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Upon termination of employment, what are the obligations and entitlements of employer and employee? (Applicable to employees employed under continuous contract)

Labour Department

Obligations and Entitlements of Employer and Employee upon Termination of Employment
(Applicable to employees employed under continuous contract, i.e. he /she has been employed continuously by the same employer for 4 weeks or more, with at least 18 hours worked in each week)

The items and amount of payments payable to an employee on termination of employment or expiry of the contract depend on a number of factors such as the length of service, the terms of employment contract and the reason for termination of contract. For quick reference, termination payments usually include :
 

1. Wages and Other Payments, including -

  • Outstanding wages
  • Any outstanding sum of end of year payment, and pro rata end of year payment for the current payment period, for details please click here
  • Long service payment or severance payment (if applicable), for details please click here
  • Other payments under the employment contract, such as, gratuity, provident fund, etc.
     

2. Payment in lieu of notice (if applicable), for details please click here
 

3. Payment in lieu of any untaken annual leave, and any pro rata annual leave pay for the current leave year, for details please click here   
 

Note that in the following special circumstances, please contact 1823 or the Labour Relations Division for further details on the relevant requirements under the Employment Ordinance -

  • Unreasonable dismissal: If a dismissed employee has been employed under a continuous contract for not less than 24 months, and is dismissed other than for a valid reason as specified in the Ordinance (i.e. conduct of the employee; capability or qualification of the employee for performing his work; redundancy or other genuine operational requirements of the business; statutory requirements; or other substantial reasons), the employee may claim for remedies against the employer.
  • Unreasonable and unlawful dismissal: If an employer dismisses an employee whilst she is pregnant, on maternity leave, whilst the employee is on paid sick leave, or if he/she has an unsettled work injury case; or dismisses an employee because he/she gave evidence or information to the authorities in connection with enforcement of labour legislation, or because of his/her trade union membership and activities; the employer is liable to prosecution and upon conviction, to a fine of $100,000. Also, if the dismissal is other than for a valid reason as specified in the Ordinance (i.e. conduct of the employee; capability or qualification of the employee for performing his work; redundancy or other genuine operational requirements of the business; statutory requirements; or other substantial reasons), the employee may claim for remedies against the employer.
  • Employee terminates employment without notice: An employee may terminate his or her employment contract without notice or payment in lieu of notice if he reasonably fears physical danger by violence or disease; he is subjected to ill-treatment by the employer; or he has been employed under a continuous contract for not less than 5 years and he is certified by a registered medical practitioner via LD424(S) (PDF) as being permanently unfit for the type of work he is being engaged.
  • Employer summarily dismisses an employee without notice: An employer may summarily dismiss an employee without notice or payment in lieu of notice if the employee, in relation to his employment, wilfully disobeys a lawful and reasonable order; misconducts himself; is guilty of fraud or dishonesty; or is habitually neglectful in his duties. It should be noted that summary dismissal is a serious disciplinary action. It only applies to cases where an employee has committed very serious misconduct or fails to improve after the employer's repeated warnings.
     

Required Time of Payment

The employer is required to make all the payments to the employee as soon as practicable. For the required time of payment and the penalties for non-compliance under the Employment Ordinance, please click here.


This is not a legal document and is prepared for general information only. The information is shown in a logical step-by-step question and answer format to facilitate users to have an overview of termination of employment. Since the merits of individual cases could vary, in case you are not sure which option should be chosen for your particular situation, or you have doubt about how to interpret the contents, to avoid misunderstanding, please contact 1823 or seek assistance from Labour Relations Division of Labour Department. The Ordinance remains the sole authority for the provisions of the law explained.

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Last update: 10 Sep 2019
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