After much heated debate that lasted 41 hours in the Hong Kong
Legislative Council, the Minimum Wage Ordinance
("Ordinance") was passed on 17 July 2010 and will come
into force on this year's Labour Day holiday, 1 May 2011. The
Ordinance, a rare departure from Hong Kong's free market
economy, provides for a statutory minimum wage ("SMW")
for employees and aims "to strike a balance between
forestalling excessively low wages and minimising the loss of low
paid jobs while sustaining Hong Kong's economic growth and
Because of the extensive application of the new SMW system,
there is a need for all employers to understand the relevant
provisions and the application of the Ordinance regardless of
whether you pay employees on an hourly basis or below the SMW.
The Applicability of the Ordinance
The Ordinance applies to every employee in Hong Kong except
persons to whom the Employment Ordinance ("EO") does
persons who are employed as domestic workers and dwell in the
employing household free of charge;
employees under contracts for employment outside Hong
persons who are engaged under a contract of apprenticeship
registered under the Apprenticeship Ordinance; and
The SMW Requirement
SMW is a wage floor which will not detract the employees'
existing rights and benefits under the current employment-related
legislation, including the EO. The SMW will not change the nature
of wages, but simply sets the lowest permissible remuneration under
In essence, an employee's wages must not be less than the
SMW on average for the hours worked in any wage period (normally
one month). The initial SMW rate is HK$28 per hour and such rate is
subject to review every 2 years.
The calculation of the minimum wage for a wage period payable to
an employee is :-
Total no. of hours worked by the employee in the wage period X
SMW rate (initially at $28)
It is expressly stated in the Ordinance that the employers and
employees may not reach private agreement to extinguish any right,
benefit or protection conferred on the employees by the
Additional Obligations Imposed on Employers – Records
The Ordinance has significantly changed an employer's
obligation with regards to records keeping. Employers are now
obliged to keep records of the number of hours worked by the
employees, unless the employees' wages for any wage period is
more than a specified amount ("Minimum Amount"), which is
initially set as HK$11,500 per month. This obligation is applicable
to all employees regardless of whether the SMW is met and may be an
onerous administrative burden on employers who hire large number of
employees at relatively low wages eg supermarkets, fast food chains
If the records keeping obligation is applicable, the following
should be recorded :-
time when the employee is in attendance of his/her place of
employment irrespective of whether he/she is provided with work at
that time; and
time spent by the employee on travelling in connection with
his/her employment (excluding travelling between his/her home to
workplace other than a place of employment that is outside Hong
Kong and is not his/her usual place of employment).
During the term of employment, the records should be kept for 12
months at the employer's place of business or at the place
where the employee is employed. After the employee ceases to be
employed, any undestroyed records should be kept for another 6
months after the employee's departure.
Employers should be aware of their additional obligations under
the Ordinance to avoid any liability thereunder. For failure to pay
the SMW, the penalty is a maximum fine of HK$350,000 and
imprisonment for 3 years. For failure to keep proper records of the
hours worked, a fine of HK$10,000 may be imposed.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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