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Legal Update

Definition of 'Continuous Contract': Should the 4-18 Requirement be Relaxed?

25 March 2013
Mayer Brown JSM Legal Update

On 19 March 2013, the Legislative Council Panel on Manpower reviewed and discussed a briefing paper submitted by the Labour and Welfare Bureau of the Labour Department in November 2011. The paper detailed the results of a special topic enquiry into the status, numbers, legal employment protections and benefits entitlements of short duration and short working hours employees ("SDWH employees"). These are employees who work for short durations or shorter working hours and whose employment status, therefore, does not qualify as falling within the definition of 'continuous contract'. The enquiry came about following calls for a review of SDWH employees' status whose employment situation is generally regarded as less secure and less protected than those employees engaged under a continuous contract.

Points of note from the special topic enquiry:

  • While certain basic legal employment protections apply universally (e.g., including payment of wages, minimum wage protection, etc.) certain others do not. For example, only eligible employees working under a continuous contract are entitled by law to rest days, paid statutory holidays, annual leave, sickness allowance and severance and long service entitlements. SDWH employees are not entitled to these benefits because their employment does not fall under the broad definition of a continuous contract. A continuous contract is defined by the Employment Ordinance and exists broadly where an employee works 18 hours or more a week in a 4-week period (also known as the "4-18 requirement").
  • As of July 2011, there were around 148,300 SDWH employees in Hong Kong, of whom 50,200 worked more than 18 hours per week in their current job. Of the 148,300 SDWH workers, some 56,300 usually worked less than 18 hours per week. Of that 56,300, some 76 percent were female.
  • The survey of the SDWH employees revealed that despite not falling under the 4-18 requirement, just over 20 percent were granted statutory holiday pay, while 24.6 percent were granted paid annual leave and 4.7 percent an end-of-year payment. Of the 56,300 SDWH employees working less than 18 hours per week, just 10.3 percent received statutory holiday pay, 8.1 percent paid annual leave and 2.5 percent an end-of-year payment.

Next steps:

With calls to relax the 4-18 requirement under the Employment Ordinance, it remains to be seen whether the Administration will propose any such amendments following the results of this special topic enquiry. As always the interests of both the employees and employers will be taken into account and views sought accordingly. Watch this space for further updates and developments.

For inquiries related to this Legal Update, please contact Hong Tran or your usual contacts with our firm.

Authors

  • Hong Tran
    Partner
    T +852 2843 4233

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