Simon McConnell, Partner and Michelle Lai, Associate
in Clyde & Co's Hong Kong office report on the proposals to
change holiday entitlements.
Recently, the Hong Kong Government has been engaged in
discussions into increasing the number of statutory holidays from
12 to 17 days, to match general or public holidays. This proposal
is aimed at removing the disparity in the holiday entitlements of
blue-collar workers and office workers, which could be regarded as
unfair and discriminatory against blue-collar workers.
It is suggested that the increase in statutory holidays should
be made gradually, with one additional day's holiday added each
year, over a five year period, to minimize the impact on
Under the current Hong Kong employment regime, there are two
types of holidays for employees. Blue-collar workers are normally
provided with 12 days' paid statutory holiday a year. Office
workers, however, usually follow the general holidays system and
enjoy five extra days' leave, in addition to the statutory
holidays. At present, fewer than 50% of Hong Kong employees are
taking general holidays, particularly employees in the retail,
accommodation, security and food services sectors. Labour
representatives have therefore urged the Government to standardise
the two types of holiday, to improve the welfare of employees. This
change is expected to benefit at least 850,000 workers in Hong
The statutory holidays and the general holidays are different in
nature and origin. The general holidays are days when all banks,
educational establishments, public offices and Government
departments are not required to open, while statutory holidays (or
so called 'labour holidays') are minimum statutory holiday
entitlements for all employees, and are determined after extensive
Implications for employers
There is concern that the proposed legislative change will bring
a significant financial burden on employers, particularly small and
medium enterprises. According to a survey, the estimated annual
compliance cost for one additional day's statutory holiday
would amount to HKD 370 million. After all, increasing the number
of statutory holidays would mean that employers will need to hire
additional workers to supplement the reduction in manpower which
will increase their operating costs. Another key concern is whether
this proposal would also apply to the 300,000 foreign domestic
helpers and its implications on foreign labour policy.
The discussions on the alignment of statutory and general
holidays at the Labour Advisory Board (a non-statutory body which
advises the Commissioner for Labour) appears to be still at a
preliminary stage. In May 2015, employee representatives put
forward some specific proposals for consideration by employer
representatives. Given its impact on business operations and costs,
the Government will need to strike a balance between employees'
interests and employers' affordability, and reach community
consensus before making any substantive changes.
Increasing the number of statutory holidays was one of the major
labour issues which Chief Executive Leung Chun-ying promised to
deal with in his term of office during the election campaign in
2012. With his term ending in two years, he has been fairly active
in promulgating discussions in labour policy to rally support in
the 2017 election.
The Press has recently reported that the Chief Executive will
resolve the issue of offsetting contributions to the mandatory
provident fund in his next policy address, one of the other key
labour issues which Leung Chun-ying promised to tackle. At the
moment, employers are allowed to use their contributions to the
employees' mandatory provident fund schemes (a compulsory
pension scheme designed by the Hong Kong government) to offset
severance or long-service payments.
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