5 February 2014
The Impact of Flexible Working on an Employee's Benefits in Hong Kong
In this Bitesize we consider the impact of flexible working on an employee's benefits in Hong Kong, in particular, how to calculate the benefits determined in accordance with the Employment Ordinance (EO).
Are benefits under the EO pro-rated based on the employee's part-time employment?
No, the EO does not expressly provide for any pro-rating of benefits based on part-time employment. For example, an employee's entitlement to the minimum number of statutory annual leave days under the EO (i.e., 7 – 14 days depending on length of service with the employer), provided there is continuous employment, is not pro-rated based on the part-time hours the employee is contracted to work. A part-time employee, provided she satisfies the qualifying criteria, will be entitled to the same number of maternity leave days as a full-time employee.
The rate of pay for benefits determined in accordance with the EO is mostly calculated by reference to the "daily average wage" of an employee which, in turn, is calculated by reference to the employee's preceding 12 months' wages. In calculating the "daily average wage" any period during which the employee did not receive wages or "full wage" by reason of (essentially) an authorised absence and the wages paid for that period, is to be disregarded. By disregarding periods where an employee is not paid wages or "full wages" and the wages paid during that period, the "daily average wage" will be higher than if those periods (and wages) were included.
Does an employer still need to consider if there is "continuous employment" for a part-time employee when determining entitlement to EO benefits?
Yes, where a statutory benefit is conditional upon an employee having satisfied the "continuous employment" requirement and the employee has failed to satisfy such requirements then that statutory benefit is not payable.
But as discussed at length in Bitesize 2 and 3, the term "continuous employment" is defined in section 3 and the First Schedule of the Employment Ordinance. Paragraph 3(2) of the First Schedule provides that any absence from work in circumstances where, by mutual arrangement, the employee is "regarded as continuing in the employment of his employer" shall count as a time during which the employee worked. A period of part-time off where it is agreed the employee does not have to work is, therefore, likely to be a period of absence during which employment will be treated as continuing and not break the "continuity" of employment for the purposes of the EO.
What are the employer's obligations in relation to statutory holiday pay for statutory holidays during a period of part-time off?
An employer is obliged to pay statutory holiday pay in accordance with the EO. This would require a payment of an amount equal to the employee's "daily average wage". Such payment must be made not later than the day on which the employee is next paid his or her wages after the statutory holiday.
What about a period of maternity leave?
Section 14 of the EO sets out both the conditions for payment of maternity leave pay (which include employment under a continuous contract immediately prior to the commencement of maternity leave) and the amount payable. The amount is determined by reference to the "daily average wage". As such, if an employee is entitled to maternity leave pay then such amount will need to be determined by reference to the employee's wages in the preceding 12-month period.