Employment laws are important for both employers and employees. Since human resources play such a significant role in a company, the employer needs to be able to manage them effectively to ensure success. Employment laws ensure that the employer has certain rights and obligations with regard to the employees, which are in place right from recruitment until termination of the employment. Employers also retain some post-termination rights against former employees. From an employee’s perspective, a company that fails to comply with employment laws may have to pay a fine or damages and there may also be criminal liabilities. The laws also grant various protections to employees.Hong Kong has an extensive labor legislation program that aims at improving working conditions. Among the various employment related legislations that the government has enacted, the Employment Ordinance (EO) is the most significant. It is applicable to all employees bound by a contract of employment in Hong Kong.
The Employment Ordinance regulates various matters such as payment of wages, termination of employment contracts and the functioning of employment agencies. According to the law, employees are also granted statutory holidays with pay, maternity protection, sick leave, rest days, paid yearly leave and employment protection. There are two systems of holidays in Hong Kong, statutory holidays and public holidays. All employees can take 12 statutory holidays annually. But under the employment ordinance, employees are entitled to statutory holidays only if they have been continuously employed for a duration of three months immediately before the statutory holiday. Many companies observe public holidays instead of statutory holidays, which include Sundays along with 17 other days.
The Employment Ordinance has a separate section on maternity leave that includes the period of maternity leave and payment for maternity leave.
The EO also stipulates what must go into a contract of employment. For instance, in such a contract an employer must specify the conditions of employment such as wages, wage period, length of notice required to terminate the contract and the end of year payment and payment period, in case an employee is entitled to such a payment. Employees that are made redundant are entitled to receive severance. It is incumbent upon the employer to inform the employee if there are any changes in the conditions of service.
Under the employment ordinance, the employer or employee can terminate a contract of employment without notice during the first month of the probation period. For the rest of that period, a minimum notice of seven days is necessary before either party can terminate the contract. If proper notice of termination has been given then either party can also terminate the contract prior to the end of the notice period, as long as they make a payment that is proportionate to the salary they would have earned if they had worked their notice period.
Minimum Wage Ordinance
Hong Kong’s labor law also includes the Minimum Wage Ordinance, which greatly affects the employment relationship. It is applicable to all employees, whether part-time or full-time, and all employers, except for certain categories. The ordinance ensures that all relevant employees get the Statutory Minimum Wage for all hours worked.
Many established companies worldwide employ people from foreign countries and those in Hong Kong are no exception. The benefits of working in Hong Kong as an expat include excellent salaries, low taxation and the lucrative local labor market. All the conditions specified in the labor laws are also applicable to expats, except the Mandatory Provident Schemes Ordinance, since this is determined by the duration of employment in Hong Kong and whether the expat is a member of a retirement scheme in their home country. Before expats can work in Hong Kong, they must apply for the appropriate visa at the Hong Kong Immigration Department. An employment visa is issued only if the applicant is able to show that he or she has a specialized skill or sufficient experience that is not readily available from a Hong Kong native. Other documents to be submitted to the Immigration Department include a copy of the employment contract, proof of the applicant’s qualification and also evidence that the company in Hong Kong attempted to recruit candidates via advertisements or through employment agents.