The Minimum Wage Ordinance, Cap. 608

How is minimum wage computed?

Wages payable to an employee by an employer in respect of any wage period shall not be less than the amount of minimum wage calculated as follows:

Minimum wage = Total number of hours worked by the employee in the wage period × SMW rate (i.e. $40 per hour with effect from 1 May 2023)

Do employers need to pay wages for each and every hour worked by employees? Must wages for each hour meet the SMW rate?

According to the Minimum Wage Ordinance, minimum wage for an employee for a wage period is the amount derived by multiplying the total number of hours (including any part of an hour) worked by the employee in the wage period by the SMW rate. The employee should be paid wages of not less than this amount in respect of the wage period.

Hence, the basic principle is that wages payable to an employee in respect of any wage period, when averaged over the total number of hours worked in the wage period, should be no less than the SMW rate. The Ordinance does not prescribe that payment must be accorded for each and every hour worked or wages for each hour must meet the SMW rate.

SMW rate is expressed as an hourly rate, do employers and employees need to change their modes of employment and wage payment from monthly / daily-rated to hourly-rated?

The implementation of SMW does not change the employment and wage payment mode (i.e. employed and remunerated at monthly-rated, weekly-rated, daily-rated, hourly-rated, piece-rated, commission-based, etc.) formulated between employers and employees in accordance with their employment contracts and the Employment Ordinance.

The Minimum Wage Ordinance provides a wage floor for employees. In essence, wages payable to an employee, when averaged over the total number of hours worked in the wage period, should be no less than the SMW rate. As long as the amount of wages payable is not less than the minimum wage, it does not matter which modes of employment and wage payment is adopted. Therefore, it is not necessary for employers and employees to change their modes of employment and wage payment.

Does it mean that employers only need to pay the minimum wage to employees to comply with the law?

SMW only provides a wage floor for employees. This does not mean that employers only need to pay employees the minimum wage. Employers still have to comply with the Employment Ordinance and terms in employment contracts (e.g. salary, arrangement of meal break and rest day) in dealing with employees’ statutory and contractual entitlements.

Can an employer and an employee mutually agree that the latter is to be paid less than the minimum wage?

Any provision of a contract of employment that purports to extinguish or reduce any right, benefit or protection conferred on the employee by the Minimum Wage Ordinance shall be void. In other words, an employer and an employee cannot by agreement reduce the employee’s entitlement to SMW.