Startup How-Tos: FAQ on Labour Legislation for entrepreneurs
You may come across with various legal matters, such as company registration, licensing, and Labour Legislation, during your entrepreneurship journey. To aviod possible labour disputes, we have gathered ten questions and answers regarding labour legislation for entrepreneurs:
1. Q: Are “temporary”, “part-time” and “substituted” employees covered by the Employment Ordinance?
A: The Employment Ordinance does not differentiate between “temporary”, “part-time”, “substituted”, “permanent” and “full-time” employees. All employees covered by the Employment Ordinance, irrespective of their designated job titles or working hours, are entitled to statutory rights and protection such as wage payment, restriction on deductions from wages and granting of statutory holidays, etc.
An employee who has been employed continuously by the same employer for four weeks or more, with at least 18 hours worked in each week is further entitled to rights such as rest days, annual leave with pay and sickness allowance, etc. (Click here to see the leaflet on “part-time employment”.)
2. Q: Which kind of employment contract, written or verbal, provides employers and employees with better protection?
A: Under the Employment Ordinance, a contract of employment can be made orally or in writing. Employees’ rights and benefits are protected under the Ordinance irrespective of whether the employment contract is made verbally or in writing. The use of written employment contract may help employees better understand the terms of their employment, remind both employers and employees of their contractual obligations. Please see the Sample Employment Contract prepared by the Labour Department for your reference.
3. Q: How is minimum wage computed?
A: Minimum wage = Total number of hours worked by the employee in the wage period × SMW rate (i.e. $37.5 per hour)
4. Q: What will be the consequences if an employer fails to pay wages on time?
A: Wages should be paid not later than 7 days from the end of the wage period. An employer who fails to pay wages to an employee within 7 days after they become due is liable to prosecution and, upon conviction, to a fine of HK$350,000 and to imprisonment for three years.
5. Q: Can an employer compel an employee to work 7 days in a week without granting him any rest days?
A: No. An employee employed under a continuous contract is entitled to one rest day in every period of seven days.
6. Q: Should rest days be with pay or without pay?
A: This term is to be agreed between an employer and an employee.
7. Q: Under what circumstances is an employee entitled to sickness allowance?
A: An employee employed under a continuous contract is entitled to sickness allowance if:
- the sick leave taken is not less than four consecutive days (unless for any day off taken by a female employee for her pregnancy check-ups, post confinement medical treatment or miscarriage, any such day on which she is absent shall be counted as a sickness day and, subject to the following conditions, be paid sickness allowance);
- the sick leave is supported by an appropriate medical certificate*; and
- the employee has accumulated sufficient number of paid sickness days (Please read here for how the paid sickness days be accumulated)
8. Q: Can an employer make payment to an employee in lieu of annual leave?
A: An employer should not include in an employment contract a term to forego all or any of his employee's annual leave entitlement, including payment of wages in lieu of any annual leave days. However, the law allows an employee to choose to accept payment in lieu of that part of his leave entitlement which exceeds 10 days.
9. Q: Can an employer require an employee to work on statutory holidays?
A: Yes. An employer is required to give his employee at least 48 hours' prior notice for work on a statutory holiday. The employer must then arrange an alternative holiday within 60 days before or after the statutory holiday.
10. Q: Are employers obliged to take out employees' compensation insurance policies for all employees?
A: According to section 40 of the Ordinance, no employer shall employ any employee in any employment unless there is in force a policy of insurance to cover his liabilities under the laws (including the common law) for injuries at work in respect of all his employees, irrespective of the length of employment contract or working hours, full-time or part-time employment. An employer who fails to comply with the Ordinance to secure an insurance cover is liable to prosecution and, upon conviction, to a maximum fine of $100,000 and imprisonment for two years.
For further information on Labour Legislation, please refer to Frequently Ask Questions of the Labour Department.
Source: Labour Department
“Startup How-tos” is an introductory guidebook written for entrepreneurship newbies, providing startup tips and related public services information.