The Employment Ordinance, Cap. 57

Termination of Contracts of Employment

Q1.

What is the required length of notice, or the amount of payment in lieu of notice, for termination of an employment contract?

Q2.

Is there any situation whereby an employer or an employee can terminate a contract of service without notice or payment in lieu of notice?

Q3.

If an employee gives notice to his/her employer to terminate the employment contract, can the employee take annual leave during the notice period?

Content

Q1.

What is the required length of notice, or the amount of payment in lieu of notice, for termination of an employment contract?

A1.

In the case of a continuous contract of employment, the length of notice or the amount of payment in lieu of notice required are:

Table 1

Employment Condition			Length of notice	Payment in lieu of notice
During Probation Period	within the first month of probation		not required	not required
	after the first month of probation	Where contract makes provision for the required length of notice	as per agreement, but not less than 7 days	Table 2
	after the first month of probation	Where contract does not make provision for the required length of notice	not less than 7 days	Table 2
For a continuous contract* with no/ after probation period	Where contract makes provision for the required length of notice		as per agreement, but not less than 7 days	Table 2
For a continuous contract* with no/ after probation period	Where contract does not make provision for the required length of notice		not less than 1 month	Table 2

* 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.

Table 2

Notice period expressed in days or weeks

Average daily wages earned by an employee

in the 12-month period preceding the day when a notice of termination of contract is given**

Number of days in the notice period for which wages would normally be payable to the employee

Payment in lieu of notice

Notice period expressed in months

Average monthly wages earned by an employee

in the 12-month period preceding the day when a notice of termination of contract is given**

Number of months specified in the notice period

Payment in lieu of notice

** In calculating the average daily/ 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.

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Q2.

Is there any situation whereby an employer or an employee can terminate a contract of service without notice or payment in lieu of notice?

A2.

Yes.

An employer may summarily dismiss an employee without notice or payment in lieu of notice if the employee, in relation to his employment, -

(a)

wilfully disobeys a lawful and reasonable order;

(b)

misconducts himself;

(c)

is guilty of fraud or dishonesty; or

(d)

is habitually neglectful in his duties.

Employers should note that summary dismissal is a serious disciplinary action. It only applies to cases where an employee has committed very serious misconduct or fails to improve after the employer's repeated warnings.

An employee may terminate his employment contract without notice or payment in lieu of notice if -

(a)

he reasonably fears physical danger by violence or disease;

(b)

he is subjected to ill-treatment by the employer; or

(c)

he has been employed for not less than 5 years and he is certified by a registered medical practitioner as being permanently unfit for the type of work he is engaged.

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Q3.

If an employee gives notice to his/her employer to terminate the employment contract, can the employee take annual leave during the notice period?

A3.

Under the Employment Ordinance, an employee is entitled to annual leave with pay after having been employed under a continuous contract for every 12 months. These statutory annual leave shall not be included in the length of notice required to terminate a contract of employment. In ruling on a case concerning the issue of the employee taking pre-arranged annual leave during the notice period, the Court of Final Appeal stated that the above restriction does not apply when an employee resigns. In the case of an employee’s resignation, the employee has the right to choose to take the statutory annual leave during the required notice period. However, since the circumstances of individual cases may be different, every case should be considered on its own merits. Therefore, when an employee resigns and wishes to take annual leave during the required notice period, he/she should consider the requirements of the law as well as the ruling of the Count of Final Appeal. In case of dispute, the final interpretation shall rest with the court.

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