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EMPLOYMENT PENSIONS and BENEFITS Talking Points for Hospitality and Leisure in Hong Kong

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EMPLOYMENT PENSIONS and BENEFITS Talking Points for Hospitality and Leisure in Hong Kong EMPLOYMENT PENSIONS AND BENEFITS Talking Points for Hospitality and Leisure in Hong Kong Due to the continuing European debt crisis, many international operators in the hospitality and leisure sector have focused on developing their businesses in Asia, including Hong Kong. Some of the key employment-related issues which they face are outlined below. WAGES BONUSES On 1 May 2011, the trade unions of Hong Kong won their It is common for employers in the hospitality and leisure decade long battle to introduce a minimum wage legislation sector to provide for an end of year payment to employees in Hong Kong when the Minimum Wage Ordinance in Hong Kong (sometimes referred to as a “13-month (MWO) came into effect. The MWO provides that all payment”) and it is often paid around the Chinese Lunar employees are entitled to be paid wages in respect of any New Year Period. Employers are free to negotiate the amount wage period of not less than the statutory minimum wage of this payment with employees or not to provide it at all. (which is currently set at HK$28 per hour). In order to However, where a bonus payment is provided, unless it is determine whether the wages paid to an employee meet the strictly a discretionary bonus, there are certain statutory minimum wage, it is important for employers to ascertain provisions which govern the amount and timing of the what wages were paid to the employee in a wage period, payment in the absence of agreement between the employer and whether wages paid were for hours worked or not. and employee. Although there is no legislation in Hong Kong Any payments made to an employee in any wage period for which governs bonus schemes which are purely discretionary any time that is not hours worked by the employee must be in nature, it is key for employers to ensure that any deducted from the amount of wages paid to the employee discretionary scheme cannot be construed to be contractual for the purposes of calculating an employee’s wages for and therefore ‘caught’ by the statutory provisions. the relevant wage period. Therefore, to ascertain whether an employee is being paid wages that are at or over the PROTECTION OF COMPANY INTERESTS statutory minimum wage, it is necessary for employers to determine, for example, whether rest days are paid or Two of the key issues for companies in the hospitality and unpaid; whether lunch breaks are included in or excluded leisure sector are the retention of talented employees and from the hours worked; and whether lunch breaks are paid the preservation of the company’s trade secrets. Therefore, or unpaid. It is also important for employers to comply companies in the hospitality and leisure sector are often: with the record keeping obligations set out in the MWO ■ Seeking advice on the drafting of the confidentiality (including the additional record keeping obligations if they clauses and post-termination restrictions and/or engage student interns or work experience students). reviewing and amending these clauses; Another key issue for companies in the hospitality and ■ Seeking advice on the enforceability of the leisure sector is that there are strict limits on the deductions post-termination restrictions when seeking to hire which they are entitled to make from an employee’s wages. an employee or when an employee is leaving and An unlawful deduction which is not permitted by the threatening to go to a competitor; and statutory framework is a criminal offence and employers ■ may be liable to a fine and imprisonment even if they have Seeking assistance with a dispute with an employee obtained the employee’s consent. or team of employees who have resigned and are in suspected breach of his/her/their contractual obligations. OUTSOURCING DISCRIMINATION Many companies seek employment law advice on the The statutory regime in Hong Kong prohibits certain outsourcing of certain functions or teams. Unlike in forms of discrimination in the workplace and elsewhere Europe (and Singapore for certain employees), there is no including sex, marital status, pregnancy, disability, family automatic transfer of employment in Hong Kong. There is status and race. While the volume of discrimination cases a key difference in Hong Kong between moving staff in Hong Kong is still smaller than many other jurisdictions, to an associated entity and moving staff to a third party the number of these cases is rising. The Equal Opportunities without a transfer of the business more generally. In either Commission has issued various codes of practice on situation, it is likely that the formal termination of the employment with the intention of providing guidance relevant employees’ employment and an offer of alternative to employers on how to comply with their obligations. employment with the new employing entity will need to Employers should take careful note of these guidelines be documented carefully. Whether or not to recognise as although failure to observe any provision of a code of the employees’ continuous employment for all purposes, practice will not of itself create liability in any proceedings, or start anew with the new employer requires serious the Hong Kong Courts and Tribunals do consider the codes consideration. The pros and cons and possible costs of each of practice if such codes of practice may be relevant to any scenario will need to be considered carefully. question arising in the proceedings. MOVING EMPLOYEES AROUND OCCUPATIONAL SAFETY AND HEALTH Many international operators have chosen to have a base in In Hong Kong, employers are subject to strict obligations Hong Kong and with the increasingly globalised nature of under the legislative framework to ensure the safety and the workforce, it has become commonplace in the hospitality health of their employees at work. For employers in the and leisure sector for employees from overseas to spend time hospitality and leisure sector, the key piece of legislation working in Hong Kong or for Hong Kong employees to work that sets out their general duties in relation to the safety in China or elsewhere in the Asia Pacific region. Cross-border and health of their employees is the Occupational Safety assignments of this nature raise a number of legal issues and Health Ordinance. There are also a wide range of affecting both the employee and the employer, including subsidiary regulations relating to specific safety and issues related to tax, immigration, dispute resolution and health matters. Severe penalties may be imposed on employment status. For example, companies in the hospitality the employers if they fail to comply with the legislative and leisure sector are often seeking advice on the structuring requirements. Therefore, it is important for employers of an employee move whether it be by way of secondment, to ensure that they have taken all necessary measures dual contract or direct hire. They are also seeking advice on to comply with all requirements set out in the various how to ensure that the employees comply with their ongoing occupational safety and health legislation/regulations. confidentiality and intellectual property obligations when they are working in another jurisdiction. PRIVACY Compliance with the data privacy legislation is frequently COST CUTTING MEASURES a big issue for companies in the hospitality and leisure Given the large number of employees employed by the sector. In Hong Kong, companies in the hospitality and international operators in the hospitality and leisure sector, leisure sector often seek legal advice to ensure that the when the economy is not good, these companies are collection, storage, use (including transfer), storage and seeking employment law advice on cost-cutting measures. handling of personal data of employees are in compliance Often issues arise as to whether a company can withdraw a with the Personal Data (Privacy) Ordinance and, in benefit from an individual or a group of employees, reduce particular, the six Data Protection Principles. salaries or working hours, or even make employees redundant. These companies would seek advice on the documents to be KEY CONTACT prepared to protect their interest in these situations. Pattie Walsh Partner Head of Employment, Pensions and Benefits, Asia-Pacific T +61 2 9286 8197 [email protected] www.dlapiper.com DLA Piper Hong Kong is a global law firm operating through various separate and distinct legal entities. Further details of these entities can be found at www.dlapiper.com. A list of offices across Asia Pacific, Europe, the Middle East and the Americas can be found at www.dlapiper.com Copyright © 2012 DLA Piper. All rights reserved. | DEC12 | 2477896.
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