By Jennifer Tam, Partner, Mayer Brown
As employers in Hong Kong continue to navigate the workplace issues brought about by the pandemic, including various COVID-19 measures implemented by the HKSAR Government, there have also been other changes and developments in Hong Kong employment law. In this article, we will examine the changes that have been introduced since mid-2021 and the proposed changes in the pipeline which employers should pay close attention to.
A. New legislations
Three new changes were made to the employment-related legislations in the past year:
1. Passage of the Anti-Breastfeeding Discrimination and Harassment Law in Hong Kong
With effect from 19 June 2021, breastfeeding women in Hong Kong are protected from unlawful breastfeeding discrimination and harassment under the Sex Discrimination Ordinance (SDO).
A woman will be treated as breastfeeding if she is engaged in the act of breastfeeding a child or expressing breast milk, or is a person who feeds a child with her breastmilk (including if the child may not be her biological child).
Insofar as the employment context is concerned, it is unlawful to:
a. treat a breastfeeding employee less favourably than a non-breastfeeding employee in the same or not materially different circumstances on the ground that she is breastfeeding (i.e., direct discrimination);
b. apply a condition or requirement where a smaller proportion of breastfeeding employees can comply compared to non-breastfeeding employees and the breastfeeding employees suffer a detriment as a result of the unjustifiable condition or requirement (i.e., indirect discrimination);
c. engage in an unwelcome conduct, which a reasonable person, having regard to all the circumstances, would anticipate that the breastfeeding woman would be offended, humiliated or intimidated by that conduct (i.e., person-to-person harassment);
d. engage in a conduct which creates a hostile or intimidating environment for the breastfeeding woman (i.e., hostile environment harassment).
Notably, it is not just employees who are protected from unlawful breastfeeding harassment; other workplace participants including contract workers, commission agents, firm partners, interns, and volunteers are also protected.
Employers may be held variously liable for any unlawful conduct of its employees, unless it can demonstrate that it has taken reasonably practicable steps to prevent such unlawful conduct from happening. Employers should therefore review and update the anti-discrimination and anti-harassment policies to take account of the changes in the legislation. Training or refresher trainings should also be provided to employees such that they are aware of their obligations and restrictions under the SDO.
2. Protection under the Employees' Compensation Ordinance Extended to Cover an Employee's Commute Under 'Extreme Conditions'
Employees will be provided with the same protection under the Employees' Compensation Ordinance (ECO) during a period of "extreme conditions" (as announced by the Chief Secretary for Administration) as that afforded for accidents that happen during the Tropical Cyclone Warning Signal No. 8 (T8) or above or when the Red or Black Rainstorm Warning Signal is in force effective from 2 July 2021.
If employees sustain an injury on the way to and from work (which must be a direct route within a period of four hours before the beginning or end of the working hours) during the extreme conditions, employers must duly report the injury to the Labour Department and comply with other obligations under the ECO. Employers should review its adverse weather conditions policies to make sure they take into account the extended coverage of the ECO.
3. Five More Statutory Holidays by 2030
All employees who have been employed under a continuous contract of employment are entitled to statutory holidays under the Employment Ordinance (EO). The number of statutory holidays will be increased progressively by five days from 12 days to 17 days, over a period of eight years from 2022 to 2030. As of this year, we now have 13 statutory holidays.
The five new statutory holidays are:
(a) The Birthday of Buddha, being the eighth day of the fourth lunar month (which started from 1 January 2022);
(b) The first weekday after Christmas Day (starting from 1 January 2024);
(c) Easter Monday (starting from 1 January 2026);
(d) Good Friday (starting from 1 January 2028); and
(e) The day following Good Friday (starting from 1 January 2030).
Apart from granting an employee a statutory holiday, employers are also required to pay those employees who have been employed under a continuous contract for not less than three months before the relevant statutory holiday statutory holiday pay. The prescribed rate of statutory holiday pay under the EO is generally the average wage earned by the employee in the 12 months immediately before the statutory holiday.
Employers should update their systems and review their calculations to ensure that they pay no less than the prescribed statutory holiday pay in respect of the additional statutory holidays.
B. Proposed Changes to the Employment-related Legislation
Two amendment bills were introduced in 2022, one to address the employment-related issues stemming from the Government's COVID-19 measures and the other one in relation to the proposed abolition of the Mandatory Provident Fund offsetting system.
4. Proposed COVID-19-Related Amendments to the EO
To address the concerns of both employees and employers which have arisen as a result of various Government COVID-19 measures, e.g., mandatory quarantine and testing requirements and vaccine pass requirements, the Government proposes to make three amendments to the EO:
(a) 1st amendment: Failure to comply with a "legitimate vaccination request" is a valid reason for dismissal or variation of contract.
An employee's failure to comply with a "legitimate vaccination request" will be a valid reason for dismissal or variation of contract by an employer. This amendment is aimed at allowing an employer to boost vaccination rates within their workforce.
A "legitimate vaccination request" must satisfy the following requirements:
(i) It must be in writing.
(ii) It is a request for the employee to produce within 56 days:
(1) If the place of work is a public transport carrier or in any premises the subject of a vaccine pass requirement – a record, document or information showing that the employee has complied with the vaccine pass requirements. This does not apply to an employee who is exempted from the vaccine pass requirements.
(2) If there are any other requirements or recommendations by the Government that persons who perform a particular type of work are to be (or should be) vaccinated apart from the requirements under the vaccine pass – a record, document or a piece of information showing that the employee has complied with this requirement or recommendation. This also does not apply to an employee who is exempted from the vaccine pass requirements.
(3) If there are no requirements falling within (1) or (2) above – a record, document or information showing that the employee has been administered with at least one dose of the vaccine. This does not apply to an employee who is (A) pregnant, (B) breastfeeding, (C) has been issued with a specified exemption certificate as being unsuitable for the COVID-19 vaccine within the 56 days after the request is made, or (D) has proof of discharge or recovery issued by an authorised person certifying that the employee has contracted COVID-19 in the six months before the request is made.
(iii) When making the request, the employer must reasonably believe that if the employee contracts COVID-19, the persons with whom the employee may come into face-to-face contact when the employee performs the employee's work will be exposed to the risk of infection. This reasonable belief must take into consideration the nature of the employee's work and the related operational requirements.
(iv) The employer cannot pick on just one employee in a group of employees performing the same work. Instead, the request must be made to all other employees of the employer who performs work that is the same as, or similar to, the work performed by the employee in question.
Employers remain subject to the statutory prohibitions on termination even if failure to comply with a "legitimate vaccination request" is a valid reason for dismissal (when the amendment bill comes into force). Thus, even if an employee fails to comply with a "legitimate vaccination request", it remains unlawful to terminate the employment of a pregnant employee or an employee on a paid sickness days other than by way of summary dismissal; to terminate the employment of an injured employee before the Labour Department issues the relevant certificate on the assessment of injury; and it is unlawful to terminate the employment of an employee on the ground of any of the protected attributes under the anti-discrimination ordinances.
(b) 2nd amendment: Compliance with a Cap 599 Requirement Will Not Be a "Valid Reason" for Dismissal or Variation of Contract
Conversely, employees will be protected from dismissal if they are absent from work due to compliance with (1) a compulsory quarantine or isolation requirement under the Prevention and Control of Disease Regulation (Cap 599A), (2) a compulsory testing order or notice and/or and restriction-testing declaration under the Prevention and Control of Disease (Compulsory Testing for Certain Persons) Regulation (Cap 599J) (Cap 599 Requirement).
It is noteworthy that compulsory quarantine on return to Hong Kong from overseas is not listed as a Cap 599 Requirement, so employees who are subject to this type of quarantine will not be protected under the amendment bill.
(c) 3rd amendment: "Sickness Day" Includes Absence for Compliance with a Cap 599 Requirement
The definition of "sickness day" under the EO is set to include a day where an employee is absent by reason of compliance with a Cap 599 Requirement. An employee is entitled to sickness allowance for a day of absence for compliance with a Cap 599 Requirement if the following conditions are satisfied:
(i) The employee has accrued the required number of paid sickness days under the EO;
(ii) The employee takes four or more consecutive days as sickness days; and
(iii) The employee produces a document or a piece of accessible electronic data issued by the Government containing the "prescribed information" in order to prove the "sickness day”. The "prescribed information" is the name of the employee subject to the Cap 599 requirement (or information that can identify the employee), the type of restriction imposed by that requirement, and the commencement and expiry dates of the restriction.
The proposed amendment will not have retrospective effect. An employee will only be entitled to statutory sickness allowance for days of absence for compliance with a Cap 599 Requirement after the proposed amendments come into force. So, employees who were absent for compliance with a Cap 599 Requirement during the fifth wave of the pandemic in early 2022 are not entitled to sickness allowance for the absence.
5. Proposed Changes to Rules on Offsetting MPF Contributions Against Long Service and Severance Pay
After many years of discussion and consultation, details of the proposed abolition of the current offsetting system, under which an employer has a statutory right to reduce the long service pay (LSP) or severance pay (SP) payable to an employee by the value of benefits paid to an employee derived from the employer's contributions to the mandatory provident fund scheme (MPF Scheme) and/or an occupational retirement scheme (ORSO Scheme) benefits, were revealed.
Under the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Bill 2022, the current offsetting system is set to be abolished starting from a date to be determined (Transition Date). After the Transition Date:
(a) An employer will no longer be able to use any part of its mandatory contribution made to the MPF Scheme (currently 5% of the relevant income of the employee per month, capped at HK$1,500) (Mandatory ER MPF Benefits) to reduce the LSP/SSP payable to an employee.
(b) The MPF/ORSO Scheme benefits which an employer may still use to reduce the LSP/SSP payable to an employee are:
i. voluntary contributions made by the employer to the MPF scheme (Voluntary ER MPF Benefits); and
ii. Employer's contributions to an ORSO Scheme in excess of the "reference amount". The "reference amount" is calculated in accordance with the following formula:
A = B x C x 5% x 12
"A" is the reference amount;
"B" is the employee's final average monthly relevant income (currently capped at HK$30,000); and
"C" is the employee's years of service (pro rata for incomplete year) to which the ORSO Scheme benefits are attributable.
(c) The Bill will not have any retrospective effect, which means that where an employee's employment commenced before the Transition Date, the employer can continue to use the current system to offset the LSP/SSP earned before the Transition Date. Specifically, an employer may use the Mandatory ER MPF Benefits (irrespective of whether the contributions are made before, on or after the Transition date) to reduce the LSP/SSP earned before the Transition Date.
(d) For monthly-rated employees, LSP/SSP earned before the Transition Date would be calculated based on the employee's monthly wages immediately before the Transition Date and years of service before the Transition date (i.e., 2/3 x monthly wages immediately before the Transition Date (capped at HK$22,500) x years of service before the Transition Date). LSP/SSP earned on or after the Transition Date would be calculated on the basis of the employee's last monthly wages before the termination of employment and the years of service after the Transition Date (i.e., 2/3 x last monthly wages before the termination (capped at HK$22,500) x years of service before the Transition Date). The aggregate amount of LSP/SSP earned before and after the Transition Date is capped at HK$390,000.
(e) Finally, employers will still be able to use the amount of any contractual gratuity paid to an employee to reduce the amount of LSP/SSP, as is the case now under the current system.
Along with the proposed abolition, the Government will also introduce a new Designated Savings Accounts for Severance Payment and Long Service Payment Bill. This bill, although details of which have yet to be announced, would bring in a new mandatory system whereby employers would need to set up a Designated Savings Account and contribute a percentage of their employees' relevant income to it, which will then be used to pay LSP/SSP.
As of 23 May 2022, the two amendment bills are not in force yet. Employers should keep track of the developments on the passage of the bills through the Legislative Council.