×

A contract of employment may be terminated by the employer or employee through giving the other party due notice or payment in lieu of notice. In the case of a continuous contract of employment, the length of notice or the amount of payment in lieu of notice required are:

Table 1

Employment condition

Length of notice

Payment in lieu of notice

During probation period

Within the first month of probation

Not required

Not required

After the first month of probation

Where contract makes provision for the required length of notice

as per agreement, but not less than 7 days

Table 2

Where contract does not make provision for the required length of notice

not less than 7 days

Table 2

For a continuous contract* with no/ after probation period

Where contract makes provision for the required length of notice

as per agreement, but not less than 7 days

Table 2

Where contract does not make provision for the required length of notice

not less than 1 month

Table 2

* For a non-continuous contract with no/ after probation period, the length of notice shall be the agreed period; please refer to Table 2 for the corresponding payment in lieu of notice. 

Table 2

 

 

Notice period expressed in days or weeks

 

 

 

 

 

 

 

 

Average daily wages earned by an employee

in the 12-month period preceding the day when a notice of termination of contract is given**

X

Number of days in the notice period for which wages would normally be payable to the employee

=

Payment in lieu of notice

 

 

 Notice period expressed in months

 

 

Average monthly wages earned by an employee

in the 12-month period preceding the day when a notice of termination of contract is given**

X

Number of months specified in the notice period

=

Payment in lieu of notice

 

 

 

 

 

 

 

 

** In calculating the average daily/monthly wages, an employer has to exclude (i) the periods for which an employee is not paid his wages or full wages, including rest day, statutory holiday, annual leave, sickness day, maternity leave, paternity leave, sick leave due to work injuries or leave taken with the agreement of the employer, and any normal working day on which the employee is not provided by the employer with work; together with (ii) the sum paid to the employee for such periods.

Employers should note that summary dismissal is a serious disciplinary action. It only applies to cases where an employee has committed very serious misconduct or fails to improve after the employer's repeated warnings. An employer may only summarily dismiss an employee without notice or payment in lieu of notice if the employee, in relation to his employment:

  • wilfully disobeys a lawful and reasonable order;
  • misconducts himself;
  • is guilty of fraud or dishonesty; or
  • is habitually neglectful in his duties.

Statutory restrictions on termination of employment contract

An employer shall not dismiss an employee under the following circumstances:

Paid Sick Leave

An employer shall not dismiss an employee whilst the employee is on paid sick leave.

Maternity Protection

An employer shall not dismiss a female employee who has been confirmed pregnant and has served a notice of pregnancy.

Giving evidence or information to the authorities

An employer shall not dismiss an employee by reason of his giving of evidence or information in any proceedings or inquiry in connection with the enforcement of the Employment Ordinance, work accidents or breach of work safety legislation.

Trade Union Activities

An employer shall not dismiss an employee for trade union membership and activities.

Injury at Work

An employer shall not dismiss an injured employee before having entered into an agreement with the employee for employee's compensation or before the issue of a certificate of assessment.

An employer dismissing an employee under the above circumstances is liable to prosecution and, upon conviction, to a fine of US$100,000.

Termination payments

The items and amount of payments payable to an employee on termination of employment or expiry of the contract depend on a number of factors such as the length of service, the terms of employment contract and the reason for termination of contract. For quick reference, termination payments usually include:

  • Outstanding wages;
  • Payment in lieu of notice, if any;
  • Payment in lieu of any untaken annual leave, and any pro rata annual leave pay for the current leave year;
  • Any outstanding sum of end of year payment, and pro rata end of year payment for the current payment period;
  • Where appropriate, long service payment or severance payment;
  • Other payments under the employment contract, such as, gratuity, provident fund, etc.

An employer shall pay all the termination payments, except for severance payment, to the employee as soon as practicable and in any case not later than seven days after the date of termination or expiry of contract.

[tips title="Did You Know"]For severance payment, an employer shall make payment not later than two months from the receipt of a notice from an employee claiming for severance payment.[/tips]

An employer is required to pay interest on the outstanding wages due to the employee if he fails to pay wages to the employee within seven days after the termination or expiry of contract. An employer who wilfully and without reasonable excuse fails to pay termination payments when they become due is liable to prosecution and, upon conviction, to a fine of US$350,000 and to imprisonment for three years. 

Changes to the Employment Ordinance in light of the COVID-19 pandemic

On February 25, 2022, the Hong Kong government published in the gazette, the Employment (Amendment) Bill 2022 (the Bill). The Bill seeks to make certain amendments to the Employment Ordinance (Cap. 59) to address unique issues arising out of the COVID-19 pandemic. The Bill is expected to be introduced to the Legislative Council for scrutiny soon. According to the Bill:

  • Employers can terminate employees for refusal to be vaccinated in certain circumstances: If an employee fails to comply with a “legitimate vaccination request” made by his/her employer, he/she will be considered as being incapable of performing work for the purpose of his/her employment, which will constitute a “valid reason” for the employer to dismiss an employee or vary the terms of the contract of employment. Employees who are unfit for COVID-19 vaccination due to medical reasons, such as those with medical exemption certificates and those who are pregnant or breastfeeding, are not subject to this policy.
  • Certain employees are protected from termination for undergoing quarantine: The Bill clarifies that an employee’s absence from work due to quarantine would be an invalid reason for dismissal or variation of the terms of the employment contract. However, this policy only applies to employees who have been employed under a continuous contract of two years or more.

 

 

Download this guide on PDF

Find Other Guides and Magazines:

magazines

Your Insights & Resources Library for Asia

Asiapedia is a collection of resources based on what we have learned about doing business in Asia. It’s the product of more than 300 team members collaborating across 28 offices in Asia, Europe, and North America.

or
Back to top