November 04, 2020

Five Things to Consider Including in a Contract of Employment Given Lessons Learned from the Past Year


In the past year Hong Kong employers have had to handle significant changes including disruptions caused by protests and COVID-19. Are there any lessons learned that can be reflected in a contract of employment? In this update, we look at five things that a Hong Kong employer should consider including in a contract of employment (if not already there). Of course, a contract of employment will need to be tailored to a particular employer, employee and the work to be performed. So the following list should be taken in that light and how comprehensive the contract is already.

  1. Service of Notice Clause

    Most contracts of employment will set out the length of notice required to terminate the contract of employment. While it is permissible for an employer and an employee to agree for notice to be given orally, most employers will provide for notice to be given in writing. A notice of termination must be received by the employee to be effective. However, as work from home becomes more prevalent (whether necessitated or as part of a design of the workplace of the future) and with employees potentially being permitted to work outside of Hong Kong, it may become difficult to personally serve written notice on an employee who is not physically in the office.

    Employers can consider including a service of notice provision in the contract of employment, which sets out the agreed means on how and when notice will be deemed to have been served and received. For example, the provision can provide that notice will be deemed to have been received by the employee if sent by ordinary post to the employee's last known address in Hong Kong on the employer's record, two days after posting.

  2. Expressly Stating Some Implied Obligations

    A contract of employment will not comprehensively contain all the terms of the employment contract. Some obligations are implied by law while others may be implied from the facts. These include, for example, an employee's duty of fidelity and duty to act in good faith. Having an express term manages the employee expectations (in terms of what is expected of them) and makes for easier enforcement by the employer should the need arise.

    Some duties that arise from implied obligations that employers should consider including as an express term of the contract of employment are that the employee must:

    • act in the best interest of the employer and not to do anything or place themselves in a situation that may damage the reputation of the employer,
    • comply with the law at all times, and
    • not to take up other or outside employment while employed by the employer without the employer's prior approval.

    This will help manage expectations and conduct, especially those outside working hours.


  3. Electronic Signature

    Even before the days of COVID-19 employers have been moving to a simpler and a modern way of entering into a contract of employment. Some employers have moved their contract creation process to an entirely online process.

    While a binding contract of employment can generally be formed electronically (except for one that is executed as a deed), employers should ensure that (among other things) the requirements under the Electronic Transactions Ordinance (Cap 553) (ETO) are complied with. In particular, the electronic signature must be attached or logically associated with the electronic document and the parties should consent to the use of electronic signature. This consent can be easily written into the contract of employment.

    A simple clause providing that the parties agree to authenticate the agreement with an electronic signature and that the electronic signature will have the same legal force and effect as a manual signature will avoid any dispute on this point later on.

  4. A Non-static Place of Work

    As we have seen from the work-from-home arrangements implemented due to COVID-19, the place of work may need to be changed. As such, the clause in the contract of employment dealing with the employee's place of work should build in flexibility for change (whether for possible future work-from-home arrangements in response to a fourth wave of COVID-19 or a change in the workplace of the future) and avoid being static to just one office location. Another issue to consider when looking at the place of work clause is whether the employee may be permitted to work remotely from overseas.

    For details of the types of issues that may arise with employees working remotely from overseas, please see our earlier Legal Update.

  5. The Power to Require an Employee to Attend a Medical Examination

    It is uncommon for an employer to require an employee to submit to a medical examination. However, sometimes it is needed, for example, to determine whether the employee can perform the inherent requirements of the job and what reasonable accommodation may be provided to assist the employee to perform those inherent requirements. Another example may be the need for an employee to submit to COVID-19 testing.

    For a discussion on whether an employer can require an employee to submit to a COVID-19 test, please see our earlier Legal Update.

    An employer should always exercise any legal rights to require the employee to submit to a medical examination with care (and seek legal advice if need be), but if the employer does have the need to require an employee to submit to a medical examination, having the express right under the contract of employment will be better than not having one.

The above is not intended to be an exhaustive list and whether or not any of the provisions discussed above is appropriate will, of course, depend on the particular circumstances.

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