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Legal Update

Suggested Changes to Employment Contracts to Deal with the Implications of the Minimum Wage Ordinance

9 November 2010
Mayer Brown JSM Legal Update

Most employers will be aware that the introduction of the Minimum Wage Ordinance (MWO) will have a major impact. One of the complexities of the legislation is the need for every employer to determine what "wages" can be applied to satisfy the MWO obligations and what amount to "hours worked" (see our recent article headed "The Minimum Wage Ordinance - The Devils in the Detail").

In order to assist with this, we anticipate that many employers will be looking to clarify these aspects with their employees.

We set out below a form of wording which employers may wish to consider inserting into their contracts. This wording is necessarily generic and so it is important that it is adjusted to take account of the terms of their particular contracts. Normally the consent of the employees is necessary for any change to existing contracts. In any case, where employers are in any doubt about how to proceed, they should contact their legal advisors.

(If changing contracts is too painful then employers could consider inserting wording of this type into an Employee Handbook.)

1. Suggested wording concerning "wages"

"(a) Subject to (b) below, any wages paid to you in any wage period shall be paid for the hours worked by you only.

(b) Notwithstanding the above, where the Company is under a statutory or contractual obligation to make any payment for time that is not hours worked by you the wages paid shall be deemed to be paid for such time also, but only up to the amount necessary to satisfy the statutory or contractual obligation of the Company and no more.

(c) For the purposes of this clause the terms "wages", "wage period" and "hours worked" shall have the same meaning as in the Minimum Wage Ordinance."

[Note: If rest days are currently paid and you are looking to make them unpaid then this will increase the "daily average wage" of an employee for the purposes of the Employment Ordinance]

2. Suggested wording for "working hours"

"(a) Your hours of work are [         ] am to [         ] pm from [Monday to Friday] [with one hour for lunch each day] (such period of time[, excluding lunch,] shall be your "Contractual Hours"). You may on occasion be required by the Company (by means of a direction in writing) to work additional hours ("Directed Hours").

(b) You understand and agree that, for the purposes of the Minimum Wage Ordinance, the Company will treat the aggregate of your Contracted Hours and Directed Hours in any month as the total of your "hours worked" in that month unless you notify the Company in writing [in the specified form] of any further "hours worked" within [5] days of the date on which you performed such further "hours worked". Details of what amount to "hours worked" for the purposes of the MWO are set out in [         ]."

For inquiries related to this Legal Update, please contact:

Duncan Abate ( )

Hong Tran ( )

Learn more about our Hong Kong office and Employment & Benefits practice.

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