions) that he or she would have received during the full period of notice of termination, and any other payments to which he or she may be entitled under the contract.

iv Termination by the employer by summary dismissal (i.e., for cause)

This type of termination permits the employer to dismiss the employee immediately and with no further entitlement to pay or benefits. In a well-drafted contract, the grounds of termination would be clearly laid out. In the absence of express grounds of termination, the EO provides for a number of grounds for summary dismissal including any ground available at common law.

In the case of senior employees, it is not unusual for the employer and employee to enter into a settlement agreement where given the seniority of the employee, the employer may want to manage termination of the relationship in a more discreet way.

v Redundancies

An employee whose contract is terminated, whether by notice or unlawfully, and who satisfies the eligibility requirements, may be entitled to receive either a statutory severance payment or long-service payment. Entitlement to one form of payment will exclude entitlement to the other.

An employee will be entitled to a long-service payment if he or she is dismissed, has been in continuous employment with the employer for not less than five years and the employer is not liable to pay a severance payment. The amount of the payment is calculated on the same basis as the severance payment (see below).

An employee will be entitled to a severance payment if he or she has been employed under a continuous contract for not less than 24 months and is dismissed by reason of redundancy or is laid off. There is no requirement to notify any government department other than the IRD as described above. Nor is there a requirement to notify any trade union, unless the employer is bound by an agreement with the union to do so.

Except for the requirement that the employee must be given a statement of the calculation of the severance payment (if there is one), termination of an employee for redundancy would follow the same procedure for termination as in a non-redundancy situation.

The amount of a severance payment (and long service payment) payable to the employee is calculated by reference to his or her number of years of service (pro rata for any part year) and last full month’s wages. For each year of service, the employee will be entitled to receive either two-thirds of his or her last full month’s wages, or two-thirds of HK$22,500, whichever is less. This sets a ceiling of HK$15,000 on the monthly amount. This amount has not changed for many years, and consequently has fallen well behind overall wage levels when compared with those prevailing when it was set. After a statutory payment has been made to an employee, an employer is entitled to claw back the amount of that payment from the employer’s mandatory contributions to the employee’s MPF account, thereby in all likelihood setting off in full (or close to it) the statutory payment made to the employee (but see Section II.iii, supra).

vi Notifications to government departments

An employer who is about to cease to employ a person in Hong Kong must notify the IRD at least one month before the date of cessation. The IRD will accept shorter notice where reasonable, such as in a summary dismissal situation.

Additionally, if an employee is about to leave Hong Kong for more than a month, the employer must also notify the IRD at least one month before he or she actually leaves. However, this requirement does not apply to an employee whose job requires him or her to leave Hong Kong at frequent intervals.

An employer, whose employment relationship with an employee holding a work visa has been terminated, must inform the Immigration Department as soon as possible.

xiiI TRANSFER OF BUSINESS

There is no provision under Hong Kong law for the automatic transfer of contracts of employment upon transfer of the ownership of a business. Consequently, it is necessary in that context for the selling employer to terminate the contracts of employment of all transferring employees, and for the buyer to make offers of re-engagement to those employees.

The EO provides for a form of compliant transfer. This requires broadly that the offer of re-engagement must be on substantially equivalent terms to the existing terms of employment. Provided that this offer is made not less than seven days before the transfer of the business occurs, an employee who accepts the offer will be treated as having his or her continuity of employment and statutory protection rights preserved and transferred across to the new employment with the buyer.

Conversely, an employee who rejects the offer unreasonably, and who would otherwise be eligible for a severance payment or long-service payment, will lose that statutory protection.

xIV OUTLOOK

As mentioned at the beginning of this chapter, the most significant ongoing developments are the EOC’s submissions to the government recommending some key reforms to anti-discrimination legislation, the possibility of consensus being reached between business and labour representatives on standard working hours in Hong Kong, and how that might be taken forward, as well as the government plan to tackle the MPF offset mechanism for severance or long service payments. It is hoped that momentum for these developments will build, to help modernise aspects of Hong Kong’s employment laws and bring them into line with the current laws of other jurisdictions on which they were originally modelled.

Footnotes

1 Jeremy Leifer is a partner at Proskauer Rose LLP.

2 Legislative Council Brief for the Administration of Justice (Miscellaneous Provisions) Bill 2014 (22 April 2014).

3 Discrimination Law Review. Submissions to the Government – Executive Summary.

4 ‘Practical Guidelines for Employers on Eliminating Age Discrimination in Employment’ (2006 ed.).

5 CACV 12/2015.

6 HCMP 2365/2014.

7 The Privacy Commissioner has published guidance on cross-border data transfers to help data users to prepare for the implementation of this statutory provision. While no date has been set for this, the Privacy Commissioner nonetheless encourages data users to adopt the recommended practices contained in the guidance.