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Decoding new amendments to Hong Kong’s employment ordinance

Published on Saturday, 05 Aug 2017

The Legislative Council is currently considering two bills that will bring about amendments to the Employment Ordinance. If passed, the changes will make it easier for dismissed employees to seek an order for reinstatement or re-engagement, and will introduce tougher operating conditions for employment agencies.

The Employment (Amendment) Bill 2017 (”Bill No. 1”) was gazetted on May 5, 2017 and introduced into the Legislative Council on May 17. It is a revival of a similar bill that was introduced in 2016 but which subsequently lapsed.

Currently, under Hong Kong law, certain categories of employee enjoy a blanket protection from dismissal – the most important categories being those who are pregnant or on paid sick leave. If an employer dismisses an employee who falls into any of these protected categories, the employee can bring a claim for unreasonable and unlawful dismissal in the Labour Tribunal. One of the remedies the employee can seek is an order for reinstatement back to his or her original position with the same employer, or re-engagement to a different position with the same employer. However, currently, the Tribunal will only make such an order if it obtains the agreement of the employer – this has made an order for reinstatement or re-engagement extremely rare in Hong Kong, as employers are unlikely to agree to such an order.

Bill No. 1 will give the Labour Tribunal the power to order the reinstatement or re-engagement of an employee who has been unreasonably and unlawfully dismissed without requiring the consent of the employer if it considers it to be appropriate and practicable. If the employer fails to comply with an order to reinstate or re-engage, it will need to pay the employee a penalty sum of three times the employee’s average monthly wages (subject to a cap of HK$72,500).

Bill No. 1 may give Hong Kong employers cause for concern as it provides greater employment protection for employees. Employers will not welcome the prospect of having to take employees back into their organisations in what are usually very difficult circumstances. However, the number of cases where an employee is unreasonably and unlawfully dismissed and seeks an order for reinstatement has always been very low in Hong Kong compared to other jurisdictions, so it is unclear whether the proposal will have a real impact.

Finally, employers should note that Bill No. 1 only applies to dismissals which are both unreasonable and unlawful, i.e., the dismissal of a protected category employee.

The Employment (Amendment) (No.2) Bill 2017 (”Bill No. 2”) was gazetted on June 16, 2017 and introduced into the Legislative Council on June 28. It introduces two key additional regulatory measures for employment agencies.

First, the maximum penalty for overcharging jobseekers and operating without a valid licence will be raised from HK$50,000 to HK$350,000, with possible imprisonment of up to three years.

Second, it provides a legal basis for the Code of Practice for Employment Agencies (the “code”) which was promulgated by the Labour Department in January earlier this year. The code aims to promote the professionalism and service quality of employment agencies by setting out the minimum operation and management standards which the Labour Commissioner expects of licensees. Although the code is technically non-binding, Bill No. 2 will allow the Labour Commissioner to issue further legally binding codes of practice for employment agencies, and will make clear that non-compliance with the code will be a ground for the Commissioner to refuse to issue/renew or to revoke an employment agency licence.

Bill No. 2 is intended to address the rise in the number of complaints of employment agencies charging jobseekers more than the prescribed limit for commissions. This is currently set at no more than 10 per cent of the jobseeker’s first month’s wages but is often exploited, particularly in the foreign domestic helper market. The Government is keen to crack down on these practices and provide better protection for jobseekers.

While the thrust of Bill No. 2 is on tougher regulation for employment agencies, other employers who rely on agencies for their recruitment practices may welcome the new legal basis for the code if it means an increase in the quality of agency services. For example, the code requires employment agencies not to deploy unfair trade practices prohibited by the Trade Descriptions Ordinance.

Although the two bills have yet to be passed into law, there has been no major push back from stakeholders so far, meaning that the bills are likely to be passed in their current form. Employers, employment agencies and job-seekers should keep abreast of developments.


This article appeared in the Classified Post print edition as Decoding new amendments to employment laws.

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