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    Latest updates on employment related legislation

HONG KONG - Latest updates on employment related legislation

The Employment (Amendment) (No. 2) Ordinance 2018 became effective on 19th October 2018

If an employee has been unreasonably and unlawfully dismissed and the employee makes a claim for reinstatement or re-engagement, the Labour Tribunal (LT) may make an order for reinstatement or re-engagement without the need to secure the employer’s agreement. Unreasonable Dismissal and Unlawful Dismissal is defined as:

Unreasonable Dismissal AND Unlawful Dismissal
Dismissal other than for the following valid reasons Dismissal which is in contravention of the law
  • The conduct of the employee
  • The capability or qualifications of the employee for performing their work
  • Redundancy or other genuine operational requirements of the business
  • Statutory requirements (i.e. It would be contrary to the law to allow an employee to continue to work in their original position or to continue with the original terms in their employment contract)
  • Other substantial reasons
  • During pregnancy and maternity leave
  • During paid sick leave
  • After work-related injury and before determination/settlement and/or payment of compensation under the Employees’ Compensation Ordinance
  • By reason of the employee exercising trade union rights
  • Giving evidence for the enforcement of relevant labour legislation


If no order for reinstatement or re-engagement is made by LT, LT may make the below payable by the employer to the employee:

  • An award of terminal payments as LT considers fair and appropriate.
  • An award of compensation up to a maximum of HKD 150,000 may also be awarded.

If the employer does not reinstate or re-engage the employee as required by the LT order, the employer shall pay to the employee a further sum, amounting to three times the employee’s average monthly wages and capped at HK$72,500 (the further sum), on top of the above mentioned monetary remedies payable to the employee as ordered by the LT.

The employer commits a criminal offence if they willfully and without reasonable excuse fail to pay the further sum under an order made by the court or LT, and is therefore subject to a maximum fine of HKD 350,000 and 3 years imprisonment on conviction.

Amendment to the statutory minimum wage rate with effect from 1st May 2019

The Chief Executive in Council has accepted the recommendation of the Minimum Wage Commission to increase the statutory minimum wage (SMW) rate from the prevailing level of HKD 34.50 per hour to HKD  37.50 per hour. Subject to the approval of the Legislative Council, the revised SMW rate will take effect on 1 May 2019.

The SMW rates before and after the amendments are summarised below:

Details

Amendment to statutory minimum wage rate in 2019

Prevailing level of statutory minimum wage before amendment since 1 May 2017

Will come into force from 1 May 2019 (subject to the approval of the Legislative Council)

Minimum Hourly Wage Rate

HKD 34.50 per hour

HKD 37.50 per hour

Monetary cap on keeping records of hours worked by employees

HKD 14,100 per month

HKD 15,300 per month


Proposal for increment of statutory paternity leave

The Employment (Amendment) (No. 3) Ordinance 2018 in respect of the increase of statutory paternity leave from three days to five days was been gazetted on 2nd November 2018. The proposal is expected to come into effect by Lunar New Year in 2019.

Proposal to extend maternity leave

The government has proposed to extend the statutory maternity leave from the current 10 weeks to 14 weeks. The rate of statutory maternity leave pay shall maintain at four-fifths of the employee’s average daily wages and subject to a cap of HKD 36,822 per employee. The current cap is equivalent to an employee with a monthly wage of HKD 50,000 (i.e. HKD 36,822= HKD 50,000 x 12 x 28/365 x 4/5). This cap may be reviewed and adjusted from time to time.

The Government will fund the cost for this extra maternity leave pay by way of reimbursement to the employers. If an employee is entitled to maternity leave pay under the Employment Ordinance, the employer shall first provide the employee with maternity leave pay for both the current 10 weeks’ statutory maternity leave and the additional 4 weeks’ statutory maternity leave. Employers may apply for government reimbursement for the additional four weeks’ statutory maternity leave pay afterwards. 

The Government has extended the maternity leave for all female employees of the Government to 14 weeks with effect from 10 October 2018.

In addition, it is also proposed that the Employment Ordinance be amended to update the definition of miscarriage so that an employee who suffers a miscarriage at or after 24 weeks of pregnancy may be entitled to maternity leave.

The Labour Department will report the outcome of the review to the Labour Advisory Board and seek its views on the proposal within year 2018 and the LegCo Panel on Manpower will also be consulted in this respect.

Updates on proposed abolishment of the Mandatory Provident Fund (MPF) offsetting arrangement

The government has been in active discussion with both the business sector and the labour sector since the Chief Executive’s 2017 Policy Address, to explore viable options for the abolishment of the MPF offsetting arrangement. After discussing and considering the views of various parties, it is advised that the government’s support for employers would be further enhanced. The proposed enhanced arrangements are as follows:

  1. Period of the two-tier government subsidy will extend from 12 years to 25 years (details of the enhanced proposed two-tier government subsidy system are set out in below Table 1).
  2. Financial commitment of the entire government subsidy scheme will increase significantly from HKD 17.2 billion to HKD  29.3 billion, a 70% increase from the government’s preliminary proposal in March 2018.

There will be no change to the below proposed arrangements:

  • Severance Pay (SP) and Long Service Pay (LSP) will continue to be calculated at two-thirds of an employee’s salary for the final month, multiplied by the reckonable years of service and capped at a maximum of HKD 390,000.
  • Employers to set up designated savings accounts to which monthly contributions will be made as a reserve for SPs and LSPs.
  • The government will provide a second layer of subsidy if a business’ contributions to the Department of Social Affairs (DSA) fail to cover the SPs or LSPs

Table 1: Details of the enhanced proposed two-tier government subsidy

Number of years after abolition

Tier 1 of government subsidy (% of employer’s SPs and LSPs)

Tier 2 of government subsidy (% of employer’s SPs and LSPs after netting off Tier 1 subsidy and accrued balance of DSA)

Maximum government subsidy (tier 1 plus tier 2)

1-3

50%

25% (50% x 50%)

75%

4

45%

24.75% (55% x 45%)

69.75%

5

40%

27% (60% x 45%)

67%

6

35%

29.25% (65% x 45%)

64.25%

7

30%

28% (70% x 40%)

58%

8

25%

30% (75% x 40%)

55%

9

20%

32% (80% x 40%)

52%

10

15%

29.75% (85% x 35%)

44.75%

11

10%

31.5% (90% x 35%)

41.5%

12

5%

33.25% (95% x 35%)

38.25%

13-15

0%

30%

30%

16-18

0%

25%

25%

19-21

0%

20%

20%

22-23

0%

15%

15%

24-25

0%

10%

10%

26

0%

0%

0%

Notes

  1. Employers are allowed to offset the pre-effective date SPs and LSPs with their MPF contributions made both before and after the effective date of abolition of MPF offsetting arrangement
  2. The abolition of the offsetting arrangement also applies to occupational retirement schemes under Occupational Retirement Schemes Ordinance (ORSO)

Proposed amendments to anti-discrimination ordinances

The government will introduce the Proposed Discrimination Legislation Bill by the end of 2018 following its review of the four anti-discrimination Ordinances, namely: the Sex Discrimination Ordinance (SDO), the Disability Discrimination Ordinance (DDO), the Family Status Discrimination Ordinance (FSDO), and the Race Discrimination Ordinance (RDO). A number of the proposed amendments are employment-related and summarised as follows:

  1. Protection from direct and indirect discrimination and harassment by perception or imputation that a person is of a particular racial group.
  2. Prohibiting harassment on the basis of sex, disability, race (including imputed race and association with a race) will be made illegal in a common workplace, in co-tenanted or sub-tenanted premises, on aircraft, ships and in clubs. This will apply not only to employers, employees, contract workers and co-workers but also to service providers, customers, co-tenants, sub-tenants and club managers.
  3. Prohibiting direct and indirect discrimination against a woman on the grounds of breastfeeding and to render such conduct unlawful.

Employers are encouraged to obtain a good understanding of the various proposed amendments and should be prepared to establish and implement a broader anti-discrimination/harassment policy and compliance training programs to provide a more harmonious work environment for their employees.

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