Hong Kong Employment Ordinance: A Complete Guide for Employers

The Employment Ordinance (Cap. 57) is the primary legislation governing employment relationships in Hong Kong. Every employer with employees working in Hong Kong must comply with its provisions, regardless of the number of staff or the nature of the business.

Eligibility: Who Must Comply and Who Is Covered

Every employer in Hong Kong must comply with the Employment Ordinance for all employees engaged under a "contract of employment," defined as any agreement where one person agrees to serve another as an employee. This covers full-time, part-time, casual, and probationary workers.

Key eligibility rules:

• Employers: Any person, company, or organisation that hires employees to work in Hong Kong. There is no minimum employee threshold — even a single part-time worker triggers obligations.
• Employees: Any individual who works under a continuous contract of employment. A "continuous contract" is defined under section 5A of the Ordinance as employment for at least 4 consecutive weeks, with at least 18 hours worked per week.
• Exclusions: The Ordinance does not apply to:
  • Family members living with the employer
  • Employees covered by the Merchant Shipping Ordinance (Cap. 281)
  • Employees covered by the Contracts for Overseas Employment (Cap. 78)
  • Certain categories of foreign domestic helpers (covered under separate legislation)

Under section 2 of the Employment Ordinance (Cap. 57), "employee" means "a person who has entered into a contract of employment with an employer, or who is, under a contract of employment, working for an employer."

Timelines: Key Deadlines Every Employer Must Meet

The Employment Ordinance imposes strict deadlines for various employer obligations. Missing these deadlines can result in penalties, fines, or criminal liability.

Pre-Employment and Onboarding

Ongoing Obligations

Termination and Post-Employment

Ongoing Compliance Execution

Ongoing statutory obligations are handled seamlessly through Captime's dedicated Hong Kong company secretary service, providing a licensed local representative and automated annual return management.

Cost Metrics: Statutory Entitlements and Financial Obligations

Employers must budget for the following statutory costs. All figures are based on the Employment Ordinance and related legislation as of 2025. Check the latest guidance from the Labour Department for updated rates.

Statutory Leave Entitlements

Mandatory Provident Fund (MPF)

Under the MPF Schemes Ordinance (Cap. 485), employers must contribute 5% of an employee's relevant income (capped at HKD 1,500 per month for income above HKD 30,000). Employees also contribute 5%.

• Minimum relevant income: HKD 7,100 per month (below this, no mandatory contribution required)
• Maximum relevant income: HKD 30,000 per month (contributions capped at HKD 1,500 each)

Termination Payments

Suitability: Who This Applies To and Who Should Seek Alternatives

Best For

• All Hong Kong employers: The Employment Ordinance applies universally. There is no exemption for small businesses, startups, or part-time workers.
• Employers with continuous contracts: If your employees work 18+ hours per week for 4+ consecutive weeks, all statutory protections apply.
• Businesses with Hong Kong-based employees: The Ordinance covers employees who work in Hong Kong, regardless of the employer's domicile.

Not Suitable For

• Employers of casual workers: If workers do not meet the continuous contract threshold, many protections (annual leave, sick leave, maternity leave) do not apply. However, basic protections like wage payment and anti-discrimination still apply.
• Employers of foreign domestic helpers: These workers are covered under a separate contract and the Employment of Domestic Helpers from Abroad Ordinance (Cap. 57A).
• Employers using independent contractors: The Ordinance only covers employees. If you engage genuine contractors (with their own business, tools, and control over work), the Ordinance does not apply. However, misclassification risks exist.

Key Provisions Every Employer Must Know

Written Employment Contract

Under section 43E, every employer must provide a written contract of employment before the employee starts work. The contract must specify:

• Wages and wage period
• End-of-year payment (if any)
• Termination notice period
• Any other terms agreed between parties

Wage Protection

Section 23 requires wages to be paid within 7 days of the end of the wage period. Late payment is a criminal offence. The maximum penalty is a fine of HKD 350,000 and imprisonment for 3 years.

Termination of Employment

The Ordinance provides specific rules for termination:

• Notice period: Minimum 7 days for continuous contracts under 2 years; 1 month for contracts over 2 years (unless otherwise agreed)
• Summary dismissal: Permitted only for gross misconduct (theft, fraud, serious insubordination)
• Constructive dismissal: Employee may terminate without notice if employer breaches contract (e.g., non-payment of wages)

Anti-Discrimination and Victimisation

Section 6B prohibits employers from discriminating against employees based on trade union membership or activities. The Sex Discrimination Ordinance (Cap. 480), Disability Discrimination Ordinance (Cap. 487), and Family Status Discrimination Ordinance (Cap. 527) also apply.

Record-Keeping Requirements

Employers must maintain records of:

• Employee names, HKID numbers, and addresses
• Employment dates and termination dates
• Wages, allowances, and deductions
• Leave records (annual, sick, maternity, paternity)
• MPF contribution records

Records must be kept for at least 12 months after termination. Failure to keep records is an offence punishable by a fine of HKD 10,000.

Practical Steps for Compliance

1. Draft employment contracts: Ensure every employee receives a written contract before starting work. Include all statutory terms.
2. Register for MPF: Within 60 days of hiring your first employee, register with an MPF trustee. You cannot delay this.
3. Set up payroll systems: Ensure wages are paid within 7 days of the wage period end. Issue wage slips on or before pay day.
4. Track leave entitlements: Maintain accurate records of statutory holidays, annual leave, sick leave, and maternity/paternity leave.
5. Prepare for termination: Understand notice periods, severance payments, and final pay deadlines. Issue certificates of employment within 7 days of request.
6. Review annually: Check for updates to the Employment Ordinance and related legislation. The Labour Department publishes annual updates.

Common Pitfalls and How to Avoid Them

1. Misclassifying employees as contractors: If a worker is under your control, uses your tools, and works exclusively for you, they are likely an employee. Misclassification can lead to back-payment of wages, MPF contributions, and penalties.
2. Failing to provide written contracts: Oral agreements are not sufficient. The Labour Department can issue compliance orders.
3. Late payment of wages: Even one day late can result in criminal liability. Set up automated payroll systems.
4. Ignoring statutory holiday entitlements: All 12 statutory holidays are mandatory. You cannot substitute them with other days without agreement.
5. Not keeping records: The burden of proof in disputes falls on the employer. Without records, you may lose.

Frequently Asked Questions

Q: Do I need to provide a written contract for part-time employees? A: Yes. The requirement applies to all employees under a contract of employment, regardless of hours worked.

Q: What happens if I don't pay wages on time? A: Late payment is a criminal offence under section 23. The maximum penalty is a fine of HKD 350,000 and imprisonment for 3 years.

Q: Can I dismiss an employee during probation without notice? A: Yes, if the probation period is less than 1 month. For probation periods of 1 month or more, you must give at least 7 days' notice unless otherwise agreed.

Q: What is the minimum notice period for termination? A: For continuous contracts under 2 years, minimum 7 days. For contracts over 2 years, minimum 1 month. The contract may specify longer periods.

Q: Do I need to pay severance for redundancy? A: Yes, if the employee has been employed continuously for at least 24 months and you have ceased business or reduced staff. The payment is 2/3 of the last month's wages per year of service, capped at HKD 390,000.

Summary

The Employment Ordinance (Cap. 57) imposes comprehensive obligations on every Hong Kong employer. Compliance requires:

• Written contracts before employment begins
• Timely wage payments within 7 days
• Accurate record-keeping for at least 12 months post-termination
• Statutory leave entitlements (12 holidays, annual leave, sick leave, maternity/paternity leave)
• MPF contributions (5% each from employer and employee)
• Proper termination procedures with notice or payment in lieu

Non-compliance carries criminal penalties, including fines and imprisonment. For specific guidance on your situation, consult the Labour Department's website or seek professional legal advice.

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