What Should You Know Before Signing an Employment Contract?

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Congratulations on getting that job that you wanted! You've been waiting eagerly for that employment contract that has finally been sent through to you but before you grab a pen, WAIT!

We have all probably heard some horror stories where people discovered something wrong with their contract only AFTER they have signed it. These stories teach us to pay more attention when we sign a contract, but in practice, this isn't necessarily the case. We understand that once you get sent a long contract with tiny words and legal jargon, you're probably too excited to read it thoroughly, so it can be easy to just skim through it without paying much attention. You must remember that you're actually signing a legally binding contract, so it's highly important you review it carefully before signing!

We understand the struggle and the sense of urgency, so here are some important details for you to check next time you sign an employment contract.

Vanna's Employment Contract Checklist & FAQs

1. Termination of Contract

You should take note of what the required length of notice you have to give, or the amount of payment you should receive in lieu of notice, for termination of an employment contract. Generally, during the first month of probation, neither is required. After the first month, by law, you should expect at least 7 days notice. For more details, please click here.

I received a better offer from another company. Will I be required to compensate if I terminate the contract now?

According to the Employment Ordinance, unless otherwise stated in the contract of employment, the contract will be effective on your first day of work. If it is stated in the contract that the contract effective date will be the same as your first working day, you are not officially an employee there yet and are free to choose another position.

However, if it is stated that the contract is effective from the signing date, then you may need to compensate for breaking the agreement.

Note that most offers have a probation period. If you resign within the first month, you should not have to compensate.

4 days into my new position, and I’ve decided to quit. Will I still get paid?

Yes. Under any circumstances, an employer is required to pay an employee within 7 days after the payday, or it will be illegal.

Can I work in the same industry after my resignation?

If your contract has a non-competition clause (NCC), you are forbidden from taking a position at a competing company or start a position in a similar profession. If you violated this clause, you will need to compensate your former employer. In general, this clause is applicable to senior management, employees with specialised skills or an extended network of clients.

2. Probation Period

How long is your probation period? Is this fair? Do you agree with it? Remember that a probation period works both ways. Although your employer can terminate your contract quickly during this probation period, if for whatever reason you want to leave before probation is up, you also don't need to give the normal length of notice period (obviously this isn't in the interest of both parties!). The general length of probation periods is around 1-3 months.

3. Leave

Will I get public holidays or statutory holidays?

All employees, regardless of the length of service or whether the employee is employed under a continuous contract, are entitled to 12 days of statutory holidays, also known as labour holidays.

Employers, however, are not required to grant public holidays (also known as general holidays) to their employees. There are 17 public holidays in Hong Kong - know which ones you are entitled to. For details, take a look at “The Hong Kong Employment Ordinance that Everyone Should Know About 2018”.

How many days of annual leave am I entitled to?

According to the Employment Ordinance in Hong Kong, the minimum number of annual leave entitlements are 7 days in the first 2 years.

After the first 2 years of employment, the employee is entitled to an extra day of leave per year. So they will get 8 days in the 3rd year, 9 days in the 4th year, 10 days in the 5th year, etc.

Can I take sick leave during my probation?

If you are employed under the same employer for over 4 weeks, working at least 18 hours per week, you are entitled to 2 days of sick leave in your first month, together with 80% of your salary for that day. After the first month, you can accumulate up to 4 days of sick leave.

4. Wages and Salary

You should check that the stated salary is as agreed. You should also check when your payday will be, whether or not you are entitled to bonuses, and if you get paid overtime.

I just joined the company, but the employer is giving year-end double pay soon. Am I entitled to that?

It depends. If you have been hired for over 3 months (excluding probation), and year-end double pay is included in your contract, then you may be entitled to prorated end of year payment (double pay and bonus).

5. Contract Signatory

Name of the Company

Check to see if the signatory company is the same as your future employer. Otherwise, in cases of labour-management conflicts, your employer may refuse to recognise you as their employee.

For those who used a headhunting service will need to pay extra attention to see if you are signing a contract directly with your future company. If not, you will be signing a secondary or indirect contract, in which a job-seeker signs a contract with one company, who will then send him to work at another company as a contractor. This is particularly common in certain industries, such as IT contractors with the government. Please note that your direct employer is the agency, not the government. Job-seekers need to be extra careful when signing this type of contracts.

6. Working Conditions

Working Location

Your new employer might have multiple offices across Hong Kong. Pay attention to where you will be stationed at, else you'll find yourself agreeing to a commute longer than you expected.

Working Hours

What are the working hours? When and how long will your lunch break be? If you have to work overtime, will you be compensated? Also be aware that it is one thing to have something written on a contract, but more often than not for a lot of result-driven jobs, your actual working hours will be different and not set in stone. Be realistic, so that your expectations meet reality.

7. MPF Arrangement

All employees aged 18 to 64 are covered by the MPF system (unless exempt under the MPFSO). MPF is the Mandatory Provident Fund, and it is Hong Kong’s retirement protection scheme. Generally, an employee and his/her employer are both required to contribute 5% of the employee’s relevant income as mandatory contributions for and in respect of the employee to an MPF scheme. To find out more about this MPF scheme and whether you’re exempt under MPFSO, click here.

8. Contract Copies

Lastly, there should be two copies of the contract, both signed by you and the employer. You should always keep one copy of the contract.

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This article is not a legal document. The Ordinance remains the sole authority for the provisions of the law explained.

-- Editor’s Pick:

Hong Kong Employment Ordinance that Everyone should Know about

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Hong Kong Senior Managers on How to Get Hired!

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