Amendments to the Employment Ordinance

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3 Amendments to the Employment Ordinance Monthly Wage Ceiling for the purpose of calculating Severance Payment and Long Service Payment With effect from 23 June 1995, the monthly wage ceiling for the purpose of calculating Severance Payment and Long Service Payment has been raised from $15,000 to $22,500. Entitlement to Long Service Payment With effect from 14 July 1995, the service requirement for retirement on ground of old age in respect of an employee ages 65 or above has been reduced from 10 to 5 years. Maternity Leave Pay With effect from 14 July 1995, maternity leave pay is increased to four-fifths of the normal wages of the employee. Amendments to the Employment Ordinance Offences and Penalties An employer who fails to pay wages and other sums due in due time or underpay wages commits an offence which, upon cdnviction, may lead to a fine of $200,000 and to imprisonment for one year. The main offences which, upon conviction, may lead to a fine of $100,000 and to imprisonment for one year, include: an employer making illegal deduction from wages; «any person who fails to comply with the inspection requirements required by officers of the Labour Department or who wilfully or recklessly gives false information, withholds information required to be given under the Employment Ordinance. With effect from 15 December 1995, the offences which, upon conviction, may lead to a fine of $100,000, include.» an employer failing to terminate a contract, knowing that wages cannot be paid by him,

4 » an emplover terminating the employment of a female employee after she has given notice to take maternity leave; an employer terminating the employment of an employee during his sick leave of which sickness allowance is payable;» an employer dismisses his employee on the grounds that the employee has given evidence or information to the authorities concerned in connection with the enforcement of the Employment Ordinance or breach of work safety regulations; an employer discriminating against an employee because of his membership of. and activities in trade unions, With effect from 15 December 1995 : the main offences which, upon conviction, may lead to a fine of $50,000, include: «an employer failing to comply.with the provisions relation to rest days; «an employer failing to make severance payments when due or including false information when giving written particulars of severance payments to an employee; «an employer failing to grant his employees any holiday or to give holiday pay or sickness allowance to qualified employees; an employee failing to grant annual leave with pay to qualified employee; an employer failing to comply with the provisions relating to end of year payment an employer failing to pay long service payment to the entitled person on the due date on the death of an employee; an employer including false information wnen giving written particulars of long service payments to an employee; an employer failing to grant maternity leave, maternity leave pay or sickness allowance for sickness days taken for pregnancy check-ups, post confinement medical treatment or miscarriages. With effect from 15 December 1995, the main offences which, upon conviction, may lead to a fine of $10,000, include: an employer failing to pay wages in the manner or place prescribed; an employer failing to keep wage and employment records; an employee gives false information in a statutory declaration on the number of surviving children

5 CONTENTS Foreword 2 Application of the ordinance 3 Contract of employment 4 Termination of contracts of employment 6 Wages, 9 Rest Days 13 Statutory Holidays 14 Paid Annual Leave 16 Sickness Allowance 18 Maternity Protection 21 End of Year Payment 23 Long Sendee Payment and Severance Payment 25 Wages and Employment Records 33 Offences and Penalties 34 Appendix

6 This guide sets out briefly the main provisions of the Employment Ordinance. Chapter 57, including major amendments made up to 31 March While every care has been taken in the preparation of this guide, the ordinance itself remains the sole authority for the provisions of the law explained. Enquiries relating to the interpretation of the provisions of this ordinance may be made at any office of the Labour Relations Service of the Labour Department. Office addresses are listed in the appendix. Alternatively, you may call the department's general enquiries telephone service at

7 Cli&pter 1 Application of tie The ordinance applies to all employees irrespective of their earnings, with the following exceptions - (a) (b) (c) (d) family member who lives in the same dwelling as the employer; an employee as defined in the Contracts for Employment Outside Hong Kong Ordinance; a seaman serving under ship's articles; and an apprentice whose contract of aprenticeship has been registered under the Apprenticeship Ordinance 1976, other than certain provisions. Continuous Contract of Employment An employee who works continuously for the same employer for four weeks or more, prior to a given date, for at least 18 hours in each of the four weeks is regarded as working 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.

8 Chapter 2 5 Contract of employment A contract of employment is an agreement made between an employer and an employee. The agreement can be made orally or in writing. Both express and implied terms can be included in the contract. «If the contract of employment is in writing, the employer must give one copy of the written contract to the employee for retention and reference. Information on conditions of service Before employment begins, an employer must inform each employee clearly the conditions of service, including wages, under which he is to be employed. Such information should include - (a) (b) (c) (d) wages (including rate of wages, overtime rate and any allowance, whether calculated by the piece, job, hour, day, week or otherwise), wage period, notice required to terminate the contract, and end of year payment, if any.

9 Upon the employee's written request for such information, the employer must immediately provide him with it in writing. Whenever there is any change in the conditions of service, whether these have merely been offered to an employee or are actually in force, the employer must inform him in an intelligible manner. If such change to conditions of service is in writing, a copy of the written amendment must be provided to the employee. Duration of employment contract In the absence of any express agreement to the contrary, even- contract of employment covered by the ordinance, which is a 'continuous contract', is deemed to be a contract for one month and renewable from month to month.

10 Chapter 3 ; Terrofaation of contract^ A contract of employment may be terminated by due notice or wages in lieu of notice. In the case of a continuous contract of employment, the length of notice and the amount of wages in lieu of notice required are - ; Length of notke Wages in lien of notice with express agreement to the length of notice as per agreement, but the length of notice must not be less than 7 days an amount equivalent to the amount of wages for the notice period no provision for length of notice not less than one month an amount not less than one month's wages The notice period does not include maternity leave or annual leave.

11 Where it has been expressly agreed that the employment is on probation, the length of notice or wages in lieu of notice required are - During probation within the first month of probation Length of notice not required to give notice! Wages in lien j = of notice j not required lifter the first month of probation with agreed length of notice no provision for length of ftotkt as per agreement, but the length of notice must not be less than 7 days not less than 7 days' notice an amount equivalent to the amount of wages for the notice period an amount not less than 7 days' wages Termination of contract of employment without notice or wages in lieu of notice In certain special circumstances, for example, an employee's fraud, dishonesty, habitual neglect of his duties, or wilful disobedience of a lawful and reasonable order, the employer may lawfully terminate the contract of employment without notice. In other circumstances, such as danger of violence or disease not contemplated by the contract, the employee may also summarily terminate his contract of employment. 7

12 Statutory Restrictions on Termination The Employment Ordinance imposes some limitations on termination - Maternity If the female employee is eligible for maternity leave and has completed 12 weeks' service with an employer, termination is not allowed during the period from the date on which she gives notice of her intention to take maternity leave until the date on which she is due to return to work. Sick Leave Termination is not allowed during the period when the employee is on paid sick leave. or information to the authorities An employer is not permitted to dismiss his employee on the grounds that the employee has given evidence or information to the authorities concerned in connection with an accident arising out of and in the course of employment, the enforcement of the Employment Ordinance or breach of work safety regulations. Activities No employer or any person acting on his behalf should dismiss an employee because he participates in trade union activities.

13 :Wages Definition "Wages" means all remuneration and earnings paid to an employee in respect of work done. Commission, allowances, tips and service charges are within the definition of wages. "Wages", however does not include - (a) (b) (c) (d) (e) the value of any accommodation, education, food, fuel, water, light or medical care provided by the employer; travelling allowance or the value of any travelling concession; gratuity payable on completion or termination of a contract of employment; employer's contribution to any retirement scheme; end of year payment, or annual bonus which is of a gratuitous nature or is payable only at the discretion of the employer. Wage Period Unless the contrary is proved, the wage period is deemed to be one month.

14 Payment of Wages Time of Payment Still m employment on expiry of wage period and, in any case, not later than seven days after the end of the wage period itt^tiowi of employment on the day of termination and, in any case, not later than seven days after termination of employment An employer who fails to pay wages and other sums due in due time or underpays wages commits an offence which upon conviction may lead to a fine of $200,000 and to imprisonment for one year. Place and manner of Payment Wages must be paid on a working day directly to an employee at his place of employment, or other place customarily used by the employer for the payment of wages, or at any place mutually agreed. Wages should not be paid at certain specified places, such as a place of amusement or a shop, unless the employee works there. With the consent of an employee, \vages may be paid by cheque or paid into the employee's bank account or to his duly appointed agent. 10

15 Deductions from wages An employer is prohibited from deducting wages from his employee, except under the following circumstances - (a) (b) (c) (d) (e) the employee is absent from work, the deductions should be proportionate to the period of absence; the employee damages or loses the employer's goods, equipment, or property. For each occasion, the maximum deduction is $300 with the total of such deductions not exceeding one quarter of the \vages payable to the employee for that wage period; the employer supplies food and accommodation to the employee; the employer can recover any advanced or over-paid wages to the employee provided that the total of such deductions shall not exceed one quarter of the wages payable to the employee for that \vage period; the employer can recover, with the employee's written consent, any loan made to the employee. Except with the approval in writing of the Commissioner for Labour, the total of all deductions, excluding those for absence from work, made in any one wage period must not exceed one half of the wages payable for that period. An employer who makes illegal deduction from wages commits an offence which, upon conviction, may lead to a fine of $100,000 and to imprisonment for one vear. 11

16 Protection of Wages No employer may enter into, renew, or continue a contract of employment without reasonable belief that he can pay wages as they become due. An employer who is unable to pay wages due is required to terminate the contract of employment in accordance with its terms. Employees who are owed wages, wages in lieu of notice or severance payments by their insolvent employers may apply for ex-gratia payment from the Protection of Wages on Insolvency Fund. Applications may be filed at offices of the Labour Relations Service. An employee who is employed by a sub-contractor in the building and construction industry shall approach the Labour Relations Service immediately if the employer fails to pay wages and other sums due at the end of the wage period or within seven days thereafter. The principal contractors, superior nominated sub-contractors and superior sub-contractors are vicariously liable for the first two months' unpaid wages of an employee who is employed by the subordinate sub-contractor. To claim wages under vicarious liability, the employee must serve a written notice on the principal contractor within 60 days after the wages become due. If an employee has reasonable grounds for believing that his employer is about to leave Hong Kong with intent to avoid payment of wages or other sums due, he may make an application to a District Judge for the arrest of the absconding employer. Employees intending to make use of these provisions are strongly advised to consult an officer of the Labour Relations Service. 12

17 Chapter 5 $ Rest Pays An employee employed under a continuous contract is entitled to one rest day in every period of seven days. 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. Rest days are in addition to statutory holidays. If a statutory holiday falls on a rest day, it should be taken on the day following the rest day. Rest days are appointed by the employer. If rest days are appointed on fixed days in each period of 7 days on a regular basis, it is sufficient for the employer to inform his employees of the arrangements. Otherwise, before the beginning of each month, the employer must inform all his employees of the appointed rest days during the month orally or in writing 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 and before the original rest day or within 30 days after it. An employee, except women and young persons under the age of 18 employed in industry, mav voluntarily work on a rest day. An employer cannot 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. Any condition in a contract of employment which makes payment of any type of annual bonus conditional on an employee agreeing to work on rest davs is void. Whether employees are paid on rest days depends on the express or implied conditions contained in the oral or written contract of employment. 13

18 : Statutory ggjj<layg_ An employee is entitled to 11 statutory holidays in a year, viz.- (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) the first day of January; Lunar New Year's Day; the second day of Lunar New Year; the third day of Lunar New Year; Ching Ming Festival; Tuen Ng (Dragon Boat) Festival; the day following the Chinese Mid-Autumn Festival; Chung Yeung Festival; Chinese Winter Solstice Festival or Christmas Day at the employer's option; and 2 floating holidays. Arrangement of floating holidays - (i) (ii) (iii) The floating holidays should be designated by the employer and notified to each of the employees by notice at the end of the preceding year. This notice should be posted in a conspicuous place in the place of employment throughout the year in which the holiday is granted. If the employer does not fix the date for one or both floating holidays, the employee may request such holidays be taken together with the paid annual leave. If neither the employer nor the employee exercise the option mentioned in (i) and (ii) above, the employees should be granted holidays on the Monday immediately following the Queen's birthday and the last Monday in August. 14

19 If an employee is required to work on a statutory holiday, 48 hours' prior notice must be given. His employer must also arrange an alternative holiday within 60 days before or after a statutory holiday. However, if the employer and employee agree, any day within 30 days of a statutory or alternative holiday may be taken by the employee as a substituted holiday. If a statutory holiday or any holiday in lieu falls on a rest day, the holiday should be taken on the day following the rest day. An employee employed under a continuous contract is entitled to holiday pay if he has worked continuously for his employer for three months preceding any of the holidavs. Holiday pay is a sum equivalent to the normal wages which the employee would have earned if he had worked on a full working day. An employee who in normal circumstances only works half a day on Saturdays and receive half-day's pay is entitled to a full working day's pay as holiday pay if a statutory holiday falls on Saturday. Where an employee is employed on piece rates or where the daily wages of an employee van' from day to day, the holiday pay should be a sum equivalent to the average daily wages earned by the employee on the days on which he had worked during every complete wage period, comprising not less than 28 days and not more than 31 days in total, preceding the holiday. 15

20 Chapter 7 : JP ai An employee is entitled to annual leave with pay after serving every period of 12 months under a continuous contract with the employer. The leave should be taken within the following period of 12 months. An employee's entitlement to paid annual leave ranges from seven to 14 days depending on his length of service. Years of Service of Employee or above i Annual Leave Entitlements 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. Common Leave Year An employer may, at his option, specify any period of 12 consecutive months as the common leave year for all of his employees. Should the employer wish to select the option, he shall state his intention by giving 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. The employer shall also calculate the leave entitlement of each employee prior to the commencement of the common leave year. «If there is a common leave year in the company, the employee may opt to : (i) (ii) take the pro-rata annual leave accrued preceding the commencement of the common leave year after consultation with his employer; or carry it forward and combine it with his leave accrued in future. 16

21 j Granting of annual leave Paid annual leave should be granted for an unbroken period. so requests, it may also be granted in the following manner:- If the employee Leave entitlement not exceeding 10 days up to 3 days can be granted separately; the balance should be granted consecutively Leave entitlement - i exceeds 10 days at least 7 days should be granted consecutively 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. The employer is prohibited to force an employee to forego all or any of his annual leave entitlement. However, an employee may choose to accept payment in lieu of the part of his leave entitlement which exceeds 10 days. Annual leave pay should be paid on the normal pay day. Annual leave pay is a sum equivalent to the normal wages which the employee would have earned if he had worked during the period of annual leave. In the event of an annual shut-down for the purpose of granting annual leave to employees, an employee not yet entitled to annual leave pay in respect of any day during that period but who has to stop work as a result should also be granted annual leave with pay by the employer. If an employee's employment contract is terminated by whatever reasons, including resignation and summary dismissal after 12 months' employment under a continuous contract and he has not been granted paid annual leave, he should be entitled to payment in lieu of any annual leave not yet taken. Pro-rata annual leave pay would be given when the employment contract is terminated by whatever reasons, including resignation but excluding summary dismissal, on completion of three but less than 12 months' service in a leave vear. 17

22 Chapter 8; Sickness allowance To be eligible for sickness allowance - (i) (ii) (iii) the sick leave taken by the employee must not be less than four consecutive days; the sick leave must be supported by an appropriate medical certificate, or medical certification as required by the employer; the employee has an accumulation of sickness days by virtue of his length of service. Paid sickness days may be accumulated up to a maximum of 120 days. They are accumulated at the rate of two paid sickness days for each of the first 12 completed month of employment, and four paid sickness days for each month of service thereafter. Paid sickness days are divided into two categories - Category 1 : made up of paid sickness days accumulated up to a total number of 36 days. Categors- 2: made up of paid sickness days in excess of 36 days and can be accumulated up to 84 days. Depending on the number of sickness days accumulated in Category 1, an employee may draw sickness allowance up to 36 days by producing a certificate issued by any medical practitioner or registered dentist. If the number of paid sickness days taken exceeds the total number of paid sickness days in Category 1, the excess days should be deducted from Category 2. In this case, the employer may request the employee to produce a certificate issued by a hospital doctor or registered dentist attending him as an out-patient or in-patient in a hospital. The medical certificate, if so required by the employer, should give a brief record of the investigation carried out and the treatment prescribed by the hospital doctor or dentist. The daily rate of sickness allowance is equal to two-thirds of the normal wages for that day. Payment should be made on the normal pay day. 18

23 An employee is not entitled to sickness allowance if- (a) (b) (c) (d) (e) (f) the sick leave is less than 4 days; [female employees who take any day-off for her pregnancy check-ups, post confinement medical treatment or miscarriages should be taken as sick leave and be paid sickness allowance]; he fails to produce an appropriate medical certificate; or such medical certification as required by the employer; he refuses treatment by a company doctor of a medical scheme recognised by the Director of Health or disregards the advice of a hospital doctor or dentist; his unfitness for work is caused by his serious and wilful misconduct; compensation is payable under the Employees' Compensation Ordinance; or his sickness day falls on a statutory holiday on which he is entitled to pay. Record on sickness days An employer must keep a record of the date of commencement and termination of employment of each employee, as well as all paid sickness days accumulated by each employee. The record must show - (i) the number of sickness days accumulated in Category 1 and 2, (ii) (iii) paid sickness days taken and deducted from the total number of sickness days in either categories; sickness allowance paid and the sickness days in respect of which the sickness allowance was paid. 19

24 The record must be signed as correct by the employee within seven days of his return to work from paid sick leave. The record can be inspected by the employee. If an employer fails to maintain a record or if the record is lost or destroyed, the employee is, notwithstanding any sickness allowance paid to him, entitled to sickness allowance based on paid sickness days accumulated for each completed month of his employment. Employment Protection An employer is prohibited from terminating the contract of employment of an employee on his paid sickness day, otherwise he has to pay to the employee - (i) (ii) (iii) wages in lieu of notice; a further sum equivalent to seven days' waggs; and any sickness allowance to which the employee may be entitled in respect of the sickness as if his contract has not been terminated. 20

25 Chapter 9_ :Matermty protectiott Eligibility for maternity leave A female employee who has worked for the same employer under a continuous contract for a period of not less than 26 weeks immediately before the expected date of her commencement of maternity leave is entitled to maternity leave. * Maternity leave normally begins four weeks before the expected date of confinement and ends six weeks after the actual date of confinement. It may be extended, not exceeding four weeks, on the grounds of illness or disability arising out of the pregnancy or confinement. Serving Notice A pregnant employee who intends to take maternity leave and enjoy employment protection shall give notice to her employer, specifying the expected date of confinement and the date of commencement of maternity leave. «This notice need not be accompanied by a medical certificate, but if requested by the employer, the employee must produce a medical certificate certifying that she is pregnant and specifying the expected date of her confinement. To obtain employment protection, such notice shall be served when the employee has completed 12 weeks' service with the same employer. Employment Protection Once the notice is served, the employer is prohibited from terminating her contract of employment until the date on which she is due to return to work after the maternity leave. Otherwise, the employer has to pay the following - (a) wages in lieu of notice; (b) (c) a further sum equivalent to seven days' wages; and if she is or would be entitled to maternity leave pay, maternity leave pay for 10 weeks. In addition, the employer is liable to prosecution. 21

26 Eligibility for maternity leave pay To be eligible for maternity leave pay, the employee - (i) (ii) must have worked under a continuous contract for the employer for not less than 40 weeks before the expected date of her commencement of maternity leave; and has no more than two surviving children. The employee must produce to her employer a statutory declaration verifying the number of children she has at the time when she gives notice of her intention to take leave. Maternity leave pay is two-thirds of the employee's normal wages. leave pay will be paid up to a maximum of 10 weeks. Maternity Maternity leave pay should be paid on the normal pay day. A female employee forfeits her entitlement to maternity leave pay if she works, without the permission of her employer, for another employer during her maternity leave. An employer is not allowed to pay wages in lieu of maternity leave. Maternity leave should be granted in addition to annual leave. Any rest day or statutory holiday falling within the period of maternity leave will be counted as maternity leave and should not give rise to any entitlement to an additional rest day or holiday. The period of maternity leave shall not be included in the length of notice required to terminate a contract of employment. 22

27 ^Chapter 10 :End of year payment 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, is entitled to an end of year payment from his employer. End of year pa\xnent means any annual payment (whether described as 'thirteenth month payment', 'fourteenth month payment', 'double pay', 'end of year bonus', 'annual bonus' or otherwise) of a contractual nature. It does not include any annual payment or bonus which is of a gratuitous nature or which is payable at the discretion of the employer. Employers and employees are free to reach agreement on the payment period, due date and amount of year end payment. Payment Period ; Specified in employment contract As specified not Specified one lunar year Due date! As specified end of the payment period Amount j As specified A full month's wages (one month pay for monthly paid employees and 26 days' wages for those who are paid daily.) 23

28 Eligibility for End of Year Payment Employed continuously during the whole payment period: foil amount. Employed continuously for not less than 26 weeks during a payment period, is dismissed otherwise than for cause under Section 9 of the Employment Ordinance: proportional amount. Payment of the proportional amount is due on the day of termination of the contract. However, where the end of year payment is calculated by reference to any profits of the employer, it will be due on the day on which profits are ascertained. An employee, who at the expiry of a payment period, has been employed continuously by the same employer for not less than 26 weeks and who continues to be employed by the same employer after the expiry of the payment period : proportional amount. An end of year payment must be paid as soon as it is due and in any case not later than seven days thereafter. 24

29 Chapter II : i>0ttg Service &ymmt and Severance Payment An employee is eligible for either Long Service Payment or Severance Payment He is not entitled to both. Unless it is proved to the contrary, an employee who has been dismissed by his employer will be presumed to have been dismissed by reason of redundancy. Eligibility for Long Service Payments An employee is eligible for Long Service Payment if he satisfies one of the following criteria : 25

30 j >^x. RequiremeBts ^^^s. Situation ^^''^x^ No. fy#ar$of service required Other Requirements Dismissal The employee is dismissed for reasons other than summary dismissal or redundancy Death The employee dies in service Resignation on ground of ill health 5 The employee is certified by a medical practitioner registered under the Medical Registration Ordinance as permanently unfit for the present job. (Enquiries relating to the procedures for applying the above certificate can be made at the offices of the Labour Relations Service of the Labour Department Resjgftatim* on ground of $14 &ge 10 Age 65 or above 26

31 Eligibility for Severance Payment An employee has worked continuously for an employer for a period of not less than 24 months immediately prior to dismissal by reason of redundancy or lav-off. Redundancy means - (i) (ii) (in) 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; 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 \vas employed, ceases or diminishes or is expected to cease or diminish. Lay-off means - an employee is not provided with work/pay for more than half of the total number of normal working days in any period of four consecutive weeks, or the non-provision of work/pay exceeds one-third of the total number of working days in any period of 26 consecutive weeks. The days of lock-out, rest days, annual leave days and statutory holidays should not be counted as normal working days during the above periods. 27

32 Calculation of Long Service Payment and Severance Payment Long Sefyite Payment Severance Payment Mate for each redeemable year of service: (monthly employees) 2/3 of the last full month's wages, or 2/3 of $15,000, (whichever is less) [Please see Note A on page 29] Rate lor each reckonable year of service: (daily-rated oj 4 piecerated employees) 18 days' wages or 2/3 of $15,000, (whichever is less) [Please see Note A on page 29} Maximum Payment Please see Note B on page 30 Amount of payment affected by age Yes, please see Note C on page 31 No. 28

33 Note A:. Reckonable Years of Service «For the purpose of calculating severance payment and long service payment, with effect from 20 January 1995, the reckonable years of service of all manual employees and non-manual employees w r hose average monthly wages do not exceed $15,000 for the past 12 months preceding , is increased from 18 years to 25 years plus 50% of any period exceeding 25 years. «The floor is also raised progressively. By 1 October 2004, all years of service will be reckoned. In calculating an employee's entitlement to severance and long service payment the employer should in accordance with the table below recognise all the fiilly reckonable years of service and half of the years of service exceeding the limit. Relevant Date of Termination of Employment to to to to to to to to to to Fully Reckonable Years of Service

34 For non-manual employees whose average monthly wages exceed $15,000 for the past 12 months preceding 8.6,1990, the calculation of reckonable years of sendee is as follows - Year of Termination of Employment etc Service reckonable to Note B: Maximum Amount Relevant Date of Termination of Employment Maximum Amount to to to to to to to to to on or after $210,000 $230,000 $250,000 $270,000 $290,000 $310,000 $330,000 $ $ $390,000 30

35 Note C: Calculation of LSP for an employee who is under 44jrears of age and with less than 10 years' service An employee who is under 44 years of age and with less than 10 years' service can only enjoy a certain percentage of the amount of long service payment. The percentage of the amount of long service payment in relation to the employee's age and number of years of service is as follows - NyNo. of years >qf service Age \. Syrs 6yrs 7yr$ 8yr$ 9yr$ <4t 50% 60% 70% 80% 90% 41 50% 60% 70% 80% 100% 42 50% 60% 70% 100% 100% 43 50% 60% 100% 100% 100% 44 50% 100% 100% 100% 100% An employee with ten years' service, regardless of age, will be entitled to the full amount of LSP. Long Service Payment Severance Payment and the relationship with gratuity, retirement schemes Where an employee is simultaneously entitled to long service payment or severance payment and to a gratuity based on length of service or a retirement scheme payment, the amount of Long Sendee Payment or Severance Payment can be set off by any gratuity or employer's contribution to the retirement scheme. 31

36 Claiming. Long.Service Payment in the event of the Death of an employee If an employee dies in service, long service payments should be paid to his statutory beneficiary in the following priority:- (i) (ii) (iii) (iv) spouse; children; parent; and the personal representative of the employee. For (ii) and (iii), if two or more persons apply, the long service payment will be divided equally between them. The person entitled to long service payment must serve an application in a specified form on the employer within 30 days after the death of the employee. «If the person so entitled is a spouse, the employer has to make payment to the spouse not later than seven days after the receipt of the application. «If the person so entitled is not a spouse, the employer has to make payment not later than seven days after the expiry of the application. Procedures to claim severance payment An employee who is made redundant shall serve a notice in writing to the employer within three months for the purpose of claiming severance payment. 32

37 Chapter 12; Wages and Even' employer must at all times keep and maintain a record setting out the wage and employment history of each employee covering the period of his employment during the preceding 6 months. The record must be kept at the employer's place of business or at the place where the employee is employed. It must also be kept for another 6 months after the employee ceases to be employed. The record must contain information on the employee's name, identity card number, date of commencement of employment, job title, wages paid to him in respect of each wage period, wage period, period of annual leave, sick leave, maternity leave and holidays entitled and payment so made, amount of end of year payment, notice period and date of termination of employment. 33

38 Chapter 13: Offerees and Penalties An employer who fails to pay wages and other sums due in due time or underpay wages commits an offence which, upon conviction, may lead to a fine of $200,000 and to imprisonment for 1 year (See paragraph on Payment of Wages); The main offences which, upon conviction, may lead to a fine of $100,000 and to imprisonment for one year, include - * an employer who makes illegal deduction from wages (see paragraph on Deduction of Wages); * any person \vho fails to comply with the inspection requirements required by officers of the Labour Department or who wilfully or recklessly gives false information, withholds information required to be given under the Employment Ordinance. The main offences which, upon conviction, may lead to a fine ranging from $5,000 to $25,000, include - * an employer failing to pay wages in the manner or place prescribed (see paragraph on Payment of Wages); * an employer failing to terminate a contract, knowing that wages cannot be paid by him (see paragraph on Protection of Wages); * an employer failing to comply with the provisions relating to rest days (see paragraphs on Rest Day); * an employer failing to make severance payments when due or to give written particulars of severance payments to an employee (see paragraphs on Severance Payment); * an employer failing to grant his employees any holiday or to give holiday pay or sickness allowance to qualified employees (see paragraphs on Sickness Allowance and Statutory Holidays); * an employer failing to grant annual leave with pay to qualifed employees (see paragraphs on Paid annual leave); 34

39 an employer failing to comply with the provisions relating to end of year payment (see paragraphs on End of Year Payment); an employer failing to keep wage and employment records (see paragraphs on Wage and Employment Records); an employer failing to comply with the provisions relating to long service payment (see paragraphs on Long Service Payment); an employer who terminates the employment of a female employee after she has given notice to take maternity leave (see paragraph on Maternity Protection and Statutory' Restrictions on Termination); an employer fails to grant maternity leave or to pay maternity leave pay or sickness allowance for sickness days taken for pregnancy check-ups, post confinement, medical treatment or miscarriages (see paragraphs on Maternity Protection); an employer dismisses his employee on the grounds that the employee has given evidence or information to the authorities concerned in connection with the enforcement of the Employment Ordinance or breach of work safety regulations (on conviction of such offence, the court or magistrate is empowered under the Ordinance to order the employer to pay compensation to the dismissed employee in any appropriate amount); an employee gives false information in a statutory declaration on the number of surviving children; an employer who discriminates against an employee because of his membership of, and activities in trade unions. 35

40 APPENDIX 2 0 F& 2034 Offices of the Labour Relations Division of the Labour Department are HONG KONG REGION NEW TERRITORIES REGION Hong Kong East Tsuen Wan 12/F, Eastern Law Court Building, 5/F, Tsuen Wan Government Offices, 29, Tai On Street, Sai Wan Ho, Hong 38, Sai Lau Kok Road, Tsuen Wan, Kong New ; Territories Hong Kong West 3/F, Western Magistracy Building, 2A, Pokfulam Road, Hong Kong KOWLOON REGION Kowloon East G/F, San Po Kong Government Offices, 692, Prince Edward Road, San Po Kong, Kowloon Kowloon West First Level, Lai Ho House, Lai Kok Estate, Cheung Sha Wan, Kowloon Kwai Chung 6/F, Kwai Hing Government Offices, K\vai Chung, New? Territories Tuen Mun 1/F, Tuen Mun Government Offices, 1, Tuen Hi Road, Tuen Mun, New Territories Shatin & Tai Po Units , Level 7, New Town Plaza I, Shatin, New Territories Kowloon South Room 1814, Park-in Commercial Centre, 56, Dundas Street, Mong Kok, Kowloon Kwun Tong 6/F, Kowloon East Government Offices, 12, Lei Yue Mun Road, Kwun Tong, Kowloon General Enquiry Telephone Service Tel No April 1995

41 X P H7 A Concise guide to the Employment Ordinance [Hong Kong : Government Printer, 1995]

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