Career Advice Legal Case studies for employers

Amendments to Employment Ordinance have implications for employment agencies

Two years ago, the Employment Ordinance and the Employment Agency Regulations were the only statutes which directly regulated employment agencies (EAs). This legal regime was often perceived by rights groups as inadequate to protect the labour rights of jobseekers, particularly foreign domestic helpers who can be more susceptible to  abuse and exploitation.

 In January 2017, the Hong Kong government published a non-legal binding code of practice for EAs (CoP) with the view to promote professionalism and quality service in the EA industry. This move was also prompted by hundreds of complaints from jobseekers about malpractice by EAs.

 Among other things, the CoP highlights the key legal requirements that EAs must follow and sets out the minimum standards which the Commissioner for Labour expects of EAs. Non-compliance with those standards may be taken into account when deciding if an EA’s licence is to be granted, renewed or revoked.

The CoP went at least some way to combating unscrupulous practices of EAs. Information released by the Commissioner for Labour shows that there were at least four instances where an EA’s licence was revoked due to failure to meet the standards set out in the CoP, e.g. withholding passports without reasonable excuse and failing to draw up service agreements with jobseekers and employers. However, in the absence of legal backing, critics remained sceptical as to its true effectiveness .

In response to increasing pressure to further strengthen the regulations of EAs and having regard for public concern about the effectiveness of the CoP, the Hong Kong government has taken more robust moves in early 2018.


The Employment (Amendment) Ordinance 2018

Effective from 9 February 2018, this ordinance has amended Part XII of the Employment Ordinance in the following ways: it raises the maximum penalty for the offences of overcharging jobseekers and unlicensed operation of EAs from a fine of HK$50,000 to one of HK$350,000 and three years in prison. The statutory time limit for prosecution of the above two offences has also been extended, from six to 12 months.

The amendment expands the scope of the overcharging offence to cover not only the EAs, but also certain persons associated with the EAs, such as director, manager and secretary or other offices. It provides a legal basis for the Commissioner for Labour to issue codes of practice for EAs, and provides new grounds for the commissioner to renew, revoke or refuse issuance of EAs’ licences.

Imposing stiffer fines and jail terms, extending the prosecution deadline and expanding liability coverage and providing a legal basis to the CoP sends a clear message to EAs that the CoP is not a “toothless tiger” as may have previously been perceived but can actually cost them their licence.


Promulgation of a new version of the code of practice

In parallel, the Commissioner for Labour on the same day published a revised CoP which supersedes the one dated January 2017. This revised CoP not only reflects the latest legislative amendments, but also further addresses some headline concerns for domestic helpers. In recent years, local right groups have been urging the Hong Kong government to abolish the “live in” rule and allow domestic helpers to live outside the household.

While this request has yet to be addressed, the CoP adds a provision requiring EAs to remind employers to provide photos or a description about the proposed accommodation to domestic helpers with the aim of at least providing information in advance about likely living arrangements before entering into the employment contract.

Furthermore, since withholding passports or ID documents from domestic helpers as collateral for unpaid agency fees or loans is notoriously common in the EA industry, the revised CoP specifically requires the return of personal ID without delay and prohibits the confiscation of them for the purposes of forcing domestic helpers to pay or repay any sum.

The recent amendments and enforcement actions evidence a growing trend towards closer monitoring of the activities of EAs and a willingness not to grant licences to those who fail to comply with standards and regulations. It is therefore crucial for EAs, their employees and management to familiarise themselves with, and conduct the business in compliance with, the law and the relevant CoP at all times.