What the Labour Department employment contract template is and what it is for

The Labour Department has produced an “Employment Contract Sample” for employers and employees to refer to when drawing up a written employment contract. The purpose of a written employment contract is to set out clearly the rights and obligations of both parties, remind the employer and employee of their contractual duties, and help prevent labour disputes. The Labour Department’s English pages similarly explain that a written contract reminds employers and employees of their respective obligations, helps avoid potential disputes, and clearly sets out the rights and benefits of both parties.

The sample mainly covers the principal rights and protections an employee is entitled to under the Employment Ordinance. The eligibility for each benefit and other details should be referred to the Employment Ordinance itself or the Labour Department’s “Concise Guide to the Employment Ordinance”. In other words, the sample is a checking tool before signing; the actual legal basis remains the Ordinance itself.

Wage clauses: when they fall due and the latest time for payment

  • Wages fall due on the last day of the wage period and the employer must pay all wages as soon as reasonably practicable, and in any event not later than 7 days after the end of the wage period. If the contract states a pay day later than this limit, you should propose an amendment in writing before signing.
  • If an employee has not been paid wages that have already fallen due for more than 1 month, the employee may treat the employment contract as having been terminated by the employer, and the employer must pay termination payment in lieu of notice and other termination compensation.
  • Deductions from wages are restricted by the Ordinance: no arbitrary deduction may be made other than for items permitted by law, which include contributions to a retirement scheme or provident fund scheme paid on the employee’s behalf at the employee’s written request, and deductions of unpaid maintenance under an attachment of earnings order issued by a court.
  • Statutory entitlements such as holiday pay, annual leave pay, sickness allowance, maternity leave pay and paternity leave pay are calculated on the basis of the average daily or monthly wages over 12 months; when computing the average daily or monthly wages, the periods for which no wages were paid must be excluded, including rest days, statutory holidays, annual leave, sick leave, maternity leave, paternity leave, sick leave due to work injury or leave taken with the employer’s agreement, as well as normal working days on which no work was provided to the employee, together with any payments made during those periods.
  • For the specific amount of the Statutory Minimum Wage, see the Labour Department’s “Concise Guide to the Statutory Minimum Wage”, which can be downloaded from the Labour Department’s website or obtained from the Labour Department’s Labour Relations Division district offices.
  • Before an employee commences employment, the employer must give the employee a detailed explanation of the terms of employment, including the date on which the employee begins employment.

Working hours and rest days: the hard boundaries in the template

  • Every employee employed under a continuous contract is entitled to not less than 1 rest day in every period of 7 days.
  • A rest day is defined as a continuous period of not less than 24 hours during which the employee is entitled not to work for the employer; the rest day is designated by the employer and may be fixed or flexible. For a flexible rest day, the employer must notify the employee of the rest day arrangements for each month before the beginning of that month.
  • The employer must not compel an employee to work on a rest day except where there is a breakdown of machinery or plant equipment or any emergency; if the employer requires the employee to work on a rest day, a substituted rest day must be designated within 30 days after the original rest day, and the employee must be notified within 48 hours after the original rest day.
  • With the employee’s agreement, the employer may designate a different rest day in place of the original one; the substituted rest day must be arranged before the original rest day within the same month, or within 30 days after the original rest day.
  • Whether a rest day is paid or unpaid should be agreed between the employer and the employee; except for young persons under 18 employed in an industrial undertaking, an employee may, if he or she volunteers, work for the employer on a rest day.
  • An employer who, without reasonable excuse, fails to grant a rest day or compels an employee to work on a rest day commits an offence and is liable on conviction to a maximum fine of HK$50,000.

Leave clauses: statutory holidays, annual leave, sick leave and maternity leave

Statutory holidays:

  • All employees, regardless of their length of service, are entitled to statutory holidays.
  • The employer must not substitute a payment for a holiday, the so-called “buying out” of holidays. Whether or not the employee is entitled to statutory holiday pay, the employer must still allow the employee to take the statutory holiday, or arrange a substituted holiday or an alternative holiday. Therefore, wording in a contract that uses “company holidays” or extra pay to replace statutory holidays cannot substitute for the statutory holiday itself.
  • Where the employer requires an employee to work on a statutory holiday, a substituted holiday must be arranged within 60 days before or 60 days after the statutory holiday, and the employee must be notified at least 48 hours before the substituted holiday or the statutory holiday respectively; with the agreement of both parties, an alternative holiday may also be arranged within a period of 30 days before or after the statutory holiday or the substituted holiday.
  • If a statutory holiday falls on a rest day, the employer should arrange for the employee to take the statutory holiday on the following day, provided that the following day is not a statutory holiday, a substituted holiday, an alternative holiday or a rest day.
  • An employee who has been employed under a continuous contract for a continuous period of 3 months immediately before the statutory holiday is entitled to holiday pay; the daily amount is equal to the average daily wages earned in the 12 months preceding the specified date, and the employer must pay it by the first pay day after the statutory holiday at the latest.
  • An employer who, without reasonable excuse, fails to allow an employee to take a statutory holiday, a substituted holiday or an alternative holiday, or fails to pay holiday pay, may be prosecuted and is liable on conviction to a maximum fine of HK$50,000.

Paid annual leave:

  • An employee employed under a continuous contract who has completed 12 months of employment is entitled to paid annual leave, with the number of days determined by the length of service, and the leave must be taken within the subsequent 12 months.
  • The dates of annual leave are designated by the employer after consulting the employee or the employee’s representative, and the employer must give the employee written notice at least 14 days before the leave begins; a shorter period of notice may be given by mutual agreement.
  • Annual leave must be taken as a continuous period; if the number of annual leave days exceeds 10, a minimum of 7 consecutive days of annual leave may be granted first, with the remaining leave taken separately; if a rest day or statutory holiday falls within the annual leave period, that day should be regarded as annual leave and the employer must designate a rest day or statutory holiday for that employee.
  • An employee may choose to accept a payment in lieu of part of the annual leave, but only for the portion exceeding 10 days.
  • On termination of the contract, if an employee has completed a full leave year but has not taken the paid annual leave, then regardless of the reason for termination, the employer must pay wages in lieu of the untaken annual leave; if the employee has been employed for 3 months but less than 12 months, except where summary dismissal is for serious misconduct, the employer must pay pro-rata annual leave pay.
  • An employer who, without reasonable excuse, fails to allow an employee to take annual leave or fails to pay annual leave pay is liable on conviction to a maximum fine of HK$50,000.

Sick leave and maternity leave:

  • Paid sick leave accrues continuously throughout the period of employment, and thereafter 4 days accrue for each completed month of service; Category 1 sick leave may be accumulated up to a maximum of 36 days, and sick leave beyond 36 days is carried into Category 2, which may be accumulated up to a maximum of 84 days.
  • For maternity leave, the employee must have been employed under a continuous contract for 40 weeks immediately before the scheduled maternity leave begins; maternity leave pay is calculated at four-fifths of the average daily wages.
  • Except where the employer dismisses the employee summarily for serious misconduct, the employer may not dismiss an employee while the employee is on paid sick leave.

Termination clauses: notice period, pay in lieu of notice and post-termination payments

  • During the first month of the probation period: no notice period and no pay in lieu of notice are required.
  • After the first month of the probation period: where the employment contract expressly provides for it, the notice period stipulated in the contract applies, but must be not less than 7 days; where the contract does not expressly provide, not less than 7 days’ notice.
  • A continuous contract without a probation period or where probation has been completed: where the contract expressly provides, the contractual provision applies, but must be not less than 7 days; where the contract does not expressly provide, not less than 1 month’s notice.
  • Calculation of pay in lieu of notice: where the notice period is expressed in days or weeks, it is the average daily wages earned by the employee in the 12 months preceding the date on which the notice of termination is given, multiplied by the number of days for which wages would ordinarily be payable to the employee during the notice period; where expressed in months, it is the average monthly wages earned by the employee in those 12 months multiplied by the number of months in the notice period. If no prior notice of termination is given, it is calculated on the basis of the average wages in the 12 months preceding the date of termination.
  • Where the notice period is calculated in days, to avoid disputes you may consider excluding the day on which notice is given; where calculated in months, the day on which notice is given is included in the notice period, and a “month” means the period from the day on which notice is given up to the day immediately before the corresponding day in the following month, or, if there is no corresponding day in the following month, up to the last day of that month.
  • Summary dismissal applies only where the employee wilfully disobeys a lawful and reasonable order of the employer, is habitually neglectful of duties, or other very serious misconduct, or where repeated warnings have failed to bring improvement; an employee’s participation in a strike is not a lawful ground for the employer to terminate the contract without notice or pay in lieu of notice.
  • Circumstances in which the employer may not dismiss an employee include: an employee who has confirmed pregnancy and given notice of pregnancy; an employee who is on paid sick leave; an employee who has given evidence or information in legal proceedings concerning the enforcement of the Employment Ordinance or an accident arising out of work; participation in a trade union or trade union activities; and before a compensation agreement for a work injury has been reached with the injured employee or before the relevant assessment certificate has been issued.
  • Payments on termination of an employment contract include: any unpaid wages; wages in lieu of untaken annual leave and pro-rata annual leave pay for that leave year; any unpaid end-of-year payment and the pro-rata portion of that payment period; long service payment or severance payment; and any other sums specified in the employment contract.
  • Except for severance payment, the employer must pay the termination compensation within 7 days after the date of termination or the expiry of the contract at the latest; severance payment must be paid within 2 months after receiving the employee’s written demand for payment. An employer who wilfully and without reasonable excuse fails to pay termination compensation on time is liable on conviction to a maximum fine of HK$350,000 and to imprisonment for 3 years.

Additional clauses arising from visa status: Top Talent Pass Scheme and tech talent categories

  • Top Talent Pass Scheme (TTPS): no prior job offer in the Hong Kong Special Administrative Region is required when applying; a successful first entry is generally granted a stay of 36 months (Category A applications) or 24 months (Category B and Category C applications), not subject to other conditions of stay.
  • Persons admitted to Hong Kong under the TTPS are subject only to a limit of stay and not to other conditions of stay, and may, during the permitted stay, freely take up or change employment and establish or join in any business without prior approval from the Director of Immigration.
  • An application for an extension of stay should be made within 3 months before the expiry of the limit of stay, and in all cases submitted at least 6 weeks before expiry.
  • Tech talent category (General Employment Policy (GEP) and Admission Scheme for Mainland Talents and Professionals (ASMTP)): a successful first entry is generally granted a stay in Hong Kong as an employee for 36 months; for individual technical trades where the relevant local practising registration or licence has not yet been obtained at the time of application, the first entry is generally granted a stay of only 24 months.
  • During the permitted stay, a tech talent may only take up the employment approved by the Director of Immigration, and must obtain the Director’s prior approval before changing employment, and may not change the technical trade.
  • The official sources cited in this article do not cover the specific employment terms of IANG (Immigration Arrangements for Non-local Graduates (IANG)) and the Quality Migrant Admission Scheme (QMAS); holders of these two types of visa must separately verify with the Immigration Department.

Clause-by-clause checklist before signing

  1. Pay arrangements: whether the wage period and pay day fall within 7 days after the end of the wage period, and whether the deduction items fall within the statutory permitted scope.
  2. Rest days: whether it is stated that there is not less than 1 rest day in every 7 days, and whether that rest day is paid or unpaid.
  3. Leave: whether statutory holidays are listed separately and whether there is any wording of “pay in lieu of holiday”; whether annual leave states that it is entitled after each completed 12 months under a continuous contract and the written notice period.
  4. Termination: whether the calculation of the notice period and pay in lieu of notice is consistent with the Ordinance, and whether the arrangements for the first month of probation are clearly stated.
  5. Post-termination payments: whether it is stated that, except for severance payment, sums due are paid within 7 days after termination of the contract.
  6. Records: the employer must properly keep employees’ attendance, leave and wage records for calculating statutory entitlements, and employees themselves should also retain attendance and wage evidence.
  7. Visa linkage: the notification deadline and departure limit after termination of the contract should be checked item by item according to the visa category held.
  8. Pre-employment explanation: before an employee commences employment, the employer must give a detailed explanation of the terms of employment, including the date on which the employee begins employment.

What to do when a clause is inconsistent with the template or the Ordinance

  • First propose amendments to the employer in writing; the template itself is a reference document, and eligibility for each benefit is governed by the Employment Ordinance itself.
  • You may enquire at the Labour Department’s Labour Relations Division district offices, and may also obtain the “Concise Guide to the Employment Ordinance” and the “Concise Guide to the Statutory Minimum Wage”.
  • If unfavourable clauses are discovered only after signing, you may first negotiate an amendment with the employer; if negotiation fails, you may use the enquiry and claim channels described above.

Reader Q&A

By what latest time must the employer pay wages, and is a later contractual date still valid?

Wages fall due on the last day of the wage period and the employer must pay as soon as practicable, and in no case later than 7 days after the end of the wage period. If the pay day agreed in the contract is later than this limit, you should require before signing that it be changed to not later than 7 days; if the employer fails to pay on time it must also pay interest on the arrears, and wilful and unreasonable failure to pay on time may be prosecuted.

Can an employer replace statutory holidays with “company holidays”?

No. All employees, regardless of length of service, are entitled to statutory holidays, and the employer must not substitute a payment for a holiday, the so-called “buying out” of holidays. Where the employer requires an employee to work on a statutory holiday, a substituted or alternative holiday must be arranged and the employee notified at least 48 hours in advance; failing, without reasonable excuse, to allow the employee to take the holiday or to pay holiday pay carries a maximum fine of HK$50,000.

How short may the notice period on termination be, and how is pay in lieu of notice calculated?

During the first month of probation no notice period or pay in lieu of notice is required; after the first month of probation, where the contract does not expressly provide, not less than 7 days; for a continuous contract without a probation period or where probation has been completed, where the contract does not expressly provide, not less than 1 month. Pay in lieu of notice is calculated by multiplying the average daily wages in the 12 months preceding the notice date by the number of days for which wages would ordinarily be payable during the notice period; where expressed in months, it is the average monthly wages multiplied by the number of months in the notice period.

If a contract clause is below the standard of the Employment Ordinance, is it automatically void, and how can one claim?

The template covers the statutory rights and protections under the Employment Ordinance, and eligibility for each benefit is governed by the Ordinance itself. On the parts that the sources make clear: statutory holidays may not be substituted by payment, arrears of wages accrue interest and wilful arrears may be prosecuted. Where a dispute arises, you may enquire with the Labour Department’s Labour Relations Division, or institute a claim through the Labour Tribunal or the Small Claims Tribunal.

What extra items must holders of IANG, QMAS, TTPS or tech talent category visas check?

TTPS entrants are generally granted a first stay of 36 months (Category A) or 24 months (Category B and C), not subject to other conditions of stay, and may freely take up or change employment. The terms of IANG and QMAS are outside the scope of the sources cited in this article and must be separately verified with the Immigration Department.

How does the template provide for probation, MPF contributions and sick leave accrual?

Probation mainly affects the notice period: no notice period or pay in lieu of notice is required for the first month, and thereafter where the contract does not expressly provide, not less than 7 days. Sick leave requires a continuous period of not less than 4 days, production of a proper medical certificate and sufficient accumulated paid sick leave, and sickness allowance is four-fifths of the average daily wages; thereafter 4 days accrue for each completed month of service, with a Category 1 cap of 36 days, and the excess carried into Category 2 with a cap of 84 days. The MPF contribution rules are not within the provisions of the “Concise Guide to the Employment Ordinance” cited in this article and must be separately verified with the Mandatory Provident Fund Schemes Authority (MPFA); the sources mention 1 May 2025 as the effective date for the removal of the “offsetting” arrangement under the Mandatory Provident Fund.

May one request amendments before signing, and what recourse remains after signing?

Yes. The very purpose of a written employment contract is to remind both parties of their obligations and avoid disputes; if before signing you find a provision inconsistent with the template or the Ordinance, you should first propose an amendment in writing. If already signed, you may first negotiate with the employer; if negotiation fails, you may enquire with the Labour Department’s Labour Relations Division, or institute a claim for arrears of wages, holiday pay, annual leave pay, etc. before the Labour Tribunal or the Small Claims Tribunal.

Source references

  • The Labour Department’s “Employment Contract Sample” page (publication date not provided in the sources)
  • The Hong Kong Special Administrative Region Government 1823, “How to Calculate the Notice Period and Pay in lieu of Notice upon Termination of Employment?” (publication date not provided in the sources)
  • The Immigration Department, “General Employment Policy and Admission Scheme for Mainland Talents and Professionals (Tech Talent Category)” (publication date not provided in the sources)
  • The Immigration Department, “Top Talent Pass Scheme” (publication date not provided in the sources)
  • The Department of Human Resources and Social Security of Fujian Province, “How does the Labour Contract Law regulate non-compete restrictions?” (2025-02-25, background reference only, Mainland regulation)