Hong Kong Employment Update

Hong Kong Employment Update: The Hong Kong government has set forth a proposal aimed at revising the long-standing “418” rule delineated within the Employment Ordinance (EO). This rule, a cornerstone in determining continuous employment, has been subject to scrutiny and calls for reform.
Hong Kong proposed employment changes.

Hong Kong Employment Update

Proposal to relax the “418” rule

The Hong Kong government has set forth a proposal aimed at revising the long-standing “418” rule delineated within the Employment Ordinance (EO). This rule, a cornerstone in determining continuous employment, has been subject to scrutiny and calls for reform.


Understanding the “418” Rule

Presently, the “418” rule dictated that an individual employed by the same entity for a minimum of four consecutive weeks, with each week encompassing at least 18 hours of labor, falls under the purview of a ‘continuous contract’ of employment as defined by the EO. This status afford employees various statutory benefits, including sick leave, annual leave, and other entitlements mandated by law.


Proposed Amendment

The essence of the proposed amendment revolves around recalibrating the assessment of qualifying hours. Instead of the current week-to-week evaluation, the government proposes a cumulative approach over a four-week period. Under this revised framework, an employee will trigger continuous employment status by clocking a total of at least 68 hours within the specified duration.


Rational Behind the Change

This proposed alteration seeks to broaden the scope of statutory benefits, particularly aiming to encompass a wider spectrum of the workforce, including those engaged in part-time or casual roles. By adopting a more flexible criterion, the government aims to align regulations with contemporary employment dynamics, ensuring equitable treatment and safeguarding the welfare of all workers.


Legislative Process

As this proposal transitions towards actionable legislation, a bill amending the EO is slated for presentation before the Legislative Council in the foreseeable future. Details pertaining to the bill’s specifics are anticipated to emerge in due course. In the interim, employers are urged to proactively evaluate the potential ramifications of this proposed change on their workforce and payroll protocols.


Proposed Changes to Minimum Wage Review Process


Annual Review Proposed

According to sources, the Minimum Wage Commission is contemplating a pivotal shift in its approach to reviewing minimum wage rates. Instead of the previous biennial assessments, the commission is reportedly considering an annual review mechanism. This proposed change follows persistent advocacy from labor activists who have long called for more frequent evaluations to better align with inflationary trends.


Current Minimum Wage Status

As it stands, the minimum wage in Hong Kong stands at HK$40 per hour. The most recent adjustment, a raise of HK$2.50, was implemented last year, breaking a freeze that had persisted since 2019. Chief Executive John Lee conveyed appreciation to workers for their contributions to the country and societal development upon announcing the increase.


New Formula and Protection Measures

Additionally, reports indicate that the commission is contemplating the adoption of a new formula that takes into account CPI, GDP, average GDP over the previous 10 years and importantly prevents any future decreases in the minimum wage. This potential safeguard underscores the commission’s commitment to upholding fair labor practices and protecting the welfare of low-wage workers.


Evolution of Minimum Wage Policies

Reflecting on the journey of minimum wage regulations in Hong Kong, Chairperson Priscilla Wong highlighted the positive impact of these measures since their inception in 2011. Wong noted a continuous improvement in the income of low-paid employees alongside the city’s robust overall competitiveness.


Impact and Statistics

As of mid-2021, approximately 143,000 individuals in Hong Kong were earning the minimum wage, spanning various sectors such as security, cleaning services, and retail. These statistics underscore the significance of minimum wage policies in providing essential protections for vulnerable segments of the workforce.


Diverse Perspectives

In anticipation of Labour Day, stakeholders from different sectors have expressed diverse viewpoints on the minimum wage issue. While some, like Kingsley Wong of the Hong Kong Federation of Trade Unions, advocate for annual reviews to safeguard the interests of grassroots workers, others, such as legislator Tommy Cheung, have raised concerns about the policy’s impact on the city’s competitiveness.


It is imperative to note that these proposed changes are subject to legislative processes and official announcements. As such, we are closely monitoring the situation and will provide updates as further details are released by the relevant authorities.


We understand the importance of staying informed about regulatory changes that may affect your business, and we are committed to keeping you updated with accurate information as it becomes available.


In this newsletter, Black Mountain discuss the proposed new employment law changes including the 418 rule.


If you would like to stay up to date on all of our newsletters, the latest updates and legislation, you can sign up via our news webpage here.

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