In Hong Kong, under the Employment Ordinance, employers are required to pay wages to an employee within 7 days of the end of the wage period (or in the case of termination of employment, within 7 days of the last day of employment).
Failure to pay wages on time is a criminal offence, punishable by a fine of HK$350,000 and imprisonment for 3 years. In addition, the employer will also have to pay interest on the outstanding wages and failure to do so will also attract criminal penalties. Where the employer is a body corporate, officers of the employer (such as directors and senior management) who were involved in the breach could also be held personally liable for the offence.
While many employers may be familiar with the criminal consequences of late payment of wages, not many are aware that the Labour Department publishes the names of employers who have been convicted of failing to pay wages on time. The repercussions of failure to pay wages on time therefore extends beyond legal penalties.
"Name and Shame"
Press release
On 14 January 2025, the Labour Department issued
a press release about an engineering company which had failed to
pay wages on time in respect of three employees. In the press
release, the Labour Department was not hesitant to name the
employer and published details of the conviction. For example, the
press release expressly mentioned that the company had wilfully and
without reasonable excuse breached their legal obligation to pay
wages on time and the amount of fine which was imposed.
Further, the Labour Department emphasized that this case serves as
a strong reminder about the importance to pay wages on time and
that it would "spare no effort" in protecting the
statutory rights of employees.
This was not an isolated case. The Labour Department issued similar press releases on 30 December 2024, 9 December 2024 and 24 October 2024, just to name a few recent examples.
Conviction records on failure to pay wages
In addition to press releases, every three months, the Labour Department will publish on its website the conviction records of employers who have failed to pay wages on time. The conviction records are available on the Labour Department's website for 24 months.
The Labour Department has been publishing such conviction records since 2019 with a view to raise public awareness about the criminal consequences for breaching the Employment Ordinance in relation to the obligation to pay wages on time.
The conviction records are detailed. They set out the name of the employer (if the employer is a company), a summary of the offence committed as well as the date of sentence and the penalty imposed.
How to manage Public Relations (PR) risk
The publication of press releases and conviction records shows the Labour Department's commitment to clamp down on employers who fail to pay wages on time.
The widespread audience which press releases are able to reach, together with conviction records being publicly available for 24 months on the Labour Department's website, makes it very difficult for employers who have been convicted of failing to pay wages on time to stay out of the public eye. If named by the Labour Department, this can cause material damage to the employer's brand name and reputation. For larger employers, the risk of damage will be higher as larger employers tend to attract more public interest and media attention. As such, the PR risk which employers face can be quite significant.
We have set out below some practical tips for managing the PR risk associated with payment of wages:
- It is crucial for employers to familiarize themselves with their legal obligations under the Employment Ordinance and provide training to members of their HR/payroll team and senior management on the same, particularly in relation to the payment of wages and the statutory time limits. In addition, members of the HR/payroll team and senior management should be made aware that in the event they are involved in the breach, they could be personally liable for the offence too.
- Employers should take proactive steps and put in place adequate
controls to ensure that wages will be paid within the statutory
time limits, for example:
- If payroll is processed manually, an employer may wish to assign at least two members of staff to be responsible for payroll so that in the event one member of staff goes on leave, the other member(s) of staff can still arrange for wages to be disbursed on time to avoid missing the statutory time limits. Employers should automate processes where possible to reduce the risk of human error and ensure timely payments.
- If the employer uses payroll software, the employer may regularly check that the settings on the software in relation to pay date are within the statutory time limits, particularly whenever the software is updated.
- Employers may wish to conduct regular audits of payroll processes to ensure compliance with the law. This can help identify any potential issues before they become serious violations.
- If the employer engages a third party payroll service provider, the employer may wish to request the service provider to provide regular reports on when wages were paid and to forthwith inform the employer in the event of any delays in paying wages so that remedial action could be promptly taken. It is important to remember that the employer remains legally liable for the consequence of late payment of wages even if it engages a third party payroll service provider to support with payroll matters.
- In the event a late payment of wages has occurred, the employer should pay the overdue wages together with interest to the employee as soon as possible. Employers may wish to seek legal advice on how to do so in a way that best mitigates the risks that may arise from the late payment.
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.
