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The Minimum Wage Ordinance ("MWO") came into effect in
Hong Kong on 1 May 2011. As the name of the legislation implies,
employees to whom the MWO applies are entitled to be paid wages of
at least the Statutory Minimum Wage, which is currently set at
HK$28 per hour.
Who does the MWO apply to?
The MWO applies to most full-time, part-time and casual
employees, with the following exceptions:
Student interns;
Work experience students who have agreed to an exempted period
of less than 60 days with their employers; and
Domestic workers who live free of charge in the household in
which they work.
Employees with Disabilities
Employees with disabilities are entitled to the same minimum
wage protection under the Ordinance. However, the MWO provides an
arrangement whereby an employee with a disability whose
productivity may be impaired by their disability can elect to have
their productivity assessed to determine whether they should be
remunerated at a rate no lower than the statutory minimum wage or
at a rate commensurate with their productivity. Where an employee
does not elect to undergo the assessment, they must be paid no
lower than HK$28 per hour.
Calculating the Minimum Wage
Under the MWO, wages payable to an employee in respect of any
wage period should be no less than HK$28 per hour on average for
the total number of hours worked (including any part of an hour).
The wage period is the period in respect of which wages are
payable, which in Hong Kong is usually one month. The formula for
calculating the minimum wage is:
Minimum wage = Total number of hours worked in a wage period
× HK$28
To calculate the hours worked by an employee, an employer must
include time during which the employee is physically at the
workplace or travelling in connection with his or her employment.
Normally, this would include the time during which an employee is
receiving training or working overtime. Hours not worked, such as
holidays or travelling time between an employee's home and the
workplace, are excluded from the calculation of minimum wage and
should not count towards the wages payable to the employee.
However, employers should be aware that the question of what time
should be included in the total number of hours worked by an
employee must be determined by reference to the facts and
circumstances of each individual case.
Whether meal breaks and rest days are to be paid is a matter to
be agreed between an employer and their employees. Such issues are
relevant to calculating the total number of hours worked by an
employee. Where an employee is paid for his or her meal breaks or
rest days, then in order to calculate whether an employee is being
paid the minimum wage of HK$28 per hour on average, an employer
must discount the sums received by the employee for hours not
worked.
Compliance
Regardless of when an employment contract was entered into, if a
provision in a contract would mean that an employee would receive
less than the minimum wage for hours worked, that provision will
have no effect. Further, if the wages payable to an employee are
less than the minimum wage of HK$28 per hour on average, his or her
employer must pay the employee the difference in respect of that
wage period. The employment contract must be taken to provide for
this additional sum.
The Statutory Minimum Wage will be subject to review at least
once every two years. If an employer fails to comply with its
obligation to pay the Statutory Minimum Wage to its employees, the
employer may be liable to prosecution and, upon conviction, to a
fine of HK$350,000 and to imprisonment for 3 years.
Record-keeping
Every employer has to retain records of the wage and employment
history of each employee covering the period of his or her
employment for the past twelve months. For employees that are
covered by the MWO and receive less than HK$11,500 per month, their
employers are also required to keep a record of the total number of
hours worked by the employee. The records have to be kept for six
months after the employee ceases to be employed.
An employer who fails to keep wage and employment records is
liable to prosecution and, if convicted, to a fine of
HK$10,000.
Conclusion
Whilst the MWO was intended to protect the wages of low-income
workers and minimise the loss of low-paid jobs, matters such as
paid meal breaks and rest days have had the effect of complicating
the issues. Employers who hire new staff from 1 May 2011 onwards
may want to consider if their employment contracts should be
revised so that employees will only be paid for hours worked and
not for meal breaks and rest days. In addition, employers may want
to consider inserting provisions in employment contracts for new
staff which will assist them in their record keeping
obligations.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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