Hong Kong Law Employment Update.

30 January, 2018

 

1. Increased paternity leave

 

In October 2017, Chief Executive Carrie Lam delivered in her policy address that the Labour Advisory Board and lawmakers will be consulted to extend the statutory paternity leave from three to five days. If this is enacted, the entitlement of employees in the private sector will align with those in the civil service.

 

Currently, the Employment Ordinance provides that the biological father of a new born child may be eligible for three days paternity leave if he has been employed under a continuous contract (i.e., for 18 hours a week for at least four weeks) by the employer and had notified the employer of his intention to take such leave. The employee will paid four-fifths of his average daily wages earned in the past 12 months for the paternity leave taken if he has been employed for no less than 40 days before the first day of paternity leave.

 

Representative of the employers said that they welcome the change, but they will not be able to accommodate a seven-day paternity leave, which is what the workers want. Subject to the support of the Labour Advisory Board and the Panel on Manpower, the Labour Department would proceed with preparing the enabling legislation. This proposal will be presented and consulted within 2018.

 

Chief Executive Carrie Lam also hopes to change statutory maternity leave from 10 to 14 weeks. The authorities will launch a study in the near future, and the Labour and Welfare Secretary thinks that it is almost “certain” that this change will be implemented as 14 weeks of maternity leave is the time period advised by the International Labour Organisation. It will most likely take a year for the Government to consult the various sectors before putting forward a proposal.

 

2. Foreign same-sex marriages recognised for visas

 

In late September 2017, the Court of Appeal held in a landmark case that same-sex couples who are married in other foreign jurisdiction are eligible to apply for spousal dependant visas in Hong Kong.

 

QT applied for a dependent’s visa to stay in Hong Kong as a dependant of her same-sex civil partner, SS. The Director of Immigration rejected the application on the basis that “spouse” refers to one whose marriage is heterosexual and the interpretation of the dependent visa policy excludes same-sex marriage.

 

QT challenged the Director of Immigration’s decision by way of judicial review. Her application was dismissed in the Court of First Instance which held that Hong Kong’s relevant legislation did not intend to include foreign legally recognised civil partnerships and confirmed that there was no discrimination against QT.

 

QT appealed and was successful in the Court of Appeal. The Court recognised social policy where certain rights and obligations are inherited in traditional, opposite-sex marriage but concluded that rights and obligations under immigration do not fall under this. It further held that the denial was discriminatory on the ground of sexual orientation, the right of equality and non-discrimination and the common law principle of equality. The Court considered the legitimate aim between attracting talents and application of Hong Kong immigration policy. It found that not granting QT dependant visa does not help attract employees and there is no impact on immigration as SS could bring an opposite-sex spouse into Hong Kong.

 

The Court also confirmed that its ruling does not have any legal effect on the definition of marriage under Hong Kong’s Marriage Ordinance. It emphasized that institution of marriage under Basic Law remains intact.

 

This case came shortly after another landmark case for LGBT rights in the Hong Kong courts (see our article on Leung Chun Kwong v Secretary for the Civil Service and Commissioner of Inland Revenue [2017] HKEC 854 here). We suspect that many more claims will emerge to recognise rights of same-sex couples.

 

3. New bands for injury to feelings

 

The “Vento” bands originated from Vento v Chief Constable of West Yorkshire Police (No. 2) [2002], where the UK Court of Appeal identified three broad bands of compensation for injury to feelings relating to unlawful discrimination of protected characteristics such as sex and race, as opposed to compensation for psychiatric or personal injury. Hong Kong follows the “Vento” guidelines when assessing damages for injury to feelings.

 

The Presidents of the Employment Tribunal in England & Wales and Scotland have issued a joint Presidential Guidance to uprate the three “Vento” bands as follows:  

 

• lower band of £800 to £8,400 for less serious cases;
• middle band of £8,400 to £25,200 for cases that do not merit an award in the upper band;
• upper band of £25,200 to £42,000 for most serious cases; and
• most exceptional cases capable of exceeding £42,000

 

The adjustment took effect in the UK in September 2017 and will be reviewed annually.

 

As in the UK, Hong Kong courts must regard the guidance, but are not required to be bound by it. The new bands took into account inflation rate and a 10% uplift as recommended by the Court of Appeal in De Souza v Vinci Construction (UK) Ltd [2017].

 

4. Draft modern slavery bill introduced in Hong Kong

 

Hong Kong legislator Dennis Kwok and others introduced a new bill on modern slavery (the “Draft Bill”) to the Lefgislative Council in August 2017.

 

Hong Kong, for the second year in a row, has been ranked, alongside with Afghanistan and Pakistan, as Tier 2 on the watch list in the Trafficking in Persons Report published by the US Department of State. Hong Kong had previously been ranked in Tier 1, but was demoted due to inadequate policies and public awareness campaign and lack of laws criminalising all forms of human trafficking.

 

Currently, there is no specific criminal legislation against forced labour and human trafficking in Hong Kong; the few protections that are in place arise from multiple legislations including:

 

• Trafficking in persons to or from Hong Kong;
• Control over persons for purpose of unlawful sexual intercourse or prostitution;
• Causing prostitution;
• Living on earnings of prostitution of others;
• Abduction of child or juvenile;
• Offences relating to child pornography;
• Failure to grant any rest days to employees;
• Non-payment/under-payment of wages or delay in payment of wages; and
• Prohibition of commercial dealings in human organs.

 

The Draft Bill intends to amend the Crimes Ordinance in Hong Kong to define and criminalise internationally recognised offence of trafficking and impose reporting obligations on corporations. Please refer to the table below for a list of new offences under the Draft Bill.

 

The Draft Bill also imposes a reporting obligation on businesses whose turnover exceeds a threshold amount. The business is required to publish a statement providing detailed plans on its prevention of slavery and human trafficking in the workplace or declare that it does not have such plans. The statements must be approved by the board of directors, signed by a director and published on its website.

 

There is no timetable for the Draft Bill yet. However, it raises awareness in the community, and Hong Kong is one step closer to international standards.

 

5. Proposal to abolish MPF off-setting mechanism

 

Chief Executive Carrie Lam emphasized in her 2017 policy address that the offsetting of severance payments or long-service payments with Mandatory Provident Fund (“MPF”) (i.e., pension) contributions will be abolished. The Government is willing to increase its subsidies to employers to assist them in the event the offsetting is removed.

 

The MPF is a scheme set up by the government to help generate retirement savings for the elderly. All employed individuals must partake in a mandatory subscription where both employers and employees collectively make monthly contributions through private MPF providers.

 

Under current legislations, employers are entitled to use the benefits attributable to their contributions to offset an employee’s statutory severance or long service payments. This has been the subject of complaints from unions for many years.

 

In late July 2017, labour and employer representatives put forward a proposal to improve the current MPF provisions. The key suggested changes are:

 

• Cap the maximum amount of severance and long service payments payable to less than HK$390,000.
• Keep the existing two-thirds formula whereby the amount payable equals to two-thirds of the employee’s last salary multiplied by the number of years in service.
• A mandatory savings scheme for employers to prepare them if the Government’s subsidy is removed (see below for details).
• Employers will be eligible for tax exemption for their savings.

 

The previous Chief Executive, CY Leung, had promised to abolish the offset mechanism. His plan was not well received, in particular, he received strong opposition from the business sector. Although the Government has set aside a fund of HK$7.9 billion to help alleviate the employers’ burden of their expenditure for both severance and long service payments for the first 10 years after the off-setting mechanism is removed, the employers contested that they had originally agreed to make contributions because the offset was allowed. The employee representatives were also not pleased that under CY Leung’s proposal, severance and long service pay would use a different formula resulting in a smaller payment.

 

The Government is expected to provide details on the final arrangements this year, and employers should factor the cost associated with this change in their future financial plan.

 

Jennifer Van Dale, Partner, Eversheds

jennifervandale@eversheds.com