This alert considers the Race Discrimination Ordinance and the Minimum Wage Bill. These two pieces of legislation will change the HR landscape in Hong Kong materially.
The good news for employment lawyers continues unabated with the impending introduction of the Race Discrimination Ordinance ("RDO") and the publication of the Minimum Wage Bill ("MWB").
Whilst the legislative process is almost over for the RDO (it is expected to come into force sometime in the next few weeks), the MWB is just commencing its, no doubt tortuous, route through the Legislative Council.
This alert considers the issues concerning both pieces of legislation.
Race Discrimination Ordinance
The relevant Legco committee recently considered the third draft of the Code of Practice on Employment under the Race Discrimination Ordinance. This Code is an important document as it is supposed to explain, in plain language, certain of the complex principles of the RDO and put compliance with the RDO in a practical context.
Unfortunately, much of the draft Code falls into the trap of simply repeating the legislative provisions without explaining them or illustrating how they will work (indeed the original Code published in October last year had 50 illustrations, whilst the most recent Code only has 16!). It is, therefore, a lost opportunity for the EOC to explain how they envisage that the RDO should be implemented.
If this was the only problem with the Code, then it would not be a major cause for concern. However, the reality is that there are parts of the Code which are potentially misleading and should, in our view, be removed. In particular, the Code refers to the principles of "equal pay for equal work" and "equal pay for equal value". The Code implies that employers "should maintain" and "progressively implement" such principles.
Whilst the concepts behind "equal pay for equal work/value" are undoubtedly laudable, the reality is that there is nothing in the RDO (or indeed any other Hong Kong legislation) which prohibits differential pay per se. Sure, differential treatment due to race, sex, disability or family status is unlawful, but such unlawfulness flows from the reason for the difference, not the difference itself.
The relevant Legco committee urged the EOC to respond to both the Law Society of Hong Kong and the Employers' Federation of Hong Kong on this point. No response has yet been received.
Next steps for employers
Notwithstanding the deficiencies in the Code, it is critical that all employers start preparing for the impending introduction of the RDO. At its most basic level, such preparation should include amending any anti-discrimination/harassment policies to include references to prohibitions on treating an employee less favourably due to his or her "race". Best practice would also include training staff.
A particular "hot spot" is likely to be recruitment. As such, employers should focus on recruitment procedures and training those staff involved with recruitment.
Minimum Wage Bill
The MWB is attracting substantial press attention and will probably continue to do so for some time. Basically the MWB will, when introduced (expected to be no earlier than 2011), require every employer to pay to each employee an amount of wages in every wage period at least equal to:
number of hours worked x minimum hourly wage rate
The hot topics from the point of view of the press are:
- whether or not the MWB will cover domestic helpers - the current position in the Bill is that it will not cover domestic helpers where the employer provides free accommodation in the household. There are mutterings that this may give rise to a judicial review on the grounds of racial discrimination.
- whether or not the MWB will cover persons with a disability - the current position is that such persons are covered, but there is provision for a reduced hourly minimum wage in respect of disabled persons who are "certified" by an "approved assessor" as being less productive. The question of who bears the cost of this "certification" is yet to be decided.
From an employer's perspective the big issues are:
- the amount of the initial minimum hourly wage - unionists are agitating for around HK$35 per hour while employer groups are looking for something around HK$20.
- the mechanism for adjustment of such amount in the future - the current position in the MWB is that the Minimum Wage Commission will make recommendations to the Chief Executive in Council concerning such adjustment method.
From a legal perspective the key questions are:
- what "wages" are to be taken into consideration when deciding whether or not the minimum wage requirement has been satisfied? The current position is that "wages" has the same meaning as under the Employment Ordinance (and, therefore, end of year payments and discretionary annual bonuses are excluded while commission and other fluctuating amounts are included).
- when is an employee to be considered at work? The current position is that whenever an employee is "in attendance at a place of employment", they are entitled to a minimum wage. This is the case whether or not the employee is required to be at work (i.e. regardless of contractual hours) and whether or not the employee is actually working (except meal breaks). Any time the employee is travelling is connection with work (except to and from home) in also included.
Next step for employers
No immediate action is required by employers. We will keep you updated on developments with this very political legislation as it progresses through the legislative process.
For inquiries related to this Client Alert, please contact:
Duncan Abate (firstname.lastname@example.org)
Hong Tran (email@example.com)