Employment Contract

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What is it?

A contract by which a company hires an employee in Hong Kong. This is a long form contract with detailed provisions on various aspects of employment.

Key clauses

When drafting an Employment Contract, it is important for you to focus on the following:

• Details of the job (including position, main duties, and whether full time or part time);
• Duration of the employment and duration of probation period (if any). In the Dragon Law app, you have the option to specify a fixed term if required;
• Details of the remuneration and how often the employee will be paid. In addition to basic salary, in the Dragon Law app you can include commission, end-of-year payment, gratuity, and medical insurance;
• Entitlement to annual leave and holidays;
• Details of the work arrangements (including place of work, working hours, and days off);
• Notice required for termination. In the Dragon Law app, you may specific a notice period during the probation period (if any) and a different notice period for notice given after the probation period, either by the employer or by the employee; and
• Whether post-termination restrictions apply and, if so, the duration and geographical limit for such restrictions.

What is required by law?

In Hong Kong, employees are protected by various statutory provisions and employers must be aware of these requirements.

1. Basic employee rights

As a minimum, an employee (full-time or part-time, temporary or permanent) is entitled to:
• receive wages for work;
• not have his wages deducted except in specific circumstances provided by law; and
• not work on statutory holidays.

If the employee is employed under a “continuous contract” (see below), he is also entitled to the following benefits:
• Rest days;
• Paid annual leave (if employed for 12 months or more);
• Statutory holidays and holiday pay (if employed for 3 months or more);
• Sickness allowance;
• Maternity or paternity leave (and maternity or paternity leave pay if employed for 40 weeks or more immediately before the start of the leave).

A "continuous contract" means a contract for employment by the same employer for four weeks or more, with at least 18 hours worked each week.

2. Minimum wage

As an employer you must also be aware of the minimum wage requirements under the Minimum Wage Ordinance.

You must ensure that the wage is not less than the statutory minimum wage, which is currently HKD 34.50 per hour worked (as of 1 May 2017). The statutory minimum wage applies to all employees, whether they are monthly rated, weekly rated, daily rated, hourly rated, piece-rated, permanent, casual, full-time, part-time, or other employees, regardless of the length of employment. Only the following categories of persons are not covered by statutory minimum wage:

• student interns (see below for details);
• work experience students, provided that the employment is up to 59 days only (see below for details);
• live-in domestic workers; and
• certain other categories (contact the Dragon Law Client Services Team if necessary).

Under the Employment Ordinance, wages include salary, commission, good attendance bonus, and travelling allowance. Check the Labour Department website for more details or, if in doubt, contact the Dragon Law Client Services Team.

3. Mandatory Provident Fund (MPF)

If the employee is at least 18 but under 65 years old and the employment is for a continuous period of 60 days or more (either full-time or part-time), MPF requirements will apply.

For employment for a fixed period of less than 60 days, if the employment is within the construction or catering industry, MPF requirements will also apply.

Note this “continuous period” is different from “continuous employment” under the Employment Ordinance. There is no minimum number of hours of work for a day to be counted towards the “continuous period”.

How to hire staff

Step 1: Create and execute an Employment Contract on the Dragon Law app.

Step 2: If you are required to pay MPF contributions for the employee, enrol in an MPF scheme within the first 60 days of employment (or if you are in the construction or catering industry, enrol your employees within the first 10 days of employment).

Step 3: File Form IR56E with the Inland Revenue Department within the first 3 months of employment.

Step 4: Observe your on-going obligations as an employer, e.g. keeping payroll records or reporting remuneration paid to an employee, by completing and filing the relevant forms.

Employment Contract Document