A Concise Guide to the

Employment Ordinance

Labour Department
 Table of Contents
Foreword 2

Chapter 1 Application of the Employment Ordinance 3

Chapter 2 Contract of Employment 4

Chapter 3 Wages 7

Chapter 4 Rest Days, Holidays and Leave 11

Chapter 5 Sickness Allowance 19

Chapter 6 Maternity Protection 24

Chapter 7 Paternity Leave 30

Chapter 8 End of Year Payment 35

Chapter 9 Termination of Contract of Employment 37

Chapter 10 Employment Protection 42

Chapter 11 Severance Payment and Long Service Payment 47

Chapter 12 Protection against Anti-union Discrimination 54

Chapter 13 Employers’ Criminal Liability in Failing to Pay an 55

Award of the Labour Tribunal or Minor
Employment Claims Adjudication Board
Appendix 1 A Guide to the Calculation of Relevant Statutory 59
Entitlements on the Basis of the 12-Month
Average Wages with Examples
Appendix 2 A Guide to the Abolition of Mandatory Provident 68
Fund Offsetting Arrangement with Examples
Appendix 3 Enquiries 76

1
Foreword

This guide sets out in simple terms the main provisions of the Employment Ordinance
(Cap. 57). It should be noted that the Ordinance itself remains the sole authority for
the provisions of the law explained. Please refer to Appendix 3 for enquiries services.

This version is finalised in February 2025. Contents of this guide may be amended
from time to time where necessary. The latest version of the guide is available at the
Labour Department’s web page:
[Link]/eng/public/[Link]

2
Chapter 1: Application of the Employment Ordinance

The Employment Ordinance applies to all employees with the following

exceptions:

1. a family member who lives in the same dwelling as the employer;

2. an employee as defined in the Contracts for Employment Outside Hong
Kong Ordinance;
3. a person serving under a crew agreement under the Merchant Shipping
(Seafarers) Ordinance, or on board a ship which is not registered in Hong
Kong; and
4. an apprentice whose contract of apprenticeship has been registered under
the Apprenticeship Ordinance, other than certain provisions of the
Employment Ordinance.

All employees covered by the Employment Ordinance, irrespective of their

hours of work, are entitled to basic protection under the Ordinance including
payment of wages, restrictions on wages deductions and the granting of
statutory holidays, etc.

Employees who are employed under a continuous contract are further entitled
to such benefits as rest days, paid annual leave, sickness allowance, severance
payment and long service payment, etc.

Continuous Contract of Employment

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 regarded as
being employed under a continuous contract.

In any dispute as to whether a contract of employment is a continuous contract,

the onus of proving that it is not a continuous contract shall be on the employer.

3
Chapter 2: Contract of Employment

A contract of employment is an agreement on the employment conditions made

between an employer and an employee. The agreement can be made orally or
in writing and it includes both express and implied terms.

Employers and employees are free to negotiate and agree on the terms and
conditions of employment provided that they do not violate the provisions of the
Employment Ordinance. Any term of an employment contract which purports
to extinguish or reduce any right, benefit or protection conferred upon the
employee by this Ordinance shall be void.

Information on Conditions of Service

Before employment begins, an employer must inform each employee clearly of
the conditions of employment under which he is to be employed with regard to:

1. wages (including rate of wages, overtime rate and any allowances, whether
calculated by piece, job, hour, day, week or otherwise);
2. wage period;
3. length of notice required to terminate the contract; and
4. if the employee is entitled to an end of year payment, the end of year
payment or proportion and the payment period.

If the contract of employment is in writing, the employer shall give one copy of
the written contract to the employee for retention and reference.

If the contract of employment is not in writing, the employer shall provide the
employee with such information in writing if the employee, before such
employment is entered into, makes a written request.

Whenever there is any change in the conditions of service, whether these have
merely been proposed to an employee or are actually in force, the employer
shall inform him in an intelligible manner. If such change to conditions of service
is in writing or upon the written request from the employee, a copy of the written
amendment must be provided to the employee.

4
NOTE: Statutory entitlements such as holiday pay, annual leave pay, sickness
allowance, maternity leave pay and paternity leave pay are calculated on the
basis of wages, particulars of which are established by the terms of
employment contracts. Employers and employees should clearly understand
the wage components (for example, commission, allowance, etc), wage rate,
conditions and arrangements for payment, etc.

Duration of Employment Contract

In the absence of any express agreement to the contrary, every contract of
employment which is a continuous contract is deemed to be a contract for one
month and renewable from month to month.

Wage and Employment Records

Every employer must at all times keep a record setting out the wage and
employment history of each employee covering the period of his employment
during the preceding 12 months.

The record should include the following information of the employee:

1. name and identity card number;

2. date of commencement of employment;
3. job title;
4. wages paid in respect of each wage period;
5. wages paid in respect of each wage period covering the period of his
employment from 1 May 2024 to 30 April 2025 (where an employee
commenced employment before 1 May 2025 (i.e. the effective date of the
abolition of Mandatory Provident Fund offsetting arrangement));
6. total number of hours worked in each wage period (if applicable*);
7. wage period;
8. periods of annual leave, sick leave, maternity leave, paternity leave and
holidays entitled and taken, together with details of payments made in
respect of such periods;
9. amount of end of year payment and the period to which it relates (if
applicable);
10. period of notice required for termination of contract;
11. date of termination of employment (if applicable).

* For details, please refer to the “Concise Guide to Statutory Minimum Wage”
published by the Labour Department. This guide book can be downloaded
from the homepage of the Labour Department ([Link]) or
obtained at the offices of the Labour Relations Division of the Labour
Department.
5
The wage and employment records must be kept at the employer’s place of
business or at the place where the employee is employed, and they should also
be kept for a period of another six months after the employee ceases to be
employed.

NOTE:
 Employers should keep proper records in relation to employees’
attendance, leave and wages, etc for the purpose of calculating statutory
entitlements.
 To safeguard their own rights and benefits, employees should also keep
proper records in relation to their attendance, leave and wages, etc.

Offences and Penalties

An employer who fails to keep the above record is liable to prosecution and, upon
conviction, to a fine of $10,000.

Officers of the Labour Department may inspect the above record, inquire any
person or seize anything which may appear to be evidence of an offence under
the Employment Ordinance. Any person who fails to comply with the
requirements of the officers of the Labour Department is liable to prosecution
and, upon conviction, to a fine of $100,000 and to imprisonment for one year.

6
Chapter 3: Wages

Definition
"Wages" means all remuneration, earnings, allowances, tips and service
charges, however designated or calculated, payable to an employee in respect
of work done or work to be done, and capable of being expressed in terms of
money. Allowances including travelling allowances, attendance allowances,
commission and overtime pay are within the definition of wages. However, it
does not include:

1. the value of any accommodation, education, food, fuel, water, light or

medical care provided by the employer;
2. employer's contribution to any retirement scheme;
3. commission, attendance allowance or attendance bonus which is of a
gratuitous nature or is payable only at the discretion of the employer;
4. non-recurrent travelling allowance or the value of any travelling concession
or travelling allowance for actual expenses incurred by the employment;
5. any sum payable to the employee to defray special expenses incurred by
him by the nature of his employment;
6. end of year payment, or annual bonus which is of a gratuitous nature or is
payable only at the discretion of the employer;
7. gratuity payable on completion or termination of a contract of employment.

An employee's entitlements to end of year payment, maternity leave pay,

paternity leave pay, severance payment, long service payment, sickness
allowance, holiday pay, annual leave pay and payment in lieu of notice are
calculated according to the above definition of wages.

Overtime pay should also be included in calculating the above payments if:

• it is of a constant character; or
• its monthly average over the past 12 months is not less than 20% of the
average monthly wages of the employee during the same period.

7
Deductions from Wages
An employer is prohibited from deducting wages from his employee, except
under the following circumstances:

1. deductions for absence from work. The sum to be deducted should be

proportionate to the period of time the employee is absent from work;
2. deductions for damage to or loss of the employer's goods, equipment, or
property by the employee's neglect or default. In any one case, the sum to
be deducted shall be equivalent to the value of the damage or loss but not
exceeding $300. The total of such deductions shall not exceed one quarter
of the wages payable to the employee in that wage period;
3. deductions for the recovery of any advanced or over-paid wages to the
employee. The total sum to be deducted shall not exceed one quarter of the
wages payable to the employee in that wage period;
4. deductions of the value of food and accommodation the employer supplies
to the employee;
5. deductions, at the written request of the employee, in respect of contributions
to be paid by the employee through the employer for any medical scheme,
superannuation scheme, retirement scheme or thrift scheme;
6. deductions, with the employee's written consent, for the recovery of any loan
made by the employer to the employee;
7. deductions in respect of paternity leave pay paid to the employee before the
required document is provided if the employee fails to provide the employer
with the required document within 3 months after the first day of paternity
leave taken, or if the employee has ceased to be employed, fails to provide
the required document before the cessation;
8. deductions which are required or authorized under any enactment to be
made from the wages of the employee;
9. deductions for outstanding maintenance payment owed by the employee
pursuant to the Attachment of Income Order issued by the court.

Deductions under items (1) to (8) shall have priority over item (9).

Unless with the approval in writing of the Commissioner for Labour, the total of
all deductions, except those for absence from work and outstanding maintenance
payment, made in any one wage period shall not exceed one half of the wages
payable in that period.

8
Offences and Penalties
An employer who makes illegal deduction from wages of an employee is liable
to prosecution and, upon conviction, to a fine of $100,000 and to imprisonment
for one year.

Payment of Wages
Wages shall become due on the expiry of the last day of the wage period. An
employer should pay wages to an employee as soon as practicable but in any
case not later than seven days after the end of the wage period. An employer is
required to pay interest on the outstanding amount of wages to the employee if
he fails to pay wages to the employee within seven days when it becomes due.

Offences and Penalties

An employer who wilfully and without reasonable excuse fails to pay wages to
an employee when it becomes due is liable to prosecution and, upon conviction,
to a fine of $350,000 and to imprisonment for three years.

Where a wage offence committed by a body corporate is proved to have been

committed with the consent or connivance of, or to be attributable to any neglect
on the part of, any director, manager, secretary or other similar officer of the body
corporate, such person shall be guilty of the like offence and, upon conviction, is
liable to the same penalty.

An employer who wilfully and without reasonable excuse fails to pay interest on
the outstanding amount of wages to the employee is liable to prosecution and,
upon conviction, to a fine of $10,000.

Failure to Pay Wages

An employer who is no longer able to pay wages due should terminate the
contract of employment in accordance with its terms.

If wages are not paid within one month after they become due, an employee may
deem his contract of employment to be terminated by his employer without notice
and is entitled to payment in lieu of notice in addition to other statutory and
contractual termination payment. To avoid disputes, an employee should inform
his employer when he exercises such rights under the Ordinance.

9
Liability to Pay Wages of Sub-contractor's Employees
The principal contractors, superior sub-contractors and superior nominated sub-
contractors engaged in building and construction works are liable for the first
two months' unpaid wages of an employee who is employed by the sub-contractor
or nominated sub-contractor.

If an employee employed by a sub-contractor or nominated sub-contractor is

owed wages, he must serve a written notice to the principal contractor or the main
nominated sub-contractor within 60 days (or an additional period of 90 days
permitted by the Commissioner for Labour) after the wages become due. The
employee should state the following in the notice:

1. the name and address of the employee;

2. the name and address of his employer;
3. the address of the place of employment of the employee;
4. the particulars of the work in respect of which the wages are due; and
5. the amount of wages due and the period to which they relate.

The principal contractors, the superior sub-contractors and the superior

nominated sub-contractors should pay wages to the employee within 30 days
after receiving the notice. They may request every superior sub-contractor or
superior nominated sub-contractor to the employee's employer to share out the
liability.

The wages paid by the principal contractor, the superior sub-contractors and the
superior nominated sub-contractors shall be a debt due by the employer of the
employee to them. The debt may be recovered through civil claims proceedings.

10
Chapter 4: Rest Days, Holidays and Leave

An employee shall enjoy rest days, statutory holidays and paid annual leave during
employment.

REST DAY

Eligibility for Rest Day

An employee employed under a continuous contract is entitled to not less than
one rest day in every period of seven days.

Definition of a Rest Day

A rest day is defined as a continuous period of not less than 24 hours during which
an employee is entitled to abstain from working for his employer.

Appointment of Rest Days

Rest days shall be appointed by the employer. They may be granted on a regular
or irregular basis:

 regular rest days - the employer should inform his employees of the
arrangement
 irregular rest days - before the beginning of each month, the employer
must inform his employees orally or in writing of the
appointed rest days or by displaying a roster showing
the dates of the appointed rest days for each
employee

An employer may substitute some other rest day with the consent of the employee,
in which case it must be within the same month before the original rest day or within
30 days after it.

Compulsory Work on Rest days

An employer must not compel an employee to work on a rest day except in the event
of a breakdown of machinery or plant or in any other unforeseen emergency. For
any rest day on which the employee is required to work, the employer should
substitute some other rest day within 30 days after the original rest day. The
employer should notify the employee of the arrangement within 48 hours after the
employee is required to work.

11
Offences and Penalties
An employer who without reasonable excuse fails to grant rest days to his
employees is liable to prosecution and, upon conviction, to a fine of $50,000.

An employer who compels his employees to work on their rest days is liable to
prosecution and, upon conviction, to a fine of $50,000.

Voluntary Work on Rest Days

An employee, except young persons under the age of 18 employed in industrial
undertakings, may work voluntarily on a rest day.

Any condition in a contract of employment which makes payment of any type of

annual bonus or end of year payment conditional on an employee agreeing to work
on rest days is void.

Rest Day Pay

Whether a rest day is paid or not is to be agreed by employers and employees.

STATUTORY HOLIDAYS
An employee, irrespective of his length of service, is entitled to the following statutory
holidays:

1. the first day of January

2. Lunar New Year's Day
3. the second day of Lunar New Year
4. the third day of Lunar New Year
5. Ching Ming Festival
6. Labour Day, being the first day of May
7. the Birthday of the Buddha (newly added from 2022)
8. Tuen Ng Festival
9. Hong Kong Special Administrative Region Establishment Day, being
the first day of July
10. the day following the Chinese Mid-Autumn Festival
11. National Day, being the first day of October
12. Chung Yeung Festival
13. Chinese Winter Solstice Festival or Christmas Day (at the option of the
employer)
14. the first weekday after Christmas Day (newly added from 2024)*

*Effective from 1 January 2024

12
The additional statutory holidays from 2026 and thereafter are tabulated as follows:

Total number of
Year Newly added statutory holiday
statutory holidays

Starting from 2026 Easter Monday 15

Starting from 2028 Good Friday 16

Starting from 2030 The day following Good Friday 17

(Regarding payment for statutory holiday, please see the part below on “Holiday
Pay”)

Work on Statutory Holidays

If the employer requires the employee to work on a statutory holiday, the employer
should make the following arrangement:

Prior Notice to Employee on the

Alternative Holiday Arrangement
Date of Alternative Holiday
An alternative holiday should be To be given not less than 48 hours'
arranged within 60 days before the prior notice before the alternative
statutory holiday; or holiday
An alternative holiday should be
To be given not less than 48 hours'
arranged within 60 days after the
prior notice before the statutory holiday
statutory holiday

If the employer and employee agree, any day within 30 days before or after the
statutory or alternative holiday may be taken by the employee as a substituted
holiday.

A Statutory Holiday Falling on a Rest Day

If a statutory holiday falls on a rest day, the employee should be granted a holiday
on the next day which is not a statutory holiday or an alternative holiday or a
substituted holiday or a rest day.

13
Holiday Pay
An employee having been employed under a continuous contract for not less than
three months immediately preceding a statutory holiday is entitled to the holiday
pay. Holiday pay should be paid to the employee not later than the day on which
he is next paid his wages after that statutory holiday.

The daily rate of holiday pay is a sum equivalent to the average daily wages earned
by an employee in the 12-month period preceding the following specified dates. If
an employee is employed for less than 12 months, the calculation shall be based
on the shorter period.

Day(s) of Statutory Holiday(s) Specified Dates

1 day Day of the statutory holiday
More than 1 consecutive day First day of the statutory holidays

NOTE: In calculating the average daily 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. (see
Appendix 1 for details)

Restriction on Pay in lieu of Holiday

Regardless of whether an employee is entitled to holiday pay, an employer should
grant his employee a statutory holiday, or arrange an “alternative holiday” or
“substituted holiday”. An employer must not make any form of payment to the
employee in lieu of granting a holiday. In other words, “buy-out” of a holiday is not
allowed.

Offences and Penalties

An employer who without reasonable excuse fails to grant statutory holidays,
alternative holidays or substituted holidays, or fails to pay holiday pay to an
employee is liable to prosecution and, upon conviction, to a fine of $50,000.

14
PAID ANNUAL LEAVE
An employee is entitled to annual leave with pay after having been employed under
a continuous contract for every 12 months. An employee's entitlement to paid
annual leave increases progressively from seven days to a maximum of 14 days
according to his length of service:

Years of Service Annual Leave Entitlements

1 7

2 7

3 8

4 9

5 10

6 11

7 12

8 13

9 or above 14

Granting of Annual Leave

An employee shall take the paid annual leave to which he is entitled within the
following period of 12 months.

The time of the leave should be appointed by the employer after consultation with
the employee or his representative, confirmed by a written notice to the employee
at least 14 days in advance, unless a shorter period has been mutually agreed.

Paid annual leave should be granted for an unbroken period. If the employee so
requests, it may be granted in the following manner:

Leave entitlement not up to 3 days can be granted separately; the

exceeding 10 days balance should be granted consecutively

Leave entitlement
at least 7 days should be granted consecutively
exceeding 10 days

Any rest day or statutory holiday falling within a period of annual leave will be
counted as annual leave and another rest day or holiday must be appointed.
15
Annual Leave Pay
The daily rate of annual leave pay is a sum equivalent to the average daily wages
earned by an employee in the 12-month period preceding the following specified
dates. If an employee is employed for less than 12 months, the calculation shall
be based on the shorter period.

Day(s) of Annual Leave Specified Dates

1 day Day of the annual leave
More than 1 consecutive day First day of the annual leave

NOTE: In calculating the average daily 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. (see
Appendix 1 for details)

Annual leave pay should be paid to the employee not later than the normal pay
day after the period of annual leave taken.

Offences and Penalties

An employer who without reasonable excuse fails to grant annual leave to an
employee is liable to prosecution and, upon conviction, to a fine of $50,000.

An employer who fails to pay annual leave pay to an employee is liable to

prosecution and, upon conviction, to a fine of $50,000.

Restriction on Pay in lieu of Leave

An employee may choose to accept payment in lieu of the part of his leave
entitlement which exceeds 10 days.

Payment of Annual Leave Pay on Termination of Employment Contract

A leave year means any period of 12 months commencing on the day on which
his employment commenced and an anniversary of such day.

If an employee has been employed for a leave year and his employment contract
is terminated, irrespective of the reasons of termination, he should be entitled to
payment in lieu of any annual leave not yet taken. In calculating the daily
rate of the payment, the “date of termination of contract” should be adopted as the
“specified date”. (see the preceding part on “Annual Leave Pay”)
16
 An employee with three but less than 12 months' employment in a leave year and
his employment contract is terminated other than for the reason of summary
dismissal due to his serious misconduct, he would be entitled to pro rata annual
leave pay.

Calculation of Annual Leave Pay on Termination of Employment Contract:

Period of Employment Annual Leave Entitlements

Less less than 3 months Nil

than 12
3 to 12 summary Nil
months
months dismissal

resignation
annual
dismissed leave period of
other than entitled in x employment
the (days)
summary current 365
dismissal leave year

12 or less than 3 months in the annual leave not yet taken*

more current leave year
than 12
months
3 to 12 summary annual leave not yet taken*
months in dismissal
the
current resignation
leave year annual period of
dismissed annual leave employment
other than leave entitled in in the current
+ x
not yet the leave year
summary taken* current (days)
dismissal leave year 365

* This refers to any untaken annual leave accrued in the previous leave year.

17
Common Leave Year
An employer may elect any period of 12 consecutive months as the common leave
year for all of his employees. Should the employer wish to make this arrangement,
he shall give one month's notice either to each of his employees in writing or
by posting a notice in a conspicuous place in the place of employment.

If an employee has not been employed for 12 months in the common leave year,
the employer should calculate his leave entitlement on a pro rata basis, and any
fraction of a day resulting from the calculation should be counted as a full day's
leave.

After consultation with his employer, the employee may opt to take the pro rata
annual leave accrued preceding the commencement of the common leave year or
carry it forward and combine it with his leave accrued in the next leave year.

[Example]
common leave year: 1.1.2022 to 31.12.2022
commencement date of employment: 1.9.2022
pro rata annual leave: 122* / 365 X 7 = 2.34 days (round up to 3 days)
(*122 is the number of days between 1.9.2022 and 31.12.2022)
The employee may take the 3 days' leave in 2023, or combine it with his 7 days'
leave accrued in 2023 and take 10 days' leave in 2024.

Annual Leave Shutdown

If an employer intends to close down his business or part of his business for
granting annual leave to his employees, he should inform the affected employees
in writing at least one month in advance.

Where an employee is not yet entitled to paid annual leave in respect of any day
during the period of shutdown but he has to stop work as a result, he should be
granted paid annual leave during that whole period.

If the annual leave an employee is entitled exceeds the number of days of

shutdown, he may take the remaining annual leave immediately following the
shutdown.

The common leave year elected by the employer should not be affected by an
annual leave shutdown as the annual leave granted shall be in respect of the leave
year immediately preceding the period of the shutdown.
18
Chapter 5: Sickness Allowance

Eligibility for Sickness Allowance

An employee employed under a continuous contract is entitled to sickness allowance
if the following conditions are fulfilled:

1. 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);

2. the employee has accumulated sufficient number of paid sickness days (see the
parts below on “Accumulation of Paid Sickness Days” and “Two Categories of
Paid Sickness Days”); and

3. the sick leave is supported by:

(i) an appropriate medical certificate (regarding an employee’s medical
examination in relation to her pregnancy, may also be supported by a
certificate of attendance1 apart from a medical certificate); or
(ii) regarding the absence from work of an employee by reason of his / her
compliance with a specific anti-epidemic requirement with a movement
restriction imposed under the Prevention and Control of Disease Ordinance
(Cap. 599), the employee is required to produce a proof of such
requirement2 (see the part below on “Two Categories of Paid Sickness
Days”).

1 Certificate of attendance is not applicable to an employee’s medical examination in relation to her

pregnancy conducted before 11 December 2020.
2 Applicable to sickness days taken by employees who are absent from work by reason of their

compliance with a movement restriction on or after 17 June 2022. The specific anti-epidemic
requirements with a movement restriction are those prescribed in Part 1, Schedule 12 of the
Employment Ordinance. The proofs of the relevant requirements include hard copy or electronic form
of document, or an electronic data issued by the Government. The relevant proof should show the
name of the employee, or information that could identify the identity of employee, the type of
movement restriction imposed and the commencement and expiry dates of such restriction.
19
An employee shall not be entitled to sickness allowance under the following
circumstances:

• the employee, without reasonable excuse, refuses treatment by a company

doctor of a medical scheme recognised by the Director of Health or disregards
the advice of the doctor. (If the recognised scheme of medical treatment
operated by an employer does not cover treatment from a certain medical
discipline, the employee may choose to receive treatment from any registered
medical practitioner, registered Chinese medicine practitioner or registered
dentist under that particular discipline);
• the sickness day falls on a statutory holiday on which the employee is entitled to
holiday pay; or
• compensation is payable under the Employees' Compensation Ordinance.

Sickness Allowance
The daily rate of sickness allowance is a sum equivalent to four-fifths of the average
daily wages earned by an employee in the 12-month period preceding the following
specified dates. If an employee is employed for less than 12 months, the calculation
shall be based on the shorter period.

Day(s) of Sickness Day(s) Specified Dates

1 day The sickness day
More than 1 consecutive day The first sickness day

NOTE: In calculating the average daily 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.
(see Appendix 1 for details)

Sickness allowance should be paid to the employee not later than the normal
pay day.

Offences and Penalties

An employer who without reasonable excuse fails to pay sickness allowance to an
employee is liable to prosecution and, upon conviction, to a fine of $50,000.

20
Accumulation of Paid Sickness Days
An employee can accumulate paid sickness days after having been employed
under a continuous contract. Paid sickness days are accumulated at the rate of
two paid sickness days for each completed month of the employee's
employment during the first 12 months, and four paid sickness days for each
completed month of employment thereafter. Paid sickness days can be
accumulated throughout the whole employment period, but shall not exceed
120 days at any one time.

Two Categories of Paid Sickness Days

Paid sickness days are divided into two categories - paid sickness days can first be
accumulated up to 36 days in Category 1 and then 84 days in Category 2.

21
 Category Total Conditions for taking paid sickness day(s)
number

Category 1 36 • supported by a medical certificate3 issued by a registered

medical practitioner, a registered Chinese medicine
practitioner or a registered dentist
• regarding an employee’s medical examination in relation
to her pregnancy, may also be supported by a certificate
of attendance 4 issued by a registered medical
practitioner, a registered Chinese medicine practitioner,
a registered midwife or a registered nurse, apart from a
medical certificate
• regarding the absence from work of an employee for
compliance with a specific anti-epidemic requirement
with a movement restriction, the employee is required to
produce proof of the relevant requirement (for details,
please refer to footnote 2 above)

Category 2 84 • sickness days taken exceeds the number of paid

sickness days remaining in Category 1
• if required by the employer, a medical certificate3 issued
by a registered medical practitioner, registered Chinese
medicine practitioner or registered dentist attending the
employee as an out-patient or in-patient in a hospital
should be produced upon the employer’s request, a
brief record of the investigation carried out and the
treatment prescribed by the issuer of the medical
certificate should also be produced
• regarding an employee’s medical examination in relation
to her pregnancy, may also produce a certificate of
attendance4 issued by a registered medical practitioner,
a registered Chinese medicine practitioner, a registered
midwife or a registered nurse who conducts the
examination for the employee as an out-patient or in-
patient in a hospital, apart from a medical certificate
• regarding the absence from work of an employee for
compliance with a specific anti-epidemic requirement with
a movement restriction, irrespective of whether the paid
sickness day taken by the employee is under Category 1
or Category 2, the employee is only required to produce
proof of the relevant requirement (for details, please refer
to footnote 2 above)

3 The medical certificate should specify the number of days on which, and the nature of the sickness
or injury on account of which, the employee is unfit for work.
4 The certificate of attendance should state the employee’s attendance for a medical examination in
relation to her pregnancy and the relevant date. Certificate of attendance is not applicable to a
medical examination in relation to pregnancy conducted before 11 December 2020.
22
Record of Sickness Days
An employer should keep the following records:

1. the date of commencement and termination of employment of each

employee;
2. all paid sickness days accumulated by each employee, including the number
of paid sickness days accumulated in Category 1 and 2;
3. paid sickness days taken by each employee and deducted from the total
number of paid sickness days in either category;
4. sickness allowance paid and the sickness days in respect of which the
sickness allowance was paid.

The record should be signed by the employee within seven days of his return
to work from paid sick leave, and the employee has the right to inspect the
record.

Employment Protection
An employer is prohibited from terminating the contract of employment of an
employee on his paid sickness day, except in cases of summary dismissal due
to the employee's serious misconduct.

Offences and Penalties

An employer who contravenes the above provision is liable to prosecution and,
upon conviction, to a fine of $100,000. Besides, the employer is required to
pay the following sum of money to the dismissed employee within 7 days after
the day of termination:

1. payment in lieu of notice;

2. a further sum equivalent to seven days' wages as compensation5; and
3. any sickness allowance to which the employee is entitled.

The employee may also claim remedies for employment protection against his
employer if he is dismissed other than for a valid reason as specified in the
Ordinance. (see the part on “Eligibility and Remedies for Employment Protection”
in Chapter 10)

5 See Appendix 1 for details of the calculation.

23
Chapter 6: Maternity Protection

Maternity Leave
A female employee employed under a continuous contract immediately before
the commencement of her maternity leave and having given notice of pregnancy
and her intention to take maternity leave to the employer is entitled to the
following periods of leave:

• a continuous period of 141 weeks' maternity leave;

• if confinement occurs later than the expected date of confinement, a further
period equal to the number of days from the day after the expected date of
confinement to the actual date of confinement;
• an additional period of leave for not more than four weeks on the grounds of
illness or disability due to the pregnancy or confinement.

Taking of Maternity Leave

1. With the agreement of her employer, a pregnant employee may decide to
commence her maternity leave from two to four weeks before the expected
date of confinement.
2. If the employee does not decide on the date, or fails to secure her employer's
agreement, the employee shall commence her maternity leave four weeks
before the expected date of confinement.

Maternity leave commences on the date of confinement if it occurs before the

above scheduled maternity leave. In this case, the employee should give notice
of the date of confinement and her intention to take 14 weeks' maternity leave to
her employer within seven days of her confinement.

NOTE: Confinement means the delivery of a child; miscarriage means the

expulsion of the products of conception which are incapable of survival after being
born before 24 2 weeks of pregnancy. If before 24 weeks of pregnancy an
employee delivers a surviving child or the child prematurely dies after being born,
it is not a case of miscarriage.

1 Eligible employees whose confinement occurs before 11 December 2020 are entitled to a
continuous period of 10 weeks’ maternity leave.
2 Before 11 December 2020, miscarriage means the expulsion of the products of conception which

are incapable of survival after being born before 28 weeks of pregnancy.

24
Payment for Maternity Leave
An employee is eligible for maternity leave pay if:

1. she has been employed under a continuous contract for not less than
40 weeks immediately before the commencement of scheduled maternity
leave3;
2. she has given notice of pregnancy and her intention to take maternity leave
to her employer after the pregnancy has been confirmed. For example, the
presentation of a medical certificate confirming her pregnancy to the
employer; and
3. she has produced a medical certificate specifying the expected date of
confinement if so required by her employer.

Maternity leave should be paid for a period of 144 weeks and it should be paid
on the normal pay day of the employee.

The daily rate of maternity leave pay is a sum equivalent to four-fifths of the
average daily wages earned by an employee in the 12-month period preceding
the first day of the maternity leave. If an employee is employed for less than
12 months, the calculation shall be based on the shorter period. The 4-week
maternity leave pay for the 11th to 14th week of the maternity leave is subject to a
cap of $80,000.

Reimbursement of Maternity Leave Pay

Employers, after payment of all maternity leave pay on the normal pay day, may
apply to the Government for reimbursement5 of the 11th to 14th weeks’ maternity
leave pay payable and paid under the Employment Ordinance. Employers can
submit applications through the “Reimbursement Easy Portal” (“REP”), or by
email, fax, post or in person. For details, please visit “REP” at [Link].

NOTE: In calculating the average daily 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, 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. (see

3 For scheduled maternity leave, please refer to points 1 and 2 of the preceding item “Taking of
Maternity Leave”.
4 Eligible employees whose confinement occurs before 11 December 2020 are entitled to

10 weeks’ paid maternity leave.

5 The Reimbursement of Maternity Leave Pay Scheme is an administrative scheme of the

Government.
25
Appendix 1 for details)

Offences and Penalties

An employer who fails to grant maternity leave to a pregnant employee or fails
to pay maternity leave pay to an eligible pregnant employee is liable to
prosecution and, upon conviction, to a fine of $50,000.

Medical Examination
When the employee’s absence from work to attend medical examination in
relation to her pregnancy, post confinement medical treatment or miscarriage is
supported by an appropriate medical certificate6, any such day on which she is
absent shall be counted as a sickness day. (see the part on “Medical Certificates/
Certificates of Attendance” in this Chapter and the part on “Two Categories of
Paid Sickness Days” in Chapter 5).

Employment Protection
An employer is prohibited from dismissing a pregnant employee from the date
on which she is confirmed pregnant by a medical certificate to the date on which
she is due to return to work upon the expiry of her maternity leave if:
1. the employee has been employed under a continuous contract, and
2. she has served a notice of pregnancy to the employer.

If a pregnant employee is dismissed by her employer before she has served a

notice of pregnancy, she may serve such notice immediately after being informed
of her dismissal. Under such circumstances, her employer must withdraw the
dismissal or the notice of dismissal.

However, the employer is not prohibited from dismissing a pregnant employee

under the following circumstances:

• the employee is summarily dismissed due to her serious misconduct; or

• where it has been expressly agreed that the employment is on probation,
the employee is dismissed for reasons other than pregnancy during the
probation period of not more than 12 weeks.

6 Regarding an employee’s medical examination in relation to her pregnancy, may also be

supported by a certificate of attendance. Certificate of attendance is not applicable to a medical
examination in relation to pregnancy conducted before 11 December 2020.
26
Offences and Penalties
Except for the circumstances provided above, it is an offence for an employer to
dismiss a pregnant employee. The employer is liable to prosecution and, upon
conviction, to a fine of $100,000. Besides, the employer is required to pay the
following sums of money to the dismissed employee within 7 days after the day
of termination:

1. payment in lieu of notice;

2. a further sum equivalent to one month's wages as compensation7; and
3. 148 weeks' maternity leave pay if, but for the dismissal, she would have been
entitled to such payment.

The employee may also claim remedies for employment protection against her
employer if she is dismissed other than for a valid reason as specified in the
Ordinance. (see the part on “Eligibility and Remedies for Employment Protection”
in Chapter 10)

Prohibition of Assignment of Heavy, Hazardous or Harmful Work

If a pregnant employee produces a medical certificate with an opinion as to her
unfitness to handle heavy materials, work in places where gas injurious to
pregnancy is generated, or do other work injurious to pregnancy, the employer
may not allocate such work to the employee. If the employee is already
performing such work, the employer shall within 14 days after receiving such
request remove her from that work.

Regardless of whether the medical certificate produced by the employee was

issued by a registered medical practitioner or registered Chinese medicine
practitioner, an employer may, within 14 days after receiving such medical
certificate, at the employer’s own expense, arrange for the employee to attend
another medical examination conducted by a registered medical practitioner or
registered Chinese medicine practitioner named by the employer to obtain a
second opinion as to the employee’s fitness to undertake the work at issue.

The Employment Ordinance provides that if the earnings of the employee is

affected as a result of her transfer from heavy, hazardous or harmful work, the
maternity leave pay or the payment for termination of employment shall be

7 See Appendix 1 for details of the calculation.

8 Eligible employees whose confinement occurs before 11 December 2020 or whose date of
termination of the employment contract falls before 11 December 2020 are entitled to 10 weeks’
maternity leave pay.
27
calculated on the basis of the average daily or monthly (as appropriate) wages
earned by the employee in the 12-month period preceding the transfer. (see
Appendix 1 for details of the calculation).

Offences and Penalties

An employer who without reasonable excuse fails to comply with the above
requirements is liable to prosecution and, upon conviction, to a fine of
$50,000.

28
Medical Certificates / Certificates of Attendance
Employees shall submit medical certificates / certificates of attendance issued
by registered medical practitioners, registered Chinese medicine practitioners,
registered midwives or registered nurses, if so required by employers where
applicable, to be eligible for maternity protection. Please refer to the following
table for details:
Type of Issued by a Issued by a Issued by a Issued by a
Certification
certificates registered registered registered registered
pertaining to
medical Chinese midwife nurse
practitioner medicine
practitioner
Pregnancy and the
✓ ✓ ✓ 
expected date of
confinement
Actual date of
✓  ✓ 
confinement
An additional period
✓ ✓  
of not more than
4 weeks of maternity
leave on ground of Medical
illness or disability Certificate
due to pregnancy or
confinement
Absence from work
✓ ✓  
to attend a medical
examination in
relation to pregnancy
or post confinement
medical treatment, or
by reason of
miscarriage
Unfitness to handle
✓ ✓  
heavy, hazardous or
harmful work
Absence from work
Certificate ✓ ✓ ✓ ✓
to attend a medical of
examination in attendance
relation to pregnancy

29
 Chapter 7: Paternity Leave

Paternity Leave
A male employee is entitled to 51 days’ paternity leave for each confinement of
his spouse / partner if he –
2
1. is the father of a new-born child or a father-to-be;

2. has been employed under a continuous contract; and

3. has given the required notification to the employer.

Taking of Paternity Leave

• The employee must notify his employer of –

1. his intention to take paternity leave at least 3 months before the expected
date of delivery of the child (exact date of leave not required at this stage);
and

2. the date of his paternity leave before taking the leave3.

• If the employee fails to give the abovementioned 3 months’ advance notice

to the employer, he must notify the employer of his date of paternity leave
at least 5 days before that date.

• If the employer so requests, the employee must provide his employer with
a written statement signed by him stating –

1. the name of the child’s mother;

2. the expected / actual date of delivery of the child; and

3. that he is the child’s father.

1 The number of paternity leave days is 3 days for each confinement of the spouse / partner of an
eligible male employee if his child is born on or after 27 February 2015 but before 18 January
2019.
2 The employee is not required to be married to the mother of the new-born child for entitlement
to paternity leave under the Employment Ordinance.
3 The law does not stipulate how advance such notification should be given.
30
 Sample Written Statement

I, (name of employee), state herewith that I am the father of the

child to be delivered / delivered* by (name of the child’s mother). The
expected / actual* date of delivery of the child is .

(Signature of employee)
Date
*Delete as appropriate

• The employee may take paternity leave at any time during the period from
4 weeks before the expected date of delivery of the child to 144 weeks
beginning on the actual date of delivery of the child. The employee may
take all 5 days of paternity leave in one go or on separate days.

Payment for Paternity Leave

A male employee is entitled to paternity leave pay if he –

1. has been employed under a continuous contract for not less than
40 weeks immediately before the day of paternity leave; and

2. has provided the required document to the employer within the following
period (whichever period expires first) –

(i) 12 months after the first day of paternity leave taken; or

(ii) if he ceases to be employed, within 6 months after cessation of

employment.

The daily rate of paternity leave pay is a sum equivalent to four-fifths of the
average daily wages earned by an employee in the 12-month period preceding
the day of paternity leave. If an employee takes more than one day of paternity
leave consecutively, the daily rate of paternity leave pay is a sum equivalent to
four-fifths of the average daily wages earned by the employee in the 12-month
period preceding the first day of paternity leave. If an employee is employed for
less than 12 months, the calculation shall be based on the shorter period.

4 If the child is born before 11 December 2020, it is up to 10 weeks beginning on the actual date
of delivery of the child.
31
 NOTE: In calculating the average daily 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, 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. (see Appendix 1 for details)

The Document to be Provided by the Employee

For birth in Hong Kong: the birth certificate of the child on which the
employee’s name is entered as the child’s father.

For birth outside Hong Kong: the birth certificate of the child issued by the
authorities of the place and on which the employee’s name is entered as the
child’s father (or, if the authorities of the place do not issue birth certificates,
any other document issued by the authorities that could reasonably be taken as
proof that the employee is the child’s father).

NOTE: Samples of birth certificates issued by the authorities of some places

outside Hong Kong are available on the web pages of the Labour Department.

If the child is born dead or dies after birth and no birth certificate has been
issued in respect of the child:
• The employee must produce a medical certificate 5 certifying the delivery of
the child.

• If required by the employer, the employee must also provide a written

statement signed by him stating that –

1. he is the father of the child delivered by the woman named in the medical
certificate; and
2. the child is born dead or dies after birth, whichever is appropriate.

5
For birth outside Hong Kong, the employee must provide a medical certificate or any other
document issued by the authorities of the place that could reasonably be taken as proof of the
delivery of the child.
32
 Sample Written Statement

I, (name of employee), state herewith that I am the father of the

child delivered by (name of child’s mother as named in the medical
certificate). The child is born dead / dies after birth*.

(Signature of employee)
Date
*Delete as appropriate

Time Limit for Payment of Paternity Leave

• If an employee has provided the required document to the employer before
the day on which paternity leave is taken, the employer must pay him
paternity leave pay –

1. not later than the day on which he is next paid his wages after the day of
paternity leave; or

2. if the employee has ceased to be employed, within 7 days after cessation

of employment.

• If an employee provides the required document to the employer after taking

paternity leave, the employer must pay him paternity leave pay –

1. not later than the day on which he is next paid his wages after the document
is provided; or

2. if the employee has ceased to be employed, within 7 days after the

document is provided.

Offences and Penalties

An employer who fails to grant paternity leave or paternity leave pay to an
eligible employee is liable to prosecution and, upon conviction, to a fine of
$50,000.

33
Other Points to Note

Employers and employees are advised to observe their obligations under the
Personal Data (Privacy) Ordinance (Cap. 486) in the disclosure and use of
personal data of the mother of the employee’s child for the purpose of granting
or claiming paternity leave and paternity leave pay. Employers may wish to
remind their employees to obtain the consent of the child’s mother before
disclosing her personal data. In case of queries, employers and employees may
wish to consult the Office of the Privacy Commissioner for Personal Data.

Every employer must at all times keep a record setting out the wage and
employment history of each employee covering the period of his employment
during the preceding 12 months. Among others, the record must include
particulars of the period(s) of paternity leave that the employee has taken
together with details of payments made in respect of such period(s), if
applicable.

34
Chapter 8: End of Year Payment

Application
The provisions concerning end of year payment apply to an employee employed
under a continuous contract who, in accordance with a term of his contract (including
agreement made orally or in writing, in express or implied term), is entitled to an end
of year payment from his employer.

Definition
End of year payment means any annual payment (including double pay, 13th month
payment, end of year bonus) of a contractual nature. It does not include any payment
which is of a gratuitous nature or which is payable at the discretion of the employer.

Presumption
For every employment contract made after 27 June 1997, it is presumed that an
annual payment or annual bonus is not of a gratuitous nature and is not payable only
at the discretion of the employer unless a written term or condition in the contract
expresses intention to the contrary.

Eligibility for End of Year Payment

An employee is eligible for an end of year payment if he has been employed under a
continuous contract for a whole payment period. The payment period shall be the
period specified in the employment contract, or a lunar year if it is not specified.

Amount of End of Year Payment

• The amount as specified in the employment contract.
• If it is not specified, a sum equivalent to the average monthly wages earned by
an employee in the 12-month period preceding the day on which it becomes due.
If an employee is employed for less than 12 months, the calculation shall be
based on the shorter period.

NOTE: In calculating the average 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. (see
Appendix 1 for details)

35
Proportion of End of Year Payment
An employee is eligible for a pro rata end of year payment if he has been employed
under a continuous contract for not less than three months in a payment period and:

• continues to be employed after the expiry of the payment period; or

• is dismissed by the employer (except in cases of summary dismissal due to the
employee's serious misconduct).

Any probation period, subject to a maximum of three months, is excluded from the
calculation of the qualifying service for pro rata end of year payment. However,
excluding the probation period, if an employee has fulfilled the eligibility requirement
of no less than three months’ employment in a payment period, then the whole
employment period (including the probation period) shall be taken into account in
calculating the pro rata end of year payment.

Time of Payment
• On the day specified in the employment contract.
• If a day is not specified, payment should be made on the last day of the payment
period or within seven days after that day.
• If the employment contract is terminated before the payment period expires and
the employee is eligible for pro rata end of year payment, payment should be
made on the day the contract is terminated or within seven days after that day.
• If the end of year payment is to be calculated by reference to any profits of the
employer, payment should be made on the day the profits are ascertained or
within seven days after that day.

Offences and Penalties

An employer who wilfully and without reasonable excuse fails to pay an end of year
payment to an eligible employee is liable to prosecution and, upon conviction, to a
fine of $50,000.

36
Chapter 9: Termination of Contract of Employment

Termination of Employment Contract by Notice or Payment in lieu of Notice

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. The length of notice or
the amount of payment in lieu of notice required are:

Table 1
Employment Condition Length of Payment
Notice in lieu of
Notice

During within the first month of probation not required not required
probation
period
where contract makes as per
provision for the required agreement, Table 2
after the
length of notice but not less
first month
than 7 days
of
where contract does not not less than
probation
make provision for the 7 days Table 2
required length of notice

For a where contract makes provision for the as per

continuous required length of notice agreement, Table 2
contract* with but not less
no / after than 7 days
probation not less than Table 2
where contract does not make
period 1 month
provision for the required length of
notice

* 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.

37
 Table 2

Average daily wages

earned by an
employee Number of days in the
Notice period Payment
in the 12-month notice period for which
expressed in wages would normally in lieu of
period preceding the X =
days or weeks be payable to the notice
day when a notice of employee
termination of
contract is given*

Average monthly
wages earned by an
employee
Notice period Payment
in the 12-month Number of months
expressed in specified in the notice in lieu of
period preceding the X =
months period notice
day when a notice of
termination of
contract is given**

*In case a notice has not been given, one shall adopt the average daily wages of the
employee in the 12-month period preceding “the day when the contract is
terminated”.

**In case a notice has not been given, one shall adopt the average monthly wages of
the employee in the 12-month period preceding “the day when the contract is
terminated”.

NOTE: In calculating the average daily / monthly wages, (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, should be excluded. (see
Appendix 1 for details)

38
Termination of Employment Contract Without Notice or Payment in lieu of
Notice
An employer may summarily dismiss an employee without notice or payment in lieu
of notice if the employee, in relation to his employment:

1. wilfully disobeys a lawful and reasonable order;

2. misconducts himself;
3. is guilty of fraud or dishonesty; or
4. is habitually neglectful in his duties.

Taking part by an employee in a strike is not a lawful ground for an employer to

terminate the employee's contract of employment without notice or payment in lieu.

NOTE: Summary dismissal is a serious disciplinary action. It only applies to

cases where an employee has committed very serious misconduct or
fails to improve himself after the employer's repeated warnings.

An employee may terminate his employment contract without notice or payment in

lieu of notice if:

1. he reasonably fears physical danger by violence or disease;

2. he is subjected to ill-treatment by the employer; or
3. he has been employed for not less than five years and is certified by registered
medical practitioner or a registered Chinese medicine practitioner as being
permanently unfit for the type of work he is being engaged (see Chapter 11).

39
Statutory Restrictions on Termination of Employment Contract
An employer shall not dismiss an employee under the following circumstances:

Maternity protection An employer shall not dismiss a female employee

who has been confirmed pregnant and has served a
notice of pregnancy.

Paid sick leave An employer shall not dismiss an employee whilst

the employee is on paid sick leave.

Giving evidence or An employer shall not dismiss an employee by

information to the reason of his giving of evidence or information in any
authorities 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.

Offences and Penalties

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

40
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 based on the
length of service, provident fund, etc.

Time of Making Termination Payments

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.

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.

Offences and Penalties

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 $350,000 and to imprisonment for three years.

41
 Chapter 10: Employment Protection

The Part on Employment Protection of the Employment Ordinance aims at

discouraging employers from dismissing or varying the terms of the employment
contract of their employees in order to evade their liabilities under the Ordinance.

Eligibility and Remedies for Employment Protection

An employee may claim for remedies against an employer under the following
situations:

Situation Conditions Remedies

Unreasonable 1. the employee has been employed
Dismissal under a continuous contract for a
period of not less than 24 months; and
2. the employee is dismissed other than
for a valid reason as specified in the
Ordinance

Unreasonable 1. the employee has been employed • An order for

Variation of under a continuous contract; reinstatement or
the Terms of 2. the terms of the employment contract re-engagement; or
the are varied without the employee's • An award of terminal
Employment consent; payments
Contract 3. the employment contract does not
contain an express term which allows
such a variation; and
4. the terms of the employment contract
are varied other than for a valid reason
as specified in the Ordinance

Unreasonable 1. the employee is dismissed other than • An order for

and Unlawful for a valid reason as specified in the reinstatement or
Dismissal Ordinance; and re-engagement; or
• An award of terminal
2. the dismissal is in contravention of the
law (see the part on “Statutory payments and / or
award of
Restrictions on Termination of
compensation not
Employment Contract” in Chapter 9)
exceeding $150,000

42
Valid Reasons for Dismissal or Variation of the Terms of the Employment
Contract
The five valid reasons for dismissal or variation of the terms of the employment
contract are:

 the conduct of the employee

 the capability or qualifications of the employee for performing his 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 his original position or to continue with the
original terms in his employment contract)
 other substantial reasons

The absence from work of an employee by reason of his / her compliance with a
specific anti-epidemic requirement with a movement restriction does not
constitute a valid reason for a dismissal or a variation of the terms of an
employee’s employment contract by his/her employer. (see the part on specific
anti-epidemic requirements with movement restriction in Chapter 5 “Sickness
Allowance”)

Making a Claim for Remedies for Employment Protection

An employee who wishes to claim for remedies must serve a written notice to the
employer in respect of his claim within three months from the effective date of
termination of employment or variation of contract. This deadline may be extended
for a further period up to six months if approved by the Commissioner for Labour.
If an employee wishes to file a claim with the Labour Tribunal (“LT”), he must do
so within nine months from the effective date of termination of employment or the
variation of contract.

Remedies for Employment Protection

Remedies for Employment Protection, to be awarded by LT, include an order of
reinstatement or re-engagement, an award of terminal payments and an award
of compensation.

43
Order of Reinstatement or Re-engagement
An order for reinstatement is an order requiring the employer to treat the
employee in all respects as if he had not been dismissed or as if there had been
no variation of the terms of the employment contract.

An order for re-engagement is an order requiring the employer to re-engage the

employee in an employment on terms comparable to his original terms of
employment or in other suitable employment. An order for re-engagement may
be varied by LT on application by the employee and with the agreement of the
parties concerned to the effect that engagement of the employee by a successor
or associated company of the original employer is to be treated as re-engagement
by the original employer in compliance with the re-engagement order.

For unreasonable dismissal and unreasonable variation of the terms of the

employment contract, an order for reinstatement or re-engagement will only be
made if both the employer and the employee agree to it.

For unreasonable and unlawful dismissal1, if LT considers the order is appropriate

and reinstatement or re-engagement of the employee by the employer is
reasonably practicable, such order can be made without the need to secure the
employer’s agreement.

NOTE: If the employer eventually does not reinstate or re-engage the employee
as required by the order, the employer must pay to the employee a further sum,
amounting to three times the employee’s average monthly wages* and subject to
a ceiling of $72,500, on top of the monetary remedies payable to the employee
as ordered by LT. (* see Appendix 1 for details of calculation)

Where an employee is ordered to be reinstated or re-engaged, his rights and

privileges, including seniority and pension rights, must be restored to him and the
continuity of the period of employment shall not be treated as broken.

The employer may also be ordered to pay the employee any arrears of pay and
statutory entitlements under the Employment Ordinance which the employee
would have accrued if he has not been dismissed or his terms of employment
contract has not been varied. Conversely, the employee may be ordered to pay

1 Where an employee has been unreasonably and unlawfully dismissed before 19 October 2018,
an order for reinstatement or re-engagement will only be made if both the employer and the
employee agree to it.
44
the employer any amount that the employer has paid him because of the dismissal
or the variation of the terms of the employment contract.

Award of Terminal Payments

If no order for reinstatement or re-engagement is made, LT may make an award
of terminal payments to be payable by the employer to the employee as it
considers fair and appropriate.

Terminal payments means: 1) the statutory entitlements under the Employment

Ordinance which the employee is entitled to but has not yet been paid upon
dismissal; 2) the entitlements the employee might reasonably be expected to be
entitled to under the Employment Ordinance had he been allowed to continue his
employment; and 3) any other payments due to the employee under his contract
of employment.

An employee may be awarded terminal payments even if he has not attained the
qualifying length of service required for the entitlements. In such case, the
terminal payments shall be calculated according to his actual length of service.

Award of Compensation
An employee may be awarded compensation up to a maximum of $150,000 if he
is unreasonably and unlawfully dismissed, and no order for reinstatement or re-
engagement is made by LT.

In determining the award of compensation, LT will consider the circumstances of

a claim including:

1. the circumstances of the employer and the employee;

2. the period of employment of the employee;
3. how the dismissal took place;
4. the loss sustained by the employee as a result of the dismissal;
5. possibility of the employee obtaining new employment;
6. whether the employee should bear any fault for the dismissal; and
7. any payments, including terminal payments, that the employee is entitled to
receive in respect of the dismissal.

45
Exclusion
This Part of the Employment Ordinance does not apply to claims involving
dismissal on the grounds of sex, disability, family status or race. If an employee is
dismissed on the grounds of sex, disability, family status or race, he may claim for
remedies under the Sex Discrimination Ordinance, the Disability Discrimination
Ordinance, the Family Status Discrimination Ordinance or the Race Discrimination
Ordinance respectively.

46
Chapter 11: Severance Payment and Long Service Payment

Eligibility for Severance Payment / Long Service Payment

An employee is eligible for severance payment or long service payment subject to

the following conditions:

Entitlement Severance Payment Long Service Payment

Not less than 24 months Not less than 5 years

Qualifying period
under a continuous contract under a continuous contract
of employment

 The employee is  The employee is

dismissed by reason of dismissed but:
redundancy* - he is not summarily
dismissed due to his
serious misconduct
- his dismissal is not by
reason of redundancy
 Employment contract of  Employment contract of a
Conditions / a fixed term expires fixed term expires without
Requirements without being renewed being renewed*
by reason of
redundancy*

 The employee is laid off  The employee dies

 The employee resigns on

ground of ill health

 The employee, aged 65

or above, resigns

* If not less than 7 days before the date of dismissal / expiry of the fixed term
contract in case of severance payment, and not less than 7 days before the expiry
of the fixed term contract in case of long service payment, the employer has
offered in writing to renew the contract of employment or re-engage him under a
new contract but the employee has unreasonably refused the offer, the employee
is not eligible for the entitlements.

47
NOTE: An employee will not be simultaneously entitled to both long service
payment and severance payment.

Meaning of Redundancy
An employee is taken to be dismissed by reason of redundancy if the dismissal
is due to the fact that:

• the employer closes or intends to close his business;

• the employer has ceased, or intends to cease, the business in the place
where the employee was employed; or
• the requirement of the business for employees to carry out work of a particular
kind, or for the employee to carry out work of a particular kind in the place
where the employee was employed, ceases or diminishes or is expected to
cease or diminish.

Meaning of Lay-off
If an employee is employed on such terms and conditions that his remuneration
depends on his being provided by the employer with work of the kind he is
employed to do, he shall be taken to be laid off if the total number of days on
which no work is provided and no wages is paid exceeds:

• half of the total number of normal working days in any four consecutive
weeks; or
• one-third of the total number of normal working days in any 26 consecutive
weeks.

The days of lock-out, rest days, annual leave and statutory holidays should not
be counted as normal working days during the above periods.

48
Amount of Severance Payment / Long Service Payment
Where an employee’s employment did not straddle over 1 May 20251 (i.e. the effective date of the
abolition of Mandatory Provident Fund (“MPF”) offsetting arrangement) (“the transition date”) or
where the employee is not covered by the MPF System or other statutory retirement schemes 2,
the formula below will be used for calculation of severance payment / long service payment for the
whole period of employment.
Monthly-paid # reckonable
(last full month’s wages* X 2/3) X
employee years of service
Daily-rated / (any 18 days' wages* chosen by the employee reckonable
piece-rated # X
employee out of his last 30 normal working days) years of service
Where an employee’s employment straddled over 1 May 20253, his severance payment / long
service payment is divided into two portions by the transition date – the pre-transition portion (for
employment period before the transition date) and post-transition portion (for employment period
starting from the transition date). The calculations are as follows:
Pre-transition portion Post-transition portion
(last full month’s wages immediately
(last full month’s wages immediately
preceding the termination of
Monthly-paid preceding the transition date^ x 2/3) # x
employment contract* x 2/3) # x years
employee reckonable years of service before the
of service starting from the transition
transition date
date
(any 18 days’ wages* chosen by the
(any 18 days’ wages^ chosen by the
employee out of his last 30 normal
Daily-rated / employee out of his last 30 normal
working days immediately preceding
piece-rated working days immediately preceding
employee the termination of employment
the transition date) # x reckonable years
contract) # x years of service starting
of service before the transition date
from the transition date
Service of an incomplete year should be calculated on a pro rata basis.
* An employee may also elect to use his average wages in the 12 months immediately preceding
the termination of employment contract for the calculation. (Where the employee's employment
contract is terminated by payment in lieu of notice, the employee may elect to use his average
wages in the 12 months immediately preceding the date up to which the payment in lieu of notice
is calculated.)

^ An employee may also elect to use his average wages in the 12 months immediately preceding
the transition date for the calculation.
# The sum should not exceed 2/3 of $22,500 (i.e. $15,000).
(see Appendix 2 for examples of calculation of severance payment and long service payment)

1 An employee’s employment did not straddle over 1 May 2025 if his employment was terminated before 1 May 2025
or commenced on or after 1 May 2025.
2 For example, domestic helpers, and employees aged below 18 or employees who commenced employment at the

age of 65 or above.
3 An employee’s employment straddled over 1 May 2025 if his employment commenced before 1 May 2025 and

terminated on or after 1 May 2025.

49
Reckonable Years of Service
For all manual employees and non-manual employees whose average monthly wages
did not exceed $15,000 for the 12 months preceding 8 June 1990, if the relevant date
of termination of employment occurs on or after 1 October 2004, the years of service
should be reckoned in full.

For non-manual employees whose average monthly wages exceeded $15,000 for the
12 months preceding 8 June 1990, their years of service can be reckoned up to 1980.

Maximum Amount
The maximum amount of severance payment or long service payment is $390,000.

Where an employee has pre- and post-transition portions of severance payment / long
service payment, the sum of two portions shall not exceed $390,000. The amount in
excess should be deducted from the post-transition portion.

Payment of Severance Payment

An employee who wishes to claim for severance payment should serve a written notice
to his employer within three months after the dismissal / lay off takes effect. The
deadline for serving such notice may be extended if approved by the Commissioner
for Labour.

The employer shall make the severance payment to the employee not later than two
months from the receipt of such a notice.

Offences and Penalties

An employer who without reasonable excuse fails to pay severance payment to an
employee is liable to prosecution and, upon conviction, to a fine of $50,000.

Payment of Long Service Payment

Long service payment should be paid to an employee within seven days after the date
of termination of employment contract.

Offences and Penalties

An employer who wilfully and without reasonable excuse fails to pay long service
payment to an employee is liable to prosecution and, upon conviction, to a fine of
$350,000 and to imprisonment for three years.

50
Offsetting of Severance Payment / Long Service Payment against Mandatory
Provident Fund Scheme benefit, Occupational Retirement Scheme benefit or
Gratuity based on length of service

If an employee becomes entitled to severance payment or long service payment and:

• gratuities based on length of service are payable or have been paid to the
employee; or
• occupational retirement scheme (“ORS”) benefits attributable to employer’s
contributions are payable or have been paid to the employee; or
• accrued benefit attributable to employer's contributions is being held in an MPF
scheme in respect of the employee, or has been paid to the employee,

and if the employee’s employment is terminated before 1 May 2025, the severance
payment / long service payment is to be offset against the aforementioned amount of
gratuities and benefits to the extent that they relate to the employees' years of service
for which the severance payment / long service payment is payable.

The abolition of the offsetting arrangement applies to cases where the contract of
employment is terminated on or after 1 May 2025. After the abolition of offsetting
arrangement, an employer cannot use the accrued benefits derived from employer’s
MPF mandatory contributions to offset an employee’s severance payment / long
service payment, but can continue to use the accrued benefits derived from
employer’s MPF voluntary contributions and gratuities based on length of service to
offset an employee’s severance payment / long service payment.

The abolition has no retrospective effect. If an employee commenced employment

before 1 May 2025, an employer can continue to use the accrued benefits derived
from employer’s MPF mandatory contributions to offset an employee’s pre-transition
portion of severance payment / long service payment (but not the post-transition
portion of severance payment / long service payment). The accrued benefits derived
from employer’s MPF voluntary contributions and gratuities based on length of service
can continue to be used to offset pre- and/or post-transition portion of severance
payment / long service payment.

(see Appendix 2 for details of the abolition of MPF offsetting arrangement)

51
Starting from 1 May 2025, eligible employers, after payment of
severance payment / long service payment to employees
according to the Employment Ordinance, may apply to the
Government for subsidy 4 in respect of expenses on post-
transition portion of severance payment and long service
payment. For details, please visit the thematic website at
[Link].

(For enquiries on application for payment of an amount from the ORS benefits or
accrued benefit in the MPF scheme due to severance payment / long service payment
paid / payable to an employee, please contact the trustees concerned for details.)

Claiming Long Service Payment on the ground of Ill Health

An employee claiming for long service payment on ground of ill health should forward
to the employer a certificate in a specified form issued by a registered medical
practitioner or a registered Chinese medicine practitioner, certifying that he is
permanently unfit for his present job.

Regardless of whether the certificate produced by the employee was issued by a

registered medical practitioner or registered Chinese medicine practitioner, an
employer may, within 14 days after receiving such certificate, at the employer’s own
expense, arrange for the employee to attend another medical examination conducted
by a registered medical practitioner or registered Chinese medicine practitioner named
by the employer to obtain a second opinion as to the employee’s permanent unfitness
to undertake the work at issue. The employer should notify the employee in writing
details of the appointment not later than 48 hours before the examination is to take
place.

4 The Subsidy Scheme for Abolition of MPF Offsetting Arrangement is a 25-year administrative scheme
of the Government.
52
Claiming Long Service Payment in the event of the Death of an Employee

Priority in claiming long service payment

1st the spouse of the deceased employee

children of the deceased employee (if two or more persons apply, the long
2nd
service payment should be divided equally between them)

parents of the deceased employee (if two or more persons apply, the long
3rd
service payment should be divided equally between them)

4th the personal representative of the deceased employee

Application Procedures
The person who wishes to claim for long service payment must serve an application in
a specified form to the employer within 30 days after the death of the employee. Where
necessary, the Commissioner for Labour may extend the deadline. The form can be
obtained at any branch office of the Labour Relations Division of the Labour
Department or downloaded from the web page of the Labour Department.

The employer shall make the payment of Long Service Payment to:

The spouse of the employee within 7 days after receiving the application

Other applicants within 7 days after the application period expires

Offences and Penalties

An employer who without reasonable excuse fails to pay long service payment to the
beneficiaries of a deceased employee is liable to prosecution and, upon conviction, to
a fine of $50,000.

53
Chapter 12: Protection against Anti-union Discrimination

Right of an Employee in Participating in Trade Unions

Every employee shall have the following rights:

1. to be a member or an officer of a trade union

2. to take part in the activities of the trade union at any appropriate time, if the
employee is a member or an officer of a trade union
(Appropriate time means:-
- outside working hours; or
- during working hours by arrangement and with the consent of the employer.)
3. to associate with other persons for the purpose of forming or applying for the
registration of a trade union.

Statutory Requirements of the Employer

An employer shall not:-

1. prevent or deter an employee from exercising any of the above rights;

2. dismiss, penalise or discriminate against an employee for exercising the above
rights;
3. make it a condition of employment that an employee must not exercise the
above rights.

Offences and Penalties

Any employer who contravenes the above shall be liable to prosecution and, upon
conviction, to a fine of $100,000.

54
Chapter 13: Employers’ Criminal Liability in Failing to Pay an
Award of the Labour Tribunal or Minor Employment Claims
Adjudication Board

An employer should pay an award of the Labour Tribunal (“LT”) or the Minor
Employment Claims Adjudication Board1 (“MECAB”) without delay.

Defaulting Payment of an Award of a Tribunal is a Criminal Offence

Under the Employment Ordinance 2 , if an award of a tribunal 3 provides for the

payment by an employer of any specified entitlement (such as wages, end of year
payment, maternity leave pay and severance payment, etc)4 (see the part below
on Coverage of “Specified Entitlements”) and the employer wilfully and without
reasonable excuse fails to pay the award within 14 days after the date on which
the sum is payable5, the employer is liable to prosecution and, upon conviction, to
a fine of $350,000 and to imprisonment for three years.

The offence applies to the default on any part of a sum payable under the award.
In the case of a sum payable by instalments, it also applies to the default on any
instalment or part of an instalment.

1 In accordance with the Minor Employment Claims Adjudication Board Ordinance (Amendment of
Schedule) Notice 2021, with effect from 17 September 2021, the jurisdiction of MECAB is
increased from a claim amount not exceeding $8,000 per claimant to not exceeding $15,000 per
claimant.
2 The relevant provisions were set out in the Employment (Amendment) Ordinance 2010 and apply
to an award of the LT or MECAB made on or after its effective date (i.e. 29 October 2010).
3 “an award of a tribunal”─ includes an award, an order or a settlement treated as an award of the
LT under the Labour Tribunal Ordinance or that of the MECAB under the Minor Employment
Claims Adjudication Board Ordinance.
4 Unless there is any contrary evidence, if an award of a tribunal provides for the payment of a sum
but does not indicate whether or not that sum includes any specified entitlement, and the claim
to which the award relates consists, in whole or in part, of any specified entitlement, the award is
to be treated as providing for the payment of a specified entitlement.
5 If the award does not specify the date on which the award is payable, the sum should be paid
within 14 days after the date of the award.
55
Directors, etc. of Body Corporates are Criminally Liable for Defaulting
Payment of an Award of a Tribunal

Where a body corporate wilfully and without reasonable excuse fails to pay an
award of a tribunal within 14 days after the date on which the sum is payable, and
the offence is proved to have been committed with the consent or connivance of,
or to be attributable to any neglect on the part of, any director, manager, secretary
or other similar officer of the body corporate, such person commits the like offence
as the body corporate and, upon conviction, is liable to the same penalty, i.e. a fine
of $350,000 and imprisonment for three years.

Coverage of “Specified Entitlements”

“Specified entitlements” include wages and statutory entitlements underpinned by

criminal sanctions under the Employment Ordinance, such as wages, end of year
payment, maternity leave pay, paternity leave pay, severance payment, long
service payment, sickness allowance, holiday pay, annual leave pay as well as
terminal payments, compensation and further sum for unreasonable and unlawful
dismissal awarded under the part on “Employment Protection” of the Employment
Ordinance.

56
 Examples
How to determine the “14-day period after the award is payable”

[Example 1] When the award is payable in a lump sum:

An employer terminated the employment of his employee on 17 September 2021

by initially agreeing to pay 1-month payment in lieu of notice of $14,500 in place of
giving one month’s notice as per the term under the employment contract. The
employer subsequently refuses to pay the sum.

The employee lodges a claim for $14,500 as payment in lieu of notice against his
employer at the Labour Relations Division of the Labour Department. After
conciliation, the dispute is unresolved. The employee then files a claim with
MECAB for the payment in lieu of notice against the employer. MECAB awards in
favour of the employee on 8 November 2021 and makes an award on the same
day. The employer is ordered to pay the employee $14,500 on or before
15 November 2021 as payment in lieu of notice.
November 2021

SUN MON TUE WED THU FRI SAT

1 2 3 4 5 6

7 8 9 10 11 12 13

The date by which the 14 15 16 17 18 19 20

award sum is payable 21 22 23 24 25 26 27

28 29 30 1 DEC 2 3 4

Non or late-payment

Denotes the 14-day period (i.e. 16 to 29 November 2021)

after the date by which the award sum is payable. An
employer who wilfully and without reasonable excuse fails to
pay before expiry of this period commits an offence.

An employer who wilfully and without reasonable excuse fails to pay the award of
$14,500 within 14 days (i.e. 16 to 29 November 2021) after the date by which the
sum is payable (i.e. 15 November 2021) commits an offence and is liable to
prosecution. Upon conviction, the maximum penalties are a fine of $350,000 and
imprisonment for three years.

57
 [Example 2] When the award is payable by instalments:

An employee files a claim with LT against his employer for $27,000 as commission.
The parties reach a settlement agreement at a hearing on 3 November 2021 and
the employer agrees to pay the employee the claim amount by 3 instalments in full
and final settlement of the dispute. LT approves the settlement agreement and
makes an award on the same day. The award should be paid on or before the
following dates:

No. of Instalments Date Payment

First Instalment 17 November 2021 $9,000
Second Instalment 17 December 2021 $9,000
Third Instalment 17 January 2022 $9,000

If the employer only pays the first and second instalments on schedule in a total
sum of $18,000 but fails to pay the third instalment $9,000 by 31 January 2022 (i.e.
expiry of the 14-day period after the date by which the third instalment is payable),
the employer commits an offence and is liable to prosecution.
January 2022
SUN MON TUE WED THU FRI SAT

1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
The date by 16 17 18 19 20 21 22
which the third
23 24 25 26 27 28 29
instalment of the
award is payable 30 31 1 FEB 2 3 4 5

Non or late-payment

Denotes the 14-day period (i.e. 18 to 31 January 2022) after the

date by which the third instalment of the award is payable. An
employer who wilfully and without reasonable excuse fails to pay
before expiry of this period commits an offence.

An employer who wilfully and without reasonable excuse fails to pay the sum of
$9,000 before expiry of the 14-day period (i.e. 18 to 31 January 2022) after the
date by which the third instalment of the award is payable (i.e. 17 January 2022)
commits an offence and is liable to prosecution. Upon conviction, the maximum
penalties are a fine of $350,000 and imprisonment for three years.

58
 Appendix 1

A Guide to the Calculation of Relevant Statutory Entitlements

on the Basis of the 12-Month Average Wages with Examples

Introduction
Provisions under the Employment (Amendment) Ordinance 2007 (“the E(A)O
2007”) relating to the calculation of statutory entitlements became effective on
13 July 20071.

The main objective of the E(A)O 2007 is to ensure that all components of
wages 2 as defined under the Employment Ordinance (including commission
and allowance, etc) are included in the calculation of relevant statutory
entitlements.

Upon commencement of the E(A)O 2007, regardless of whether an employee

is monthly, daily or piece rated, his relevant statutory entitlements shall be
calculated on the basis of his 12-month average wages; and in computing
his average wages, any periods and wages that fall under the
“disregarding provisions” shall be excluded.

1 Application of the E(A)O 2007:

 Applicable to employment contracts entered into on or after 13 July 2007.
 For employment contracts entered into before the commencement date, the E(A)O 2007
is applicable under the following situations:
 If maternity leave pay, paternity leave pay, sickness allowance, holiday pay or annual
leave pay is payable by an employer to an employee in respect of a wage period, and
the last day of the wage period falls on or after the commencement date.
 If the due date of the end of year payment (or proportion of it) payable by an employer
to an employee falls on or after the commencement date.
 If the relevant statutory entitlements are payable upon termination of contract and the
date of termination falls on or after the commencement date.

2 See the part on definition of wages in Chapter 3.

59
 (I) Relevant Statutory Entitlements:
1. Holiday pay
2. Annual leave pay
3. Sickness allowance and related provisions 3
4. Maternity leave pay and related provisions 4
5. Paternity leave pay
6. End of year payment
7. Payment in lieu of notice
8. Further sum for non-compliance of an order of reinstatement or
re-engagement for unreasonable and unlawful dismissal5

(II) The Revised Mode of Calculation:

Calculating relevant statutory entitlements on the basis of the 12-month

average wages
The relevant statutory entitlements shall be calculated on the basis of the
average daily (or monthly) wages earned by an employee in the 12-month6
period preceding the specified dates as stipulated by the E(A)O 2007. If an
employee is employed for less than 12 months, the calculation shall be based
on the shorter period7.

3 Including the compensation payable by an employer for wrongfully dismissing an employee on

sick leave.
4 Including the compensation payable by an employer for wrongfully dismissing a pregnant
employee.
5 If the employer eventually does not reinstate or re-engage the employee as required by the
order, the employer shall pay to the employee a further sum, amounting to three times the
employee’s average monthly wages and subject to a ceiling of $72,500, on top of the monetary
remedies payable to the employee as ordered by the Labour Tribunal.
6 Month” refers to “calendar month”.
7 Suppose an employee commenced employment on 5 July 2007, his period of employment will
be less than 12 calendar months before 4 April 2008 (i.e. Ching Ming Festival). His holiday pay
for 4 April 2008 shall therefore be calculated on the basis of his average daily wages earned in
the period 5 July 2007 and 31 March 2008.
60
 The specified dates of the relevant statutory entitlements are:

Statutory
Day(s) of Leave Specified Dates
Entitlements
1 day Day of the statutory holiday
Holiday Pay More than First day of the statutory
1 consecutive day holidays
1 day Day of the annual leave
More than
First day of the annual leave
Annual Leave Pay 1 consecutive day
Day(s) of untaken leave
Date of termination of contract
upon termination of contract
1 day The sickness day
Sickness
More than
Allowance8 The first sickness day
1 consecutive day
Maternity Leave More than First day of the maternity
Pay9 1 consecutive day leave
1 day Day of the paternity leave
Paternity Leave
More than
Pay First day of the paternity leave
1 consecutive day
End of Year
- Due day of the payment
Payment10
The day when a notice of
termination of contract is
Payment in lieu of
- given (in case a notice has
Notice
not been given, the day when
the contract is terminated)
Date of termination of
Further Sum -
contract

8 In calculating the 7 days’ wages as compensation payable to an employee wrongfully dismissed

on a sickness day, the employer shall adopt the date of termination of contract as the specified
date.
9 In calculating the 1 month’s wages as compensation payable to a pregnant employee wrongfully

dismissed, the employer shall adopt the date of termination of contract as the specified date.
10 Applicable to situation in which the amount of end of year payment has not been specified in

the contract.
61
 Example 1: How to determine the specified date and the 12-month period
for calculating holiday pay – in the case of “Tuen Ng Festival” in 2023
 The specified date is the day of the statutory holiday, i.e. 22 June
2023
 The 12-month average wages is calculated on the basis of the wages
earned in the period 1 June 2022 and 31 May 2023.

1 JUN 31 MAY  22 JUN (Tuen Ng Festival)

< ----- holiday pay calculated on the basis of average

wages of these 12 months ----- > 

APR JUN AUG OCT DEC FEB APR JUN AUG

2022 2023

Example 2: How to determine the specified date and the 12-month period
for calculating maternity leave pay – in the case of 14-week maternity
leave commencing 18 October 2023
 The specified date is the first day of the maternity leave, i.e. 18
October 2023
 The 12-month average wages is calculated on the basis of the wages
earned in the period 1 October 2022 and 30 September 2023.

1 OCT 30 SEP 18 OCT (first day of

maternity leave)
< ----- maternity leave pay calculated on the basis of
average wages of these 12 months ----- > 

AUG OCT DEC FEB APR JUN AUG OCT DEC

2022 2023

Periods and Wages to be Disregarded

To avoid deflating the average wages and hence reducing the amount of
statutory entitlements, in calculating the 12-month average daily (or monthly)
wages, one has to identify the following situations as stipulated by the E(A)O
2007 under which an employee is not paid his wages or full wages and then
exclude the periods together with the wages paid to the employee for such
periods11:

11 To simplify the administrative work involved in calculating average wages, the E(A)O 2007 has
made a technical amendment to presume the sum payable for the periods under (i) and (ii) as
wages. By doing so, an employer does not have to exclude his employee’s full-paid leave (be it
statutory holiday, annual leave, maternity leave, paternity leave or any other leave taken with
agreement of the employer) as well as the sum paid correspondingly when calculating average
wages. It is noteworthy that the definition of wages under the Employment Ordinance has not
been changed as a result of this amendment.
62
(i) The employee’s taking any of the following leave:
 leave provided under the Employment Ordinance (i.e. rest day, statutory
holiday, annual leave, maternity leave, paternity leave or sickness day);
 sick leave due to work injuries as provided under the Employees’
Compensation Ordinance; or
 leave taken with the agreement of the employer;

(ii) The employee not being provided by the employer with work on any
normal working day.

Example 3: How to exclude the periods and wages that fall under the
“disregarding provisions” – in the case of 7-day annual leave commencing
6 December 2023

 Assuming the employee is monthly rated and she has taken 14-week
maternity leave commencing 9 August 2023 with maternity leave pay at
four-fifths of her wages.
 The 7-day annual leave pay shall be calculated on the basis of her average
daily wages in the past 12 months (i.e. from 1 December 2022 to
30 November 2023).
 Periods and wages to be excluded in calculating the average daily wages:
➢ Excluding the period of 14-week maternity leave from the 12-month
period (i.e. 365 days minus 98 days)
➢ Excluding the 14-week maternity leave pay from the total wages
earned in the 12-month period
Total wages in the 12-month period –
Average daily wages = 14-week maternity leave pay ($)
365 – 98 (days)

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Examples on Calculation
(Note: The hypothetical examples below illustrate how relevant statutory
entitlements should be calculated.)

Example 1
Calculating holiday pay for 1 January 2023

Assumptions
 An employee was employed on 1 January 2022
 Remuneration: Daily-rated at $500 with no-pay rest days
 12-month wages earned in 2022: $154,500 including –
➢ wages of $150,000 for working 300 days (i.e. 365 days – 52 rest days
– 13 statutory holidays)
➢ payments of $4,500 for 9 statutory holidays
 Leave taken with less than full wages in 2022:
➢ 52 rest days without pay
➢ 4 statutory holidays without pay (falling within the first 3 months of
employment)

Periods and wages to be disregarded

 52 days of no-pay rest days
 4 days of no-pay statutory holidays
(Note: as the above 56 days are no-pay leave, the amount to be excluded will
be $0)

Calculating holiday pay on the basis of the 12-month average

 Calculating the average daily wages earned in 2022
154,500 - 0 ($)
365 - 52 - 4 (days) = $500

 Holiday pay for 1 January 2023: $500

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Example 2
Calculating sickness allowance for 4 sickness days taken in October 2023

Assumptions
 Remuneration: Monthly-rated at $15,000 with paid rest days
 12-month wages earned before the first sickness day: $180,000 including
wages for services rendered and payments for leave
 Leave taken in the 12-month period: 72 days of full pay leave comprising –
➢ 52 rest days
➢ 13 statutory holidays
➢ 7 days of annual leave

Periods and wages to be disregarded

 No period and sum have to be excluded because the employee is not paid
less than his full wages for the leave taken in the 12-month period

Calculating sickness allowance on the basis of the 12-month average

 Calculating the average daily wages earned in the 12-month period:
180,000 - 0 ($)
365 - 0 (days) = $493

 4-day sickness allowance: $493 x 4/5 x 4 = $1,578

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Example 3
Calculating annual leave pay for 7 days of paid annual leave taken in
August 2023

Assumptions
 Remuneration: Monthly-rated at $15,000 with paid rest days
 12-month wages earned before the first day of annual leave: $180,000
including wages for services rendered and payments for leave
 Leave taken in the 12-month period: 72 days of full pay leave comprising –
➢ 52 rest days
➢ 13 statutory holidays
➢ 7 days of annual leave

Periods and wages to be disregarded

 No period and sum have to be excluded because the employee is not paid
less than his full wages for the leave taken in the 12-month period

Calculating annual leave pay on the basis of the 12-month average

 Calculating the average daily wages earned in the 12-month period:
180,000 - 0 ($)
365 - 0 (days) = $493

 7-day annual leave pay: $493 x 7 = $3,451

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Example 4
Calculating 1-month payment in lieu of notice

Assumptions
 Remuneration:
➢ Basic pay at $6,000 per month
➢ Contractual commission accrued and calculated on a monthly basis
according to a sliding scale
 12-month wages earned before the date on which notice of termination is
given: $600,000 including basic pay and commission
 Leave taken with less than full wages in the 12-month period: 15 days of
half-pay study leave (i.e. 50% of basic pay) at $1,500

Periods and wages to be disregarded

 15 days of study leave with half pay at $1,500

Calculating 1-month payment in lieu of notice on the basis of the 12-month

average
 Calculating the average monthly wages earned in the 12-month period:
(a) No. of months included in the calculation:
365 - 15 (days)
365 (days) x 12 = 11.5 months

(b) The average monthly wages:

600,000 - 1,500 ($)
11.5 (months) = $52,043

 1-month payment in lieu of notice: $52,043

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 Appendix 2

A Guide to the Abolition of

Mandatory Provident Fund Offsetting Arrangement with Examples

If an employee becomes entitled to severance payment or long service payment

and is also entitled to accrued benefits derived from employer’s Mandatory
Provident Fund (“MPF”) contributions, vested benefits of occupational retirement
scheme (“ORS”) attributable to employer’s contributions or gratuities based on
length of service, the offsetting arrangement is as follows:

(i) If an employee’s employment was terminated before 1 May 2025, his

severance payment or long service payment can be offset against the
aforementioned amount of gratuities and benefits.

(ii) If an employee’s employment commenced on or after 1 May 2025:

Severance Payment / Long Service Payment

Offsettable Non-offsettable

Accrued benefits derived ✓

from employer’s MPF
mandatory contributions1

Accrued benefits derived ✓

from employer’s MPF
voluntary contributions2

Vested benefits of MPF ✓

exempted ORS attributable
to employer’s contributions
– “carved-out benefits” 3

Vested benefits of MPF ✓

exempted ORS attributable
to employer’s contributions
– “remaining benefits” 4

Vested benefits of non-MPF ✓

exempted ORS attributable
to employer’s contributions5

Gratuities based on length ✓

of service

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(iii) If an employee’s employment commenced before 1 May 2025 and terminated
on or after 1 May 2025:

Pre-transition Portion of Post-transition Portion

Severance Payment / of Severance Payment /
Long Service Payment Long Service Payment
Offsettable Non- Offsettable Non-
offsettable offsettable

Accrued benefits
derived from employer’s
MPF mandatory ✓ ✓
contributions1

Accrued benefits
derived from employer’s
MPF voluntary ✓ ✓
contributions2

Vested benefits of MPF

exempted ORS
attributable to
✓ ✓
employer’s contributions
– “carved-out benefits” 3

Vested benefits of MPF

exempted ORS
attributable to
✓ ✓
employer’s contributions
– “remaining benefits” 4

Vested benefits of non-

MPF exempted ORS
attributable to
✓ ✓
employer’s
contributions5

Gratuities based on
length of service ✓ ✓

The severance payment / long service payment is to be offset against the

aforementioned amount of gratuities and benefits to the extent that they relate to the
employees' years of service for which the severance payment / long service payment
is payable.

1 It refers to “employer-funded (mandatory) MPFS benefit” under the Employment Ordinance (“EO”).
2 It refers to “employer-funded (voluntary) MPFS benefit” under EO.
3 It refers to “employer-funded (basic portion) exempt ORS benefit” under EO.
4 It refers to “employer-funded (prescribed portion) exempt ORS benefit” under EO.
5 It refers to “employer-funded non-exempt ORS benefit” under EO.

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“Carved-out benefits” and “Remaining benefits”
 Since ORS contributions are not differentiated into mandatory and voluntary
portions, a portion of benefits akin to employer’s MPF mandatory contributions will
be carved out (“carved-out benefits”) from the vested benefits of employer’s
contributions. The remainder of vested benefits after carving out the “carved-out
benefits” (“remaining benefits”) will be akin to employer’s MPF voluntary
contributions.

 Calculation of “carved-out benefits” and “remaining benefits” of vested benefits of

MPF exempted ORS attributable to employer’s contributions are as follows:

Carved-out Final average monthly Years of service with MPF

X 5% X 12 X
benefits^ relevant income* exempted ORS benefits#

Remaining Vested benefits of MPF exempted ORS

- “Carved-out benefits”
benefits attributable to employer’s contributions

* It means the employee’s average monthly relevant income in the 12 months

immediately preceding the termination of employment contract, subject to the
maximum level of relevant income under the Mandatory Provident Fund Schemes
Ordinance (Cap. 485).
# Only years of service on or after 1 December 2000 will count.
^ If the amount of the vested benefits of MPF exempted ORS attributable to employer’s
contributions is less than or equal to the amount calculated using the above formula,
the whole amount of vested benefits of MPF exempted ORS attributable to employer’s
contributions should be “carved-out benefits”.

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Example 1
Calculating severance payment / long service payment of an employee whose
employment commences on or after 1 May 2025 (i.e. the transition date) and
the offsetting arrangement of an employee who joins an MPF scheme

Assumptions
⚫ Employment commencement date: 1 May 2025
⚫ Date of termination of employment contract: 30 April 2030
⚫ Years of service: 5 years
⚫ Last full month’s wages: $18,000
⚫ Accrued benefits derived from employer’s MPF mandatory contributions:
$50,000 (comprising employer’s contributions for the whole employment period
and the returns derived therefrom)
⚫ No employer’s MPF voluntary contributions, employer’s ORS contributions or
gratuities based on length of service

Calculation of severance payment / long service payment and the offsetting

arrangement

(a) Severance payment / long service $18,000 × 2/3 × 5 years = $60,000

payment
(b) Accrued benefits derived from $50,000
employer’s MPF mandatory
contributions
(cannot be used to offset severance
payment / long service payment)
(c) Accrued benefits derived from $0 [Not applicable]
employer’s MPF mandatory
contributions for offsetting
severance payment / long service
payment
(d) Accrued benefits derived from $50,000 – $0 = $50,000
employer’s MPF mandatory
contributions to be retained in
employee’s MPF account
[= (b) – (c)]
(e) Employee’s aggregate benefits $60,000 + $50,000 = $110,000
[= (a) + (d)]

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Example 2
Calculating severance payment / long service payment of an employee who
commenced employment before 1 May 2025 (i.e. the transition date) and the
offsetting arrangement of an employee who joins an MPF scheme

Assumptions
⚫ Employment commencement date: 1 May 2022
⚫ Date of termination of employment contract: 30 April 2030
⚫ Years of service: 8 years
⚫ Last full month's wages immediately preceding the transition date: $15,000
⚫ Last full month's wages immediately preceding the termination of employment
contract: $18,000
⚫ Accrued benefits derived from employer’s MPF mandatory contributions:
$80,000 (comprising employer’s contributions for the whole employment period
and the returns derived therefrom)
⚫ No employer’s MPF voluntary contributions, employer’s ORS contributions or
gratuities based on length of service

Calculation of severance payment / long service payment and the offsetting

arrangement

Severance payment / long service

payment

(a) Pre-transition portion $15,000 × 2/3 × 3 years = $30,000

(b) Post-transition portion $18,000 × 2/3 × 5 years = $60,000
(c) Total: $90,000
(d) Accrued benefits derived from $80,000
employer’s MPF mandatory
contributions
(can only be used to offset pre-
transition portion of severance
payment / long service payment)
(e) Accrued benefits derived from $30,000
employer’s MPF mandatory
contributions for offsetting pre-
transition portion of severance
payment / long service payment
(f) Accrued benefits derived from $80,000 – $30,000 = $50,000
employer’s MPF mandatory
contributions to be retained in
employee’s MPF account after
offsetting pre-transition portion of
severance payment / long service
payment
[= (d) – (e)]
(g) Employee’s aggregate benefits $90,000 + $50,000 = $140,000
[= (c) + (f)]

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Example 3
Calculating severance payment / long service payment of an employee who
commenced employment on or after 1 May 2025 (i.e. the transition date) and
the offsetting arrangement of an employee who joins an MPF exempted ORS

Assumptions
⚫ Employment commencement date: 1 May 2025
⚫ Date of termination of employment contract: 30 April 2030
⚫ Years of service: 5 years
⚫ Last full month’s wages: $18,000
⚫ Final average monthly relevant income: $18,000
⚫ Vested ORS benefits attributable to employer’s contributions: $90,000
(comprising employer’s contributions for the whole employment period and the
returns derived therefrom)
⚫ No employer’s MPF contributions, other ORS contributions or gratuities based
on length of service

Calculation of severance payment / long service payment and the offsetting

arrangement

(a) Severance payment / long service $18,000 × 2/3 × 5 years = $60,000

payment
(b) Vested ORS benefits attributable to $90,000
employer’s contributions
(c) “Carved-out benefits” $18,000 × 5% × 12× 5 years = $54,000
(cannot be used to offset severance
payment / long service payment)
(d) “Remaining benefits” $90,000 - $54,000 = $36,000
(can be used to offset severance
payment / long service payment)
(e) Vested ORS benefits attributable to $36,000
employer’s contributions for
offsetting severance payment /
long service payment
(f) Vested ORS benefits attributable to $90,000 – $36,000 = $54,000
employer’s contributions to be
retained by the employee after
offsetting severance payment /
long service payment
[= (b) – (e)]
(g) Employee’s aggregate benefits $60,000 + $54,000 = $114,000
[= (a) + (f)]

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Example 4
Calculating severance payment / long service payment of an employee who
commenced employment before 1 May 2025 (i.e. the transition date) and the
offsetting arrangement of an employee who joins an MPF exempted ORS

Assumptions
⚫ Employment commencement date: 1 May 2021
⚫ Date of termination of employment contract: 30 April 2028
⚫ Years of service: 7 years
⚫ Last full month's wages immediately preceding the transition date: $15,000
⚫ Last full month's wages immediately preceding the termination of employment
contract: $18,000
⚫ Final average monthly relevant income: $18,000
⚫ Vested ORS benefits attributable to employer’s contributions: $100,000
(comprising employer’s contributions for the whole employment period and the
returns derived therefrom)
⚫ No employer’s MPF contributions, other ORS contributions or gratuities based
on length of service

Calculation of severance payment / long service payment and the offsetting

arrangement

Severance payment / long service

payment

(a) Pre-transition portion $15,000 × 2/3 × 4 years = $40,000

(b) Post-transition portion $18,000 × 2/3 × 3 years = $36,000
(c) Total: $76,000
(d) Vested ORS benefits attributable $100,000
to employer’s contributions
(e) “Carved-out benefits” $18,000 × 5% × 12 × 7 years = $75,600
(can only be used to offset pre-transition
portion of severance payment / long
service payment)
(f) “Remaining benefits” $100,000 - $75,600 = $24,400
(can be used to offset pre- and post-
transition portions of severance payment
/ long service payment)
(g) Vested ORS benefits attributable $40,000
to employer’s contributions for
offsetting pre-transition portion of
severance payment / long service
payment
(can be offset by both “carved-out
benefits” and “remaining benefits”)

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(h) Vested ORS benefits attributable $24,400
to employer’s contributions for
offsetting post-transition portion of
severance payment / long service
payment
(can only be offset by “remaining
benefits”)
(i) Vested ORS benefits attributable $100,000 – $40,000 – $24,400 =
to employer’s contributions to be $35,600
retained by the employee after
offsetting severance payment /
long service payment
[= (d) – (g) – (h)]
(j) Employee’s aggregate benefits $76,000 + $35,600 = $111,600
[= (c) + (i)]

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 Appendix 3

Enquiries

Enquiry Hotline: 2717 1771 (the hotline is handled by “1823”)

Hotline for reporting breaches of the Employment Ordinance: 2815 2200

Labour Department website:

[Link]

Enquiry in person to Offices of the Labour Relations Division:

[Link]/eng/tele/[Link]

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