Minimum Employment Benefits and Protection

Introduction

Employers, under the law of Hong Kong, are required to provide certain minimum protections and benefits to their employees. This article provides an overview on some basic legal requirements that entrepreneurs seeking to employ should observe, including minimum wage, mandatory provident fund and holidays.

Statutory Minimum Wage

According to the Minimum Wage Ordinance (Cap 608), the applicable statutory minimum wage effective from 1 May 2015, is HK$32.5 per hour. [1]  An employer should at least pay his/ her employee the prescribed minimum hourly wage multiplying the number of hours (including any part of the hour) worked by the employee.[2]

Coverage of minimum wage

Statutory minimum wage applies to virtually all employees, whether they are monthly-rated, daily-rated, hourly-rated, permanent, casual, full-time, part-time or other employees. There are however a few exceptions specified in the Ordinance, including

  • Those who are not covered by the Employment Ordinance (Cap 57), including  a family member who dwells in the same dwelling of the business proprietor; [3]
  • Those who are engaged under a contract of apprenticeship;
  • Foreign domestic workers;
  • Student interns; and
  • Work experience students.[4]

Importantly, it should be noted that these exceptions are given their meanings and definitions by law. This means that, for example, simply naming an employee a “summer/ winter intern” does not necessarily fall within the exception to the statutory minimum wage requirement. This article focuses on the legal definitions and requirements of “student interns” and “work experience students” as more commonly encountered during the recruitment process.

“Student interns” is narrowly defined under the Ordinance. To benefit from the exception, the work of that “student intern” must be arranged or endorsed by a specified education institution[5] providing either an accredited programme[6] or a non-local education programme. Further, the work must be of a compulsory or elective component of the requirements for the award of the academic qualifications of such programme to the employee. [7] After hiring a “student intern”, the employer is legally required to keep a document issued by the education institution confirming the “student intern” status of that employee.[8]

On the other hand, a “work experience student” means a student who is engaged under an employment contract at the beginning of which he/ she is under 26 years old, either having enrolled in an accredited programme[9], or is residing in Hong Kong having enrolled in a non-local education programme. Having employed a “work experience student”, there is an obligation to keep a statutory declaration made by the employee for a period of exempt student employment and a document issued by the institution confirming the student status of that employee.[10]

The documents mentioned above for hiring “student interns” and “work experience students” must be kept at the place of business for at least 6 months after the employee ceases to be employed.[11] For the specimen documents prepared by the Labour Department, please see: http://www.labour.gov.hk/eng/news/pdf/Notes_for_Student_Employees_and_Employers.pdf

Hours worked

Under the Ordinance, anytime during which an employee is in attendance at the place of employment according to the employment contract or at the employer’ direction will be included as hours worked by the employee, irrespective of whether the employee is provided with training at that time.[12] Time spent for travelling between the place of business and the place of employment will not be counted as hours worked unless the place of employment is outside of Hong Kong and is not the usual place of employment.[13]

While hours worked by an employee are guaranteed the benefits of statutory minimum wage, paying an employee for hours outside of work shall be irrelevant for the purpose of fulfilling the statutory minimum wage requirement.[14] This may include arrangements such as meal break pay, rest day pay, holiday pay, annual leave pay, maternity leave pay, paternity leave pay and sickness allowance. An employer is free to pay employees for their meal breaks and rest days while negotiating the terms of the employment contract, but there is no statutory duty to do so.

You may access the examples prepared by the Labour Department demonstrating the statutory minimum wage in different combination of employment arrangements via:  http://www.labour.gov.hk/eng/public/smw/Concise_Guide_to_SMW_2015.pdf

Mandatory Provident Fund (MPF) Scheme

As well as the statutory minimum wage requirement, an employer is under a statutory obligation to contribute to the Mandatory Provident Fund (“MPF”) schemes of his/ her employees pursuant to the Mandatory Provident Fund Schemes Ordinance (Cap 485).

Coverage

Subject to exemptions, an employer must enrol all his/ her employees of or over 18 and below 65 years of age who are employed by an employer for not less than 60 days[15] into an MPF scheme.[16] The employer himself must also be enrolled into an MPF scheme if he is a self-employed person.[17]

An employer is not required to enrol an employee into, or make contribution to an MPF Scheme if that employee is an exempt person under the Ordinance. The excepted persons include:

  • Domestic employees;
  • Self-employed licensed hawkers;
  • People covered by statutory pension and provident fund schemes (such as civil servants and subsidized or grant school teachers);
  • People from overseas who enter Hong Kong for employment for 13 months or less;
  • People from overseas who enter Hong Kong for employment and are covered by overseas retirement schemes;
  • Employees of the European Union Office of the European Commission in Hong Kong; and
  • Members of occupational retirement schemes which are “MPF exempted ORSO schemes”.[18]

Contribution

Under an MPF scheme, both the employers and employees are obliged to contribute 5% of their monthly income (capped at HK$1,500) respectively into the scheme. However, if the monthly income of an employee is less than HK$7,100, the employee does not need to contribute to the scheme but the employer still has to.[19] Employers will be fined or imprisoned for non-compliance with the scheme. Student interns whose employment duration is not less than 60 days are also covered by the scheme. This is illustrated by the table below:

Monthly Relevant IncomeAmount of Mandatory Contributions Payable by EmployerAmount of Mandatory Contributions Payable by Employee
Less than $7,100Relevant income x 5%No contributions required
$7,100 to $30,000Relevant income x 5%Relevant income x 5%
More than $30,000$1,500$1,500

Withdrawal of benefit

Employees can only withdraw from their MPF, in a lump sum or by instalments, once they reach the retirement age of 65. There are however special circumstances where early withdrawal is permitted:

  • Early retirement at age of 60 with statutory declaration of permanent cessation of employment/ self-employment;
  • Permanent departure from Hong Kong;
  • Death; and
  • Total incapacity related to work certified by a registered medical practitioner.

Alternatively, a small balance account with the total amount not exceeding HK$5,000 may be withdrawn before the retirement age of 65, provided that the employee does not intend to become employed/self-employed within foreseeable future, and there are at least 12 months after contribution day of the latest contribution period. The employee also should not have accrued benefits kept in other MPF schemes.

Holiday entitlement

The Employment Ordinance prescribes the holidays, including rest days, statutory holidays and annual leave as the minimum benefits entitled by employees. Whilst negotiating an employment contract, any express condition in the contract contrary to the holiday entitled by the employee will be void.[20]

Rest days

According to the Ordinance, every employee shall be granted not less than 1 rest day in every period of 7 days.[21] The rest day must be a continuous period of not less than 24 hours where an employee has the right to not work for the employer. The employer may require an employee to work on the rest day if it is necessary to do so by reason of machinery breakdown or unforeseen emergency.[22] In such a case, the employer must substitute another rest day within 30 days.[23] Meanwhile, an employee may volunteer to work on a rest day.[24] If the rest day is not a regular one, that is not on the same day, the employer must before each month begin inform the employee of his/ her rest day orally, in writing, or by displaying a roster. Whether the rest day is paid or not depends on the agreement between employers and employees.

Statutory holidays

The employer is obliged to grant statutorily holidays to which an employee is entitled, irrespective of the length of service of the employee. Further, an employee employed under a continuous contract for at least three months immediately before a statutory holiday is entitled to the holiday pay.[25]

  • Lunar New Year’s Day;
  • the second day of Lunar New Year;
  • the third day of Lunar New Year;
  • Ching Ming (清明) Festival;
  • Labour Day;
  • Tuen Ng (端午) Festival;
  • the day following the Chinese Mid-Autumn (中秋) Festival;
  • the Chung Yeung (重陽) Festival;
  • the Chinese Winter Solstice Festival (冬節) or Christmas Day, at the option of the employer;
  • the first day of January;
  • Hong Kong Special Administrative Region Establishment Day; and
  • National Day.[26]

The employer is obliged to arrange for a substituted holiday on another day if the employer wishes the employee to work on the statutory holiday. The alternative holiday must be within the period of 60 days and the employee has to be notified either orally, or in writing, or by notice posted in a conspicuous place of employment at least 48 hours before the substituted holiday.[27]

Paid annual leave

Employee employed under a continuous contract is entitled to paid annual leave for every 12 months.[28] The daily rate of annual lave pay is the daily average of wages eared by the employee of the preceding year.[29] The table below summarises the annual leave entitled by the employees with the corresponding year of service in a company.

Years of ServiceAnnual Leave Entitlements
17
27
38
49
510
611
712
813
9 or above14

[1] Schedule 3, Minimum Wage Ordinance (Cap 608)

[2] Section 8, MWO

[3] See Section 4(2), Employment Ordinance (Cap 57)

[4] Section 7, EO

[5] See Schedule 1, MWO

[6] “accredited programme” (經評審課程) means a full-time programme that—

(a) is provided by an education institution specified in Schedule 1;

(b) is a learning programme of a kind described in section 1, 2 or 3 of Schedule 3 to the Accreditation of Academic and Vocational Qualifications Ordinance (Cap 592); and

(c) if provided by a school registered or provisionally registered under the Education Ordinance (Cap

279), is at the level of post secondary education (within the meaning of that Ordinance). (See Section 2, MWO)

[7] Section 2, MWO

[8] Section 49A(4)(a), EO

[9] See fn 9

[10] Section 49A(4)(b), EO

[11] Section 49A(2), EO

[12] Section 4(a), MWO

[13] Section 4(b), MWO

[14] Section 6(2), MWO

[15] Section 7B, MPFSO

[16] Section 7A, MPFSO

[17] Section 7C, MPFSO

[18] See Part 1 Schedule 1, MPFSO

[19] http://www.mpfa.org.hk/eng/mpf_system/system_features/contributions/index.jsp

[20]Section 69, EO

[21] Section 17, EO

[22] Section 19(2), EO

[23] Section 19(3), EO

[24] Section 20(1), EO

[25]  http://www.labour.gov.hk/eng/public/wcp/ConciseGuide/04.pdf pg3

[26] Section 39, EO

[27] Section 39(2), EO

[28] Section 41AA, EO

[29] Section 41C, EO

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