Insights

Practice Area Articles

Hong Kong — Special Administrative Region of the People’s Republic of China

January 16, 2023

Michael Downey

KEY DEVELOPMENTS FOR 2023

Anti-COVID restriction requirement protection

Commencing 17 June 2022, current statutory sickness leave and related protections were amended to take account of the extraordinary COVID measures that have been introduced in Hong Kong over the preceding two years.

As a result of the amendment, the definition of a statutory sickness has been amended to include a day on which an employee is absent from work by reason of that employee’s compliance with a specific anti-COVID restriction requirement (e.g. an isolation order, a quarantine order or a “restriction-testing declaration”) that has been imposed on the employee concerned by virtue of the Prevention and Control of Disease Ordinance (Cap. 599).

To be protected by the amendment, employees may be required to provide their employer with a hard copy or an electronic form of a document issued by a governmental authority, detailing either the name of the employee or information that could identify the employee; the type of movement restriction imposed; and the commencement and the expiry dates of such restriction.

Eligible employees who are subject to a restriction requirement and who have provided sufficient proof to their employer will be entitled to awarded statutory sickness pay. In addition, employees who are absent from work and whose employment is terminated by reason of having complied with a restriction requirement will be regarded to have been unreasonably dismissed and entitled to statutory remedies in accordance with the Employment Ordinance (Cap. 57).

Paid statutory holidays to be increased from 12 to 17 holidays

For many decades it has been customary for both office and Government employees to be awarded 17 days’ paid holidays, whereas the statutory minimum holidays were capped at 12 days’ paid holidays. As a consequence, most other employees who received only the statutory minimum awards were awarded substantially less paid holidays.

Commencing in 2022, the statutory minimum holidays for all full-time employees will be increased by an additional paid holiday every two years in accordance with the following table:

Year	Holiday	Statutory minimum paid holidays
2002	Birthday of the Buddha	13
2024	The first weekday after Christmas Day	14
2026	Easter Monday	15
2028	Good Friday	16
2030	The day following Good Friday	17

Abolition of an employer’s right to deduct statutory severance payment and long service payment from retirement scheme contributions

After many years of deliberations and delay, the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Ordinance was passed in 2022. Under the provisions of the Ordinance, an employer’s current right to deduct statutory severance payments or long service payments from the employer’s retirement scheme contributions will be abolished commencing at a date to be announced expected to be sometime in 2025 (the “transition date”).

After the transition date, employers will no longer be permitted use the accrued benefits derived from employers’ mandatory pension contributions to offset employee’s statutory severance payments and long service payments. By way of exception, accrued benefits derived from employers’ voluntary pension contributions and gratuities based on length of service may continue to be used to offset statutory severance payments and long service payments.

In order to reduce the possibility of employers engaging in large-scale employee dismissals before the transition date, certain grandfathering arrangements have been implemented that apply to the pre-transition date portion of the statutory severance payments and long service payments that apply to employees who commenced their employment prior to the transition date.

KEY DEVELOPMENTS FOR 2022

Exploration of mandatory vaccination requirements in the private sector

Following the Hong Kong Government’s lead requiring civil servants and other publicly funded employees to be vaccinated, private sector employers are increasingly, if not cautiously, exploring options for requiring employees to be vaccinated as a condition of continued employment. This is in part due to the absence of any statutory authorisation permitting employers to impose mandatory vaccination and testing requirements in their respective workplaces.

Increase of statutory holidays

For many years there has been a wide disparity between the 12 days’ paid statutory holidays awarded to blue collar workers and the 17 days’ paid public holidays awarded to white collar employees each year. Commencing 2022, paid statutory holidays will be progressively increased at two year intervals to 17 days.

Protection afforded to breastfeeding employees

During 2021, legislation came into effect affording legal protection against harassment for breastfeeding women. Employers should ensure that they take appropriate action to address any potential harassment complaints to help mitigate legal risk.

KEY DEVELOPMENTS FOR 2021

Policy initiatives relating to employees

During 2020 the Hong Kong Government announced a package of livelihood initiatives to substantially enhance the support for grassroots employees and former employees. The initiatives were expected to be incorporated into legislation and rolled out during the course of 2021 and beyond.

These initiatives are focused on:

progressively increasing the number of paid statutory holidays awarded to employees over the coming 10 years from 12 holidays to 17 holidays;
providing a time-limited cash allowance for the unemployed and underemployed to ameliorate the deterioration of economic and employment conditions as a result of the COVID-19 pandemic;
the Government undertaking to pay mandatory retirement scheme contributions at the rate of five percent of applicable income on behalf of low-income employees and self-employed individuals who are currently not required to make such contributions;
expanding the exiting transport fare concession scheme to enable an expanded category of individuals (including employees and former employees) aged 60 or above to travel on most public transport throughout Hong Kong for an unlimited fix fare of HKD2 (or USD0.25);
reforming the existing Old Age Living Allowance Scheme so as to enable an expanded number of means-tested individuals (including former employees) aged 65 or above to receive an enhanced monthly old age allowance.

Maternity benefits extended from 10 weeks to 14 weeks

As of 11 December 2020, the period of paid maternity leave for female employees has been extended from 10 weeks to 14 weeks.

As part of the maternity leave revisions:

the definition of "miscarriage" has been amended to enable certain categories of females who miscarry to be awarded paid maternity leave;
employers will be entitled to receive reimbursement from the Hong Kong Government for their respective liability to pay the extended maternity leave pay (up to a maximum of HKD80,000 (or USD1,000)) per female employee; and
employers are now required to accept a certificate of attendance issued by a medical professional as documentary proof for entitling an eligible female employee to be paid a sickness allowance for any day on which the female employee concerned has attended a medical examination in relation to her pregnancy.

Expansion of discrimination protection in the workplace

During the course of 2020, amendments were made to the various primary discrimination laws in Hong Kong. As a result of these amendments:

commencing 2021, a female (including a female employee) is afforded significant (including workplace) protection from discrimination on the basis of them breastfeeding;
the primary race discrimination law has been amended to apply to racial discrimination as well as to racial harassment by imputation;
three of the four primary discrimination laws have been amended to afford expanded protection against discrimination on the part of a "workplace participant", which is defined to include an employee, an employer, a contract worker, a commission agent, the principal of a contract worker, contract worker or commission agent, a partner in a firm, an intern, and a volunteer.

KEY DEVELOPMENTS FOR 2020

COVID-19 employee measures

From late January 2020, the Hong Kong Government has permitted civil servants to work from home where feasible. The Government has also encouraged employers in the private sector to allow employees to work from home where circumstances permit. In a number of the industrial sectors most affected by the coronavirus outbreak, employees have been asked to voluntarily agree to take accrued annual leave as well as unpaid leave to help protect jobs.

Statutory Maternity Leave to be increased from 10 Weeks to 14 Weeks

An amendment to the Employment Ordinance is expected to be passed in 2020. The amendment proposes to extend maternity leave from the current 10 weeks to 14 weeks.

The payment for the additional four weeks of maternity leave is to be paid at the rate of four-fifths of a female employee's average daily wages. Employers will receive a subsidy from the Government for the additional four weeks of maternity leave pay, up to a maximum of HKD 36,822 (approximately $4,750 USD) for each employee.

Abolishment of the MPF Offset Mechanism

A proposal first mooted in 2018 to permit employees to be paid a statutory severance or long-service payment, as well as a mandatory retirement fund payment (Mandatory Provident Fund (MPF)), has been inching forward to being enacted into law.

Currently, employers are permitted to reduce the amount of mandatory MPF retirement fund payment an employee receives by reference to the amount of statutory severance or long-service payment that the employer has paid an employee.

The Government has announced a target date of 2022 for enacting the necessary legislation and for the law to come fully into effect by 2024.

KEY DEVELOPMENTS FOR 2019

Abolition of off-setting in relation to the Mandatory Provident Fund

In an attempt to improve retirement protection for employees, the Government is proposing to abolish the employer’s right to off-set an employee’s entitlement to a severance or long service payment on termination of employment against the contributions that the employer has made to the Mandatory Provident Fund (“MPF”) by 2024. The Government has proposed that it intends to subsidize small to medium size companies to minimise the financial impact.

Increased maternity and paternity pay

The Employment (Amendment) Bill 2018 came into force on 18 January 2019. This increases statutory paternity leave from three to five days. To comply with International Labour Standards, the government is increasing statutory maternity leave from 10 weeks to 14 weeks. The increased statutory maternity leave is already in effect for civil servants but it will not apply to other sectors until late 2019.

Reinstatement or re-engagement of an employee who has been unreasonably and unlawfully dismissed

From 19 October 2018, if an employee has been unreasonably and unlawfully dismissed he/she may make a claim for reinstatement or re-engagement to the Labour Tribunal.

An unreasonable and unlawful dismissal may arise where an employee is dismissed without a valid reason (i.e. for a reason other than the conduct of the employee; the employee’s capability/qualification for performing the job; the employee’s redundancy or other genuine operational requirements of the business; the employer’s compliance with legal requirements; or for any other reason of substance). A dismissal will be regarded as unlawful if an employee is dismissed in circumstances which contravene statutory provisions relating to: pregnancy and maternity leave; paid sick leave; after a work-related injury and before determination/settlement and/or payment of compensation under the Employees' Compensation Ordinance; or by reason of the employee exercising trade union rights or giving evidence for the enforcement of relevant labour legislation.

Where an employee has been found to have been unreasonable and unlawfully dismissed, the Labour Tribunal may make an order for reinstatement or re-engagement without the need to secure the employer’s agreement.

If the employer fails or refuses to reinstate or re-engage the employee as required by the order, the employer will be liable to pay a further sum, amounting to three times the employee’s average monthly wages (subject to a cap of HKD72,500). It is an offence if the employer fails to pay this sum to the employee without a reasonable excuse.

KEY DEVELOPMENTS FOR 2018

Statutory Rights of Employees to be Reinstated or Re-Engaged

A bill, which is currently before Hong Kong’s Legislative Council, proposes to empower tribunals and courts to order the mandatory reinstatement or re-engagement of former employees thereby excluding any need for an employer and a former employee to mutually agree to such an order.

It is further proposed that an employer will be entitled to refuse to comply with any such court order by paying the former employee a sum equivalent to the lesser of three months of their average wages or USD 9,300.

Abolition of Pension Scheme Contribution Off-Setting Against Statutory Severance Payment and Statutory Long Service Payment

The Hong Kong administration has undertaken to introduce legislative measures in 2018 to abolish the current right of employers to off-set their pension scheme contributions against employees’ statutory severance payments and statutory long service payments.

Regulation of Working Hours and Overtime

There is no legal requirement requiring employers to pay employees overtime. In practice, employment contracts typically provide details of working hours, whether overtime is expected, and if so whether it is to be paid or unpaid.

The Hong Kong administration has announced that in 2018 it proposes to regulate the working hours of low-income employees who earn USD1,400 or less a month. Employment contracts will need to expressly provide the maximum working hours to be worked; and where employees work more than their maximum working hours an employer will be required to pay employees overtime pay at rates not less than their working hour pay.