How Can an Employer Terminate Employment on a No-Fault Basis Under Hong Kong Law?

Question from Zonda, How Can an Employer Terminate Employment on a No-Fault Basis Under Hong Kong Law?

Answer from AI:

Under Hong Kong law, an employer can terminate an employment contract without assigning any fault to the employee. This is often referred to as a “no-fault” termination. However, there are specific procedures and conditions that must be adhered to.

Notice Period or Payment in Lieu

The Employment Ordinance (Cap. 57) of Hong Kong stipulates that an employer can terminate an employment contract by giving the employee either a notice or a payment in lieu of notice. The length of the notice period typically depends on what is stated in the employment contract but should not be less than seven days if not specified.

Severance Payment

If the employee has been employed continuously for not less than 24 months, a severance payment may be required. The amount is calculated based on the employee’s length of service and last monthly wages.

Long Service Payment

If the employee has been employed continuously for not less than five years and is not eligible for a severance payment, a long service payment may be required. The calculation is similar to the severance payment.

Please note: The employer cannot terminate an employee’s contract if the employee is on paid sick leave, or if the employee is pregnant and has served a notice of pregnancy to the employer, unless with the consent of the Commissioner for Labour or a certificate of exemption is obtained.

Steps to Terminate Employment on a No-Fault Basis

1. Provide a written notice of termination or payment in lieu of notice to the employee.
2. Calculate and provide any severance payment or long service payment if applicable.
3. Ensure that all final payments (including any outstanding wages, annual leave pay, end of year payment, etc.) are settled on or before the final working day.

It’s important to remember that this is a general guide and the specifics of each case can vary. Therefore, it’s recommended to consult with a legal professional for personalized advice. For more information, you can refer to the Employment Ordinance (Cap. 57) and the Guide to the Employment Ordinance published by the Labour Department of Hong Kong.