Probation Period and the Employment Contract in Hong Kong
Hong Kong employment and labor law is simpler than many other countries, with fewer requirement, regulations, and protections for the employer to abide by. From the employer’s perspective, this can make employee administration simpler. For employees, on the other hand, it is important to know how the rules work and the privileges that the law allows for them, so that they can effectively advocate for themselves and negotiate an optimal position for themselves.
The employees’ individual rights are stipulated in the Employment Ordinance of Hong Kong. It is important for the employer and employee to sign an employment contract that outlines the position obligations, remuneration, and other factors governing the relationship. An employer is at liberty to put an employment probation clause in the contract, enabling the employer to see if the employee is the desired individual for the position.
In the absence of an employment contract, a court will revert to the statutory rights of the employee as stated in the Employment Ordinance. If an employee believes that they were denied their right to statutory rest days, holidays, leave, etc., they may file a complaint with the labor department and the employer, upon conviction, will be subject to a fine.
Many employers wish to have a probationary period for a position, due to imperfections in their recruitment process. The employment probation period helps to determine whether or not the selected candidate is suitable for the position. After the employee begins attempting the duties of the position, the employer often discovers that the employer exaggerated his/her skills during the recruitment process, does not fit with the organizational culture, or is otherwise incompetent.
The probationary clause of the contract may involve the exemption of some terms of the contract, such as shorter notice prior to termination of contract, so long as it does not fall below Hong Kong’s statutory requirements specified in the Employment Ordinance. An employer may restrict the compensation during the probation period, offering some percentage of the regular compensation for the position. However, the compensation may not fall under the minimum wage HK$34.5 per hour. Oftentimes, an employment probationary period will restrict other benefits such as pension schemes and an end of year pro rate payment.
A probation period may reduce the potential for labor disputes down the road. After the probationary period has ended, employee termination may become a more complex endeavor. A probationary period in Hong Kong usually lasts from 1 to 3 months.
The probation clause of the employment contract should state the length of notice for termination of the contract during the employment probation period. After the first month of employment probation, the contract may not offer less than 7 days notice.
Length of Probationary Period
The employment probationary period should not exceed 12 weeks.
Termination During Probation Period
Within the First Month: Under a continuous employment contract, an employer is within his legal rights to terminate the contract without notice within the first month of the probationary period.
After the First Month: Under a continuous employment contract, the employer must give at least 7 days notice prior to the termination of the employment contract after the first month of probation. An employer may offer payment in lieu of notice, to be calculated as the Average daily wages earned by an employee before the day on which the notice of termination of contract is given, multiplied by number of days in the notice period for which wages would normally be payable to the employee. Nonetheless, an employer may terminate the employee without notice or payment (other than wages owed until that point) if the employee has engaged in serious misconduct, engaged in fraudulent activity during work, and habitually neglected duties.
Probationary Period and Calculation of End of Year Payment
The employment probationary period is excluded from the calculation of an eligible pro rata end of year payment.
The Employment Contract
The employment contract specifies the terms by which both the employer and employee will be legally bound. Both parties should negotiate and agree upon the terms of the employment contract. In addition to the probation clause, if any, the contract should include duties of the position, duration of the contract, date of contract commencement, wages and benefits, working hours, rest days, overtime conditions and payment (if any), grounds for termination, and requirements for termination notice.
The employment contract may not deny the employee any of their statutory rights stated in the Employment Ordinance, even if the employee willingly signs the agreement. The Employment Ordinance covers all employees except for family members of the employer with whom he/she is dwelling, a crew member covered by the Merchant Shipping (Seafarers) Ordinance, an apprentice covered under the Apprenticeship Ordinance, and employees as defined by the Contract for Employment Outside Hong Kong Ordinance (primarily foreign-employed manual labor working outside of Hong Kong).
Unless otherwise specified, a continuous employment contract is treated as a single-month contract, renewable each month.
Conditions of Employment
- Compensation Wage rate, overtime compensation, end of year payment, and other remuneration.
- Wage Period
- Termination Notice This is subject to statutory restrictions on termination.
- Code of Conduct Including disciplinary action and penalties.
Employment Probation Period Including number restriction of benefits (if any), reduced compensation (if any), and requirements for termination notice.
- Duration and Commencement Date of Contract
- Duties of Position
- Grounds for Termination of Contract