The Employment Ordinance, Cap. 57

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.

As stipulated by the Employment Ordinance, an employer must inform each employee clearly the conditions of employment under which he is to be employed before employment begins with regard to:

Under the Employment Ordinance, a contract of employment can be made orally or in writing. Employees*rights and benefits are protected under the Ordinance irrespective of whether the employment contract is made verbally or in writing.

The use of written employment contract may help employees better understand the terms of their employment, remind both employers and employees of their contractual obligations, minimise unnecessary labour disputes and protect the interests of both parties. Therefore, employers are advised to enter into written employment contracts with their employees as far as possible.

To assist employers and employees in drawing up written employment contracts, the Labour Department has prepared a Sample Employment Contract which covers the major entitlements and protection enjoyed by employees under the Ordinance for their reference.

Furthermore, employers should adopt reasonable and fair principles when drawing up the terms and conditions of employment contracts. Only fair and reasonable terms such as reasonable remuneration and the length of notice for termination of employment contract will help employers attract talents, enhance employees*sense of belonging towards the company and retain experienced and quality staff.

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.

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

Any term of an employment contract which purports to extinguish or reduce any right, benefit or protection conferred upon an employee by the Employment Ordinance shall be void. 

The Employment Ordinance does not differentiate between “temporary”, “part-time”, “substituted”, “permanent” and “full-time” employees. All employees covered by the Employment Ordinance, irrespective of their designated job titles or working hours, are entitled to statutory rights and protection such as wage payment, restriction on deductions from wages and granting of statutory holidays, etc.

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 further entitled to rights such as rest days, annual leave with pay and sickness allowance, etc. (Click here to see the leaflet on “Labour Rights under Different Employment Patterns”.)

The Employment Ordinance applies to employers and their employees engaged under a contract of employment.  Only employees engaged under a contract of employment would be entitled to the rights and benefits provided under the Employment Ordinance. To avoid misunderstanding or dispute and to safeguard their rights and benefits, the relevant persons should understand clearly their mode of cooperation according to their intention and clarify their identities, whether they are engaged as an employee or a contractor/self-employed person, before entering into a contract.

In differentiating an “employee” from a “contractor or self-employed person”, all relevant factors of the case should be taken into account. There is no one single conclusive test to distinguish these two identities. Moreover, there is no hard and fast rule as to how important a particular factor should be. The common important factors include:

• control over work procedures, working time and method
• ownership and provision of work equipment, tools and materials
• whether the person is carrying on business on his own account with investment and management responsibilities
• whether the person is properly regarded as part of the employer’s organisation
• whether the person is free to hire helpers to assist in the work
• bearing of financial risk over business (e.g. any prospect of profit or risk of loss)
• responsibilities in insurance and tax
• traditional structure and practices of the trade or profession concerned
• other factors that the court considers as relevant

It is worth to note that since the actual circumstances in each case are different, the final interpretation will rest with the court in case of a dispute.