A Concise Briefing on Employment OrdinancePrepared by: Jackie Cheng

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Employment Ordinance The Employment Ordinance, Cap. 57 57

Why should we know it?

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Employment Ordinance

418 LSP EAO Summary Dismissal

SH

wage

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Employment Ordinance (1)Continuous Contract of Employment Information on Conditions of Service Wages Rest Days, Holidays and Leave Sickness Allowance Maternity Protection Termination of Contract End of Year Payment

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Employment Ordinance (2)Severance Payment and Long Service Payment Calculation of Relevant Statutory Entitlements on the Basis of 12-Month Average Wages

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Continuous Contract of Employment An employee who has been employed continuously by the same employer for four weeks or more, with at least 18 hours worked in each week 4 18

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Continuous Contract of Employment (2) Employees who are 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.

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Information on Conditions of Service An employer must inform each employee clearly the conditions of employment under which he is to be employed with regard to: 1. wages (including rate of wages, overtime rate and any allowance, whether calculated by the piece, job, hour, day, week or otherwise); 2. wage period; 3. length of notice required to terminate the contract; 4. if the employee is entitled to an end of year payment, the end of year payment or proportion and the payment period.8

Information on Conditions of Service 1. 2. 3. 4. 9

Wages "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.

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Wages

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Rest Days, Holidays and Leaves (1) An employee employed under a continuous contract is entitled to not less than one rest day in every period of seven days. 1 7

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Rest Days, Holidays and Leaves (2) An employee, irrespective of his length of service, is entitled to the following statutory holidays : 1. the first day of January 2. Lunar New Year's Day 3. the second day of Lunar New Year 4. the third day of Lunar New Year 5. Ching Ming Festival 6. Labour Day, being the first day of May 7. Tuen Ng Festival 8. Hong Kong Special Administrative Region Establishment Day, being the first day of July 9. the day following the Chinese Mid-Autumn Festival 10. Chung Yeung Festival 11. National Day, being the first day of October 12. Chinese Winter Solstice Festival or Christmas Day (at the option of the employer)13

Rest Days, Holidays and Leaves (3) (1) 11 (2) (3) (4) (5) (6) 51) (7) (8) 71 (9) (10) (11) 101 (12)

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Rest Days, Holidays and Leaves (4) Restriction on Pay in lieu of Holiday An employer must not make any form of payment to an employee in lieu of granting him a holiday.

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Rest Days, Holidays and Leaves (5) PAID ANNUAL LEAVEAn employee is entitled to annual leave with pay after having been employed under a continuous contract for every 12 months. An employee's entitlement to paid annual leave increases progressively from seven days to a maximum of 14 days according to his length of service.

12 7 14 16

Rest Days, Holidays and Leaves (6) 1 2 3 4 5 6 7 8 9 7 7 8 9 10 11 12 13 1417

Sickness Allowance (1) 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 up to a maximum of 120 days.

12 1 2 120 14

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Sickness Allowance (2) An employee shall be entitled to sickness allowance if: 1. the sick leave taken is not less than four consecutive days (unless for any day off taken by a female employee for her pregnancy check-ups, post confinement medical treatment or miscarriage); 2. the sick leave is supported by an appropriate medical certificate; and 3. the employee has accumulated sufficient number of paid sickness days

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Sickness Allowance (3) 1. 4 2. 3.

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Maternity Leave (1) A female employee employed under a continuous contract immediately before the commencement of her maternity leave and having given notice of pregnancy to the employer is entitled to the following periods of leave: a continuous period of 10 weeks' maternity leave; if confinement occurs later than the expected date of confinement, a further period equal to the number of days from the day after the expected date of confinement to the actual date of confinement; the employee may enjoy an additional period of leave for not more than four weeks on the grounds of illness or disability due to the pregnancy or confinement.21

Maternity Leave (2) 10 4

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Maternity Protection (1) Employment Protection An employer is prohibited from dismissing a pregnant employee from the date on which she is confirmed pregnant by a medical certificate to the date on which she is due to return to work upon the expiry of her maternity leave if: 1. the employee has been employed under a continuous contract, and 2. she has served a notice of pregnancy to the employer.

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Maternity Protection (2) 1. 2.

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Payment for Maternity Leave (1) An employee is eligible for maternity leave pay if: 1. she has been employed under a continuous contract for not less than 40 weeks immediately before the commencement of scheduled maternity leave; 2. she has given notice of pregnancy and her intention to take maternity leave to her employer after the pregnancy has been confirmed. For example, the presentation of a medical certificate confirming her pregnancy to the employer; and 3. she has produced a medical certificate specifying the expected date of confinement if so required by her employer.25

Payment for Maternity Leave (2) 1. 40 2. 3.

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End of Year Payment End of year payment means any annual payment (including double pay, 13th month payment, end of year bonus) of a contractual nature. It does not include any payment which is of a gratuitous nature or which is payable at the discretion of the employer.

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Payment of Annual Leave Pay on Termination of Employment Contract (1)An employee with three but less than 12 months' employment in a leave year and his employment contract is terminated other than for the reason of summary dismissal due to his serious misconduct, he would be entitled to pro rata annual leave pay. 3 12

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Payment of Annual Leave Pay on Termination of Employment Contract (2)

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Termination of Employment Contract Without Notice or Wages in lieu of Notice (1) An employer may summarily dismiss an employee without notice or payment in lieu of notice if the employee, in relation to his employment: 1. willfully disobeys a lawful and reasonable order; 2. misconducts himself; 3. is guilty of fraud or dishonesty; or 4. is habitually neglectful in his duties.

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Termination of Employment Contract Without Notice or Wages in lieu of Notice (2) 1. 2. 3. 4.

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Termination Payment (1) outstanding wages; wages in lieu of notice, if any; payment in lieu of any untaken annual leave, and any pro rata annual leave pay for the current leave year; any outstanding sum of end of year payment, and pro rata end of year payment for the current payment period; where appropriate, long service payment or severance payment; other payments under the employment contract, such as, gratuity, provident fund, etc.32

Termination Payment (2)

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Time for Making Termination Payments (1) An employer shall pay all the termination payments, except for severance payment, to the employee as soon as practicable and in any case not later than seven days after the date of termination or expiry of contract. For severance payment, an employer shall make payment not later than two months from the receipt of a notice from an employee claiming for severance payment.

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Time for Making Termination Payments (2) 7 2

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Severance Payment/ Long Service Payment /

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Amount of Severance Payment/ Long Service Payment (1) / The following formula applies to the calculation of both severance payment and long service payment :

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Amount of Severance Payment/ Long Service Payment (2) /

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Employment (Amendment) Ordinance 2007 ) 2007 (All components of wages as defined under the Employment Ordinance (including commission and allowance, etc) are included in the calculation of relevant statutory entitlements. Upon commencement of the Amendment Ordinance, regardless of whether an employee is monthly, daily or piece rated, his relevant statutory entitlements shall be calculated on the basis of his 12-month average wages; and in computing his average wages, any periods and wages that fall under the disregarding provisions shall be excluded.39

Employment (Amendment) Ordinance 2007 ) 2007 ( () 12

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Employment (Amendment) Ordinance 2007 ) 2007 ( Relevant Statutory Entitlements: 1. Holiday pay 2. Annual leave pay 3. Sickness allowance 4. Maternity leave pay 5. End of year payment 6. Wages in lieu of notice41

Employment (Amendment) Ordinance 2007 ) 2007 ( 1. 2. 3. 4. 5. 6. 42

Employment (Amendment) Ordinance 2007 ) 2007 ( Calculating relevant statutory entitlements on the basis of the 12-month average wagesThe relevant statutory entitlements shall be calculated on the basis of the average daily (or monthly) wages earned by an employee in the 12-month period preceding the specified dates as stipulated by the Amendment Ordinance. If an employee is employed for less than 12 months, the calculation shall be based on the shorter period.

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Employment (Amendment) Ordinance 2007 ) 2007 ( 12 () 12 12

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Employment (Amendment) Ordinance 2007 ) 2007 ( :

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Employment (Amendment) Ordinance 2007 ) 2007 ( 1 : - 20071018 12 2007930 2006101

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Employment (Amendment) Ordinance 2007 ) 2007 ( 7 2 : 9,00012108,000 1271 12 7 12 047

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Employment (Amendment) Ordinance 2007 ) 2007 ( 7 (12) 12 108,000 0 () = 296 365 0 ()

7296 x 7 = 2,072

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Employment (Amendment) Ordinance 2007 ) 2007 ( 4 3 : 10,00012120,000 1271 12 7 12 049

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Employment (Amendment) Ordinance 2007 ) 2007 ( 12 12 120,000 0 () = 329 365 0 ()

4329 x 4/5 x 4 = 1,053

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Mandatory Provident Fund (1) The MPF is an employment-based retirement protection system. Except for certain exempt persons, if you are an employee or are selfemployed, are aged between 18 and 65, and are normally residing and working in Hong Kong, you are required to join an MPF scheme. Under the MPF System, an employee may be a regular employee or a casual employee. You are a regular employee if you are employed for a continuous period of not less than 60 days under an employment contract, either full-time or parttime.51

Mandatory Provident Fund (2) 18 65 60

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Mandatory Provident Fund (3) Minimum and maximum levels of relevant income Effective from 1 Feb 2003, the minimum and maximum levels of relevant income are: HKD 5,000 and HKD 20,000 per month or HKD160 and HKD650 per day.

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Mandatory Provident Fund (4) Exempt persons include: domestic employees self-employed licensed hawkers people covered by statutory pension or provident fund schemes, such as civil servants and subsidised or grant school teachers members of occupational retirement schemes which are granted exemption certificates people from overseas who enter the Hong Kong SAR for employment for less than 13 months, or who are covered by overseas retirement schemes employees of the European Union Office of the European Commission in the Hong Kong SAR54

Mandatory Provident Fund (5) 13 55

Mandatory Provident Fund (6) Offsetting of Severance and Long Service Payments If you are an employer, you can offset long service payment and severance payment as required under the Employment Ordinance by the accrued benefits derived from contributions you have made to the employee in the MPF scheme. You can apply to the trustee for payment of the relevant amount to you for this purpose, but only after you have paid the employee his or her due long service payment and severance payment.

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Mandatory Provident Fund (7)

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Mandatory Provident Fund (8) Relevant income Relevant income includes wages, salaries, leave pay, fee, commission, bonus, gratuity, perquisite or allowance, and housing allowance or housing benefits. It also does not include severance payments and long service payments.

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Mandatory Provident Fund (9) Contribution Rate

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Mandatory Provident Fund (10) Contribution Holiday Employers' contributions shall count from the first day of employment while the employee is not required to make contributions for the first 30 days of employment and the first incomplete payroll cycle immediately following the 30-day contribution holiday . 30 30 60

ReferencesA Concise Guide to the Employment Ordinance Labour Legislation FAQ Features of the MPF System

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