An employer was prosecuted and fined HK$92,000 for failure to pay five of its employees' wages, totalling around HK$322,000, in accordance with the Employment Ordinance (EO) on 31 August 2020.

Under Section 23 of the EO, an employer should pay wages to an employee when they become due and in any case not later than seven days after the end of the wage period, failing which could give rise to both criminal and civil liabilities.

  • Criminal liabilities – An employer who, wilfully and without reasonable excuse, fails to pay wages on time commits an offence and is liable to a maximum fine of HK$350,000 and imprisonment for three years.

    Directors or responsible persons of the employer could face prosecution and be jailed for late payment of wages. Section 64B of the EO stipulates that where any wage payment offence committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the body corporate, they shall be guilty of a like offence.

  • Civil liabilities – An employee may commence proceedings against the employer to recover any outstanding wages. The employee is also entitled to interest on the outstanding wages at the judgement interest rate (currently 8% p.a.).

    An employee can terminate his/her employment contract without notice or payment of wages in lieu if wages are not paid within one month from the due date of payment under Section 10A of the EO. If the employee elects to terminate the employment contract under such circumstances, the employment contract is deemed to be terminated by the employer and the employer will need to pay the employee wages in lieu of notice together with any other statutory and contractual entitlements on termination.

This recent prosecution launched by the Labour Department serves as a timely reminder to all employers in Hong Kong the importance of paying wages on time. Even if the business may be hard hit by the COVID-19 pandemic, employers must continue to observe their obligations to pay wages on time under the contract of employment and the EO. Failure to do so may not only lead to a fine but may also result in the imprisonment of relevant individuals.

The government press release is available at the following link:

https://www.info.gov.hk/gia/general/202008/31/P2020083100700.htm

Originally published by Mayer Brown, September 2020

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