2024 saw no substantial changes to the employment law landscape in Hong Kong but some key changes are expected to be rolled out or take effect in 2025. As such, employers should start planning for these upcoming changes to stay ahead of the game.
This legal update outlines the key highlights of 2024 and looks ahead to 2025.
2024 Highlights:
- Litigation trends: In 2024, we saw a number of court judgments regarding:-
- non-payment of termination entitlements (in particular, bonus payouts),
- enforcement of post-termination restrictions (see our Legal update on Moxie Communications Limited v Lai Cheuk Lok), and
- breach of implied terms of the contract of employment (including the implied duty of mutual trust and confidence) (see our legal update on Yang Zhizhong v Nomura International (Hong Kong) Limited).
Interestingly, there were also two other cases, namely, Green Light Multiplex Co. Limited v Lam Shi Yan and Conpak Management Consultants Limited v Luk Wai Ting (see our respective legal updates) which touched on whether an employee owed fiduciary duties to their employer. We see these types of disputes continuing in 2025.
- Enhancement of the Statutory Minimum Wage review mechanism: In April 2024, the government announced its plan to enhance the Statutory Minimum Wage (SMW) review mechanism, based on recommendations of the Hong Kong Minimum Wage Commission. These enhancements include shortening the review cycle of the SMW rate from two years to one (i.e. annual review), and adopting a formula tying the SMW rate to Hong Kong’s inflation rate and economic growth performance. The first SMW rate derived under the new review mechanism will take effect on 1 May 2026.
- Launch of the Re-employment Allowance Pilot Scheme: In July 2024, the Labour Department launched a three-year Re-employment Allowance Pilot Scheme (REA Scheme) to encourage elderly and middle-aged people to rejoin the workforce.
The REA Scheme offers eligible participants (i.e. Hong Kong residents aged 40 or above and who have not been in paid employment for at least three consecutive months before joining the REA Scheme) a maximum allowance of HK$10,000 after working full-time continuously for six months, with an additional allowance up to HK$10,000 to those who have worked full-time for the entire 12-month period. The allowance under the REA Scheme is halved for those eligible participants working part-time.
- Use of artificial intelligence: The use of artificial intelligence (AI) in the employment and HR space is gradually on the rise. While there is currently no AI-specific legislation in Hong Kong, the Hong Kong Office of the Privacy Commissioner for Personal Data issued the “Artificial Intelligence: Model Personal Data Protection Framework” in June 2024, providing organisations with practical and detailed recommendations when they procure, implement and use AI systems involving personal data.
2025 Outlook:
- Relaxation of the “418” continuous contract requirement: Many entitlements under the Employment Ordinance (EO) apply only to employees under a continuous contract. Generally, an employee is required to work for the same employer for at least 18 hours a week for four or more consecutive weeks to be considered working under a continuous contract. This is what is commonly referred to as the “418 rule”.
The government has now announced its plan to replace the “418 rule” with a “468 rule”, which would require an employee to work 68 hours over a four-week period. An amendment bill to the EO is expected to be introduced to the Legislative Council in the first half of 2025.
The proposed “468 rule” will potentially allow more employees (in particular part-time or casual employees) to qualify for the statutory employment benefits under the EO which they may not currently enjoy, such as statutory holiday pay, annual leave pay, sickness allowance, and maternity/paternity leave. For more details, please refer to our legal update.
- Abolition of the Mandatory Provident Fund offsetting mechanism: From 1 May 2025, the existing Mandatory Provident Fund (MPF) offsetting mechanism will be abolished. Employers in Hong Kong will no longer have the right to offset the statutory severance/long service pay (payable on termination of employment) against the accrued benefits attributable to their contributions with respect to the employee.
- Talent attraction: In the recent 2024 Policy Address, the government announced plans to reform various aspects of the existing talent admission regime, aiming to address a projected shortage of workers across different sectors, and attract experienced specialists in specific skilled trades. For a summary of these proposed reforms, please refer to our legal update.
