Employment Contracts in Hong Kong: What Must Be Included

Hong Kong law requires an employer to include five specific terms in every employment contract, and to reduce them to writing. Section 44 of the Employment Ordinance (Cap. 57) makes these terms mandatory, and section 45 imposes a penalty on any employer who fails to comply. The five terms are: wages, wage period, notice period, end-of-year payment (where applicable), and any other term the parties agree. Everything else — probation, confidentiality, non-compete, IP assignment — is optional but commercially advisable.

Under section 44(1) of the Employment Ordinance (Cap. 57), "an employer shall, before the commencement of employment, inform the person employed of the terms and conditions of employment in respect of the matters specified in subsection (2)." Section 44(2) lists the five matters above.

The Five Mandatory Terms Under Section 44

Every Hong Kong employment contract must state these five items in writing. The Employment Ordinance does not prescribe a template, but it does prescribe the content. If any of the five is missing, the contract is non-compliant and the employer is exposed to a fine.

The contract must be provided before the commencement of employment. There is no grace period. If the terms change during employment, section 44 requires the employer to inform the employee of the change "as soon as practicable" and in any event within one month.

Ongoing Compliance Execution

Ongoing statutory obligations are handled seamlessly through Captime's dedicated Hong Kong company secretary service, providing a licensed local representative and automated annual return management.

Eligibility: Who Is Covered by the Employment Ordinance?

The Employment Ordinance applies to every employee in Hong Kong under a contract of employment, with only narrow exclusions. There is no minimum company size, no minimum salary threshold, and no requirement that the employee be a Hong Kong resident. A one-person startup hiring its first staff member is bound by exactly the same rules as a listed company.

The key exclusions are:

• Employees covered by the Factories and Industrial Undertakings Ordinance (Cap. 59) for certain safety provisions — but not for the s.44 contract terms.
• Family members working in a family business — the Employment Ordinance does not apply to a person who is a member of the employer's family and lives in the employer's household.
• Independent contractors — a genuine contractor is not an employee and is not covered. Whether a person is an employee or contractor is determined by the substance of the relationship, not the label on the contract. The IRD and the Labour Department apply a multi-factor test covering control, financial risk, and integration into the business.

For a company incorporated under the Companies Ordinance (Cap. 622), the contract must also be consistent with the company's articles of association and any shareholders' agreement. A director's service contract, in particular, requires shareholder approval under section 534 of Cap. 622 if it exceeds three years.

Timelines: When Must the Contract Be Provided?

The contract must be given to the employee before the first day of work. There is no statutory grace period for the five mandatory terms. For subsequent changes, the employer must notify the employee within one month of the change taking effect.

For a director's service contract under Cap. 622, the contract must be available for inspection by members. The company must keep a copy at its registered office or at the place where the register of directors is kept.

Cost Metrics: What Does Compliance Cost?

There is no government fee to file an employment contract in Hong Kong. The Employment Ordinance does not require contracts to be lodged with the Labour Department, the IRD, or the Companies Registry. The cost of compliance is therefore the cost of drafting, plus the cost of any penalty for non-compliance.

The Labour Department publishes a free sample employment contract and a set of written particulars templates. For most SMEs, the Labour Department template plus a solicitor's review of any non-standard clauses (non-compete, IP assignment, commission) is sufficient.

Suitability: Who Needs a Bespoke Contract vs a Template?

A Labour Department template is sufficient for a standard full-time employee on a monthly salary with no variable pay, no equity, and no restrictive covenants. A bespoke contract is required where any of the following apply:

• Commission or bonus structures — the calculation method must be stated precisely, or disputes will arise over whether a bonus is discretionary or contractual.
• Equity or share options — the contract must cross-reference the company's share option scheme and the Companies Ordinance (Cap. 622) requirements for issuing shares.
• Non-compete or non-solicitation clauses — Hong Kong courts enforce these only if they are reasonable in scope, duration, and geography. A clause that is too wide is void.
• Intellectual property assignment — the contract should expressly assign IP created by the employee to the employer. Without this, ownership may default to the employee under general law.
• Director's service contract — requires shareholder approval under s.534 of Cap. 622 if longer than three years.
• Cross-border employment — where the employee works partly outside Hong Kong, the contract should state which jurisdiction's law governs and where tax is withheld.

A template is not suitable for senior management, anyone with access to trade secrets, or any role where the employer needs to restrain post-employment activity.

What Else Should Be Included (Beyond the Five Mandatory Terms)?

The five s.44 terms are the legal minimum. A well-drafted Hong Kong employment contract typically also covers:

1. Job title and duties — a description of the role and reporting line.

2. Place of work — the office address, and whether remote work is permitted.

3. Working hours — start and finish times, rest days, and overtime arrangements.

4. Probation period — length (commonly 3 months) and the shorter notice period during probation.

5. Annual leave — statutory minimum is 7 days after one year under s.41A of Cap. 57; many employers offer more.

6. Sick leave — statutory sick leave accrues at 2 days per completed month of service under s.33 of Cap. 57.

7. MPF — mandatory contributions under the Mandatory Provident Fund Schemes Ordinance (Cap. 485).

8. Confidentiality — protection of trade secrets and client data.

9. Intellectual property — assignment of work product to the employer.

10. Termination — notice period, payment in lieu, and summary dismissal grounds.

11. Governing law and jurisdiction — usually Hong Kong law and the Hong Kong courts.

12. Data privacy — compliance with the Personal Data (Privacy) Ordinance (Cap. 486).

13. Identify the five mandatory terms: wages, wage period, notice period, end-of-year payment, and any other agreed term. Draft these first.

14. Decide on the contract type: permanent, fixed-term, part-time, or probationary. Each has different notice and benefit implications.

15. Add the optional clauses: probation, confidentiality, IP, non-compete, MPF, leave, and termination.

16. Cross-check against the Companies Ordinance (Cap. 622) if the employee is a director or holds shares.

17. Provide the written contract to the employee before the first day of work.

18. Keep signed copies and wage records for 7 years under s.49A of Cap. 57.

19. Review and update the contract whenever terms change, and notify the employee within one month.

Common Mistakes That Breach the Employment Ordinance

The most frequent compliance failures in Hong Kong employment contracts are:

• No written contract at all — a verbal agreement does not satisfy s.44, which requires the terms to be given in writing.
• Stating a notice period that is shorter than the statutory minimum — under s.6 of Cap. 57, the notice period cannot be less than 7 days during the first month of employment, and cannot be less than one month thereafter unless the contract provides otherwise.
• Treating a bonus as discretionary in the contract but paying it consistently — a consistent payment pattern can turn a discretionary bonus into a contractual entitlement.
• Omitting the end-of-year payment term — even if no 13th month payment is offered, the contract should state that expressly.
• Failing to update the contract after a promotion or salary change — s.44(3) requires notification within one month.

Under section 6(1) of the Employment Ordinance (Cap. 57), "either party may terminate the contract of employment at any time by giving notice in accordance with this section." Section 6(2) sets the minimum notice at 7 days during the first month and one month thereafter, unless the contract provides for a longer period.

Q: Is a written employment contract mandatory in Hong Kong? A: Yes, for the five terms listed in section 44(2) of the Employment Ordinance (Cap. 57). The employer must inform the employee of these terms in writing before employment commences. Other terms may be agreed verbally, but a written contract is strongly advisable.

Q: What is the minimum notice period in Hong Kong? A: Under section 6 of Cap. 57, the minimum is 7 days during the first month of employment and one month thereafter, unless the contract provides for a longer period. The contract cannot provide for a shorter period than the statutory minimum.

Q: Does an employment contract need to be filed with the government? A: No. There is no filing requirement with the Labour Department, the IRD, or the Companies Registry. The employer must keep wage and employment records for 7 years under section 49A of Cap. 57.

Q: Can a Hong Kong employment contract include a non-compete clause? A: Yes, but Hong Kong courts enforce non-compete clauses only if they are reasonable in scope, duration, and geography, and protect a legitimate business interest. An overly broad clause is void.

Q: What is the penalty for not providing the s.44 terms? A: Section 45 of Cap. 57 imposes a fine at level 3 (currently HKD 10,000) on any employer who fails to comply with section 44. Check the latest figure with the Labour Department.

Summary

A compliant Hong Kong employment contract must state five terms in writing before the first day of work: wages, wage period, notice period, end-of-year payment, and any other agreed term. The Employment Ordinance (Cap. 57) sets the minimum; the Companies Ordinance (Cap. 622) adds requirements for directors and share-holders. There is no government filing fee, but non-compliance attracts a fine at level 3. Use the Labour Department's free template for standard roles, and instruct a solicitor for any contract involving commission, equity, non-compete, or IP assignment.

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