Employment Law in Hong Kong

Continuous Employment

Continuous employment is established when an employee works for at least 18 hours per week for a continuous period of four weeks or more. Once an employee reaches continuous employment status, they become entitled to statutory protections and benefits under Cap. 57, including severance payment, long service leave, sick leave, and other statutory entitlements. The “418 rule” (4 weeks, 18 hours per week) is the threshold for unlocking these protections.

Non-Continuous Employment and Probation

Employees below the 418 threshold do not qualify for statutory benefits. Probationary periods, while commonly used by employers, do not affect the accrual of continuous employment if the 418 threshold is met. Many employers mistakenly believe that probation delays statutory entitlements. An employee working 20 hours per week from day one is continuously employed after four weeks, regardless of probation status.

Statutory Entitlements Under the Employment Ordinance

Cap. 57 provides comprehensive protections for continuously employed staff. These entitlements cannot be waived or contracted out of, and employers who breach them face penalties, claims, and reputational damage.

Annual Leave

Employees are entitled to paid annual leave calculated at 1 day per month of continuous employment (minimum 8 days per year, maximum 30 days per year). Unused leave accrues and must be paid out on termination. Employers cannot unilaterally reset leave each year; unused entitlements carry forward and must be discharged.

Sick Leave

Employees are entitled to paid sick leave at 8 days per year for the first three years of continuous employment, and 10 days per year thereafter (up to a maximum of 12 days). Medical certification is required, and employers cannot refuse sick leave provided medical evidence is produced.

Maternity and Paternity Leave

Female employees are entitled to four weeks paid maternity leave (two weeks before and two weeks after the expected date of confinement). Male employees are entitled to five days paid paternity leave within a prescribed period following the birth of a child. These entitlements are statutory and cannot be reduced by contract.

Rest Days

Employees are entitled to at least one rest day per week, to be taken within a seven-day period. This day must ordinarily be a Sunday, or an alternative day by agreement. Employers cannot require rest days to be worked without compensation or alternative rest.

Termination of Employment and Notice Requirements

Termination must comply with Cap. 57 and the employee contract. Failure to provide proper notice or severance can result in claims and substantial awards.

Notice Periods

The default notice period under Cap. 57 is one month (either party), unless the contract specifies otherwise. Both employer and employee must provide written notice; verbal notice is insufficient. Failure to provide proper notice entitles the other party to claim compensation equal to the wages for the notice period.

Wrongful Dismissal

Dismissal without proper notice or cause is wrongful. Employees may claim damages (the value of the notice period) and pursue claims in the Labour Tribunal (for claims up to HK$1.8M) or the District Court. Gross misconduct (theft, violence, serious insubordination) can justify summary dismissal without notice, but employers must prove it.

Severance Payment and Long Service Payment

Both are termination entitlements under Cap. 57, but they operate under different rules and cannot both be claimed for the same period of service.

Severance Payment

Payable when an employee is dismissed due to redundancy, closure, or retrenchment. The quantum is: two-thirds of the employees average monthly wages multiplied by the number of years of continuous employment (capped at 30 months). To qualify, the employee must have completed at least two years of continuous employment.

Long Service Payment

Payable when an employee is dismissed after 10 years continuous employment on grounds of age, ill health, or redundancy. The amount is: one months wages per year of service (capped at 15 months). An employee with 10+ years service is entitled to the greater of severance or long service payment.

Mandatory Provident Fund (MPF) and Offsetting

All employers must contribute to the Mandatory Provident Fund Schemes Ordinance (Cap. 485) for employees aged 18-64 earning over HK$30,000 per month. The employer contributes 5% of wages (subject to statutory caps); employees contribute 5%. Recent legislative changes have reformed MPF offsetting rules.

MPF Offsetting Rules (2025 Changes)

Previously, employers could offset accrued MPF benefits against severance and long service payments. From May 2025, offsetting has been significantly restricted. Employees are now entitled to a higher compensation floor, and offsetting is phased out. Employers must understand these new rules to ensure compliance and accurate severance calculations.

Anti-Discrimination and Harassment Protection

Hong Kong has four principal anti-discrimination ordinances. Discrimination or harassment on any of these grounds is prohibited and can expose employers to claims and substantial damages.

Sex Discrimination Ordinance (Cap. 480): Protects against discrimination based on sex (including pregnancy-related discrimination). Includes sexual harassment.

Disability Discrimination Ordinance (Cap. 487): Protects people with disabilities. Employers must make reasonable accommodations.

Family Status Discrimination Ordinance (Cap. 527): Protects people based on family status (whether they are caregivers for children or dependants).

Race Discrimination Ordinance (Cap. 602): Protects against discrimination based on race, colour, descent, or national or ethnic origin.

Workplace Safety and Injury Compensation

Employers have a duty of care under the Occupational Safety and Health Ordinance (Cap. 509) to provide a safe workplace. Employees injured at work may claim under the Employees Compensation Ordinance (Cap. 282), which provides statutory benefits without the need to prove fault.

Restrictive Covenants and Non-Compete Clauses

Employers frequently impose restrictive covenants (non-compete, non-solicitation, confidentiality) on employees. In Hong Kong, these are enforceable if they are reasonable in scope, duration, and geographic area, and if they protect a legitimate business interest. Courts are vigilant to police overreach. A blanket five-year global non-compete is unlikely to be enforced; a six-month non-solicitation of clients in Hong Kong may be reasonable depending on the industry.

Employment Tribunal and Labour Tribunal Claims

Most employment disputes are resolved through the Labour Tribunal (claims up to HK$1.8M, informal procedures, no lawyers required) or the Employment Tribunal (claims between HK$1.8M and HK$7.2M). TITUS can represent you in both forums, or advise on settlement and dispute resolution.

Domestic Helper Employment Law

Domestic helpers are subject to special regimes (Cap. 57 applies with modifications, plus the Immigration Ordinance (Cap. 115) visa requirements). Employment contracts for domestic helpers are subject to a mandatory standard form. TITUS can advise employers on compliance and helpers on rights and remedies.