Employment (Amendment) Ordinance 2007 (“the Amendment Ordinance”)
The Amendment
Ordinance came into effect on 13th July 2007. The Amendment Ordinance amends the
Employment Ordinance (Cap. 57) (“the Ordinance”) to revise the mode of
calculating certain statutory entitlements under the Ordinance, namely, payment
in lieu of notice, damages for wrongful termination of contract, end of year
payment, maternity leave pay, damages for wrongful termination of an employee’s
contract during her pregnancy, sickness allowance, damages for wrongful
termination of an employee’s contract on a sickness day taken by him, holiday
pay and annual leave pay.
According to the
press release issued by the Government of Hong Kong Special Administrative
Region (“the Government”) on 13th July 2007, the revisions have
arisen from the Court of Final Appeal’s ruling in a labour case last year that
commission accrued and calculated on a monthly basis was not to be reckoned in
the calculation of holiday pay and annual leave pay because the Ordinance did
not provide for a “workable mode of calculation”. The revised mode provides that the above statutory entitlements
are to be calculated on the basis of the average of the wages earned by the
employee under the period of 12 months before the specified dates. Commission and non-discretionary bonuses are
to be included in the calculation of these payments.
The Government has
explained that the reason for lengthening the reference period to 12 months is
to avoid over-reliance on recent achievements at the expense of performance
over time. This is meant to address the
concerns of both employers and employees about the fluctuating nature of
certain components of wages (e.g. commission) and to provide a more stable,
predictable and equitable basis for the calculation of statutory entitlements
for employees.
The specified dates
as stipulated by the Amendment Ordinance are as follows:
|
Statutory Entitlements |
Day(s) of Leave |
Specified Dates |
|
Holiday Pay |
1 day |
Day of the statutory holiday |
|
More than 1 consecutive day |
First day of the statutory holidays |
|
|
Annual Leave Pay |
1 day |
Day of the annual leave |
|
Day(s) of untaken leave upon termination of
contract |
First day of the annual leave |
|
|
Sickness Allowance |
1 day |
Date of termination of contract |
|
More than 1 consecutive day |
The sickness day |
|
|
Maternity Leave Pay |
More than 1 consecutive day |
The first sickness day |
|
End of Year Payment |
|
First day of the maternity leave |
|
Wages in lieu of Notice |
|
Due day of the payment |
|
|
The day when a notice of termination of contract is
given (in case a notice has not been given, the day when the contract is
terminated) |
For the purpose of
calculating statutory entitlements, employers and employees should keep proper
records in relation to employees’ attendance, leave and wages. The provision, which extends the period of
keeping wage and employment records by employers from six months to 12 months,
will be effective on 13th January 2008.
Paul K.C. Chan
& Partners
21st
September 2007