Skip to content

Something urgent? Call us now! (852) 3416 1711

A reminder about wage obligations

By Alex Liu

Hong Kong, 29 November 2022: The impact of Covid-19 on Hong Kong’s economy has been underscored by media stories about firms failing to pay wages on time and falling behind with pension fund contributions. But even in these difficult times, the government has made it clear employers are expected to meet their obligations towards workers and will be hit with penalties if they fail to do so.

In a high-profile case which surfaced last month, bakery chain Hoixe Cake Shop was revealed to be two months behind in remunerating hundreds of employees. In pledging to make up the arrears within days, the firm said it had faced “unprecedentedly harsh” tests due to the pandemic. An investigation by the Mandatory Provident Fund (MPF) Schemes Authority also found the company – which has more than 50 outlets – owed pension contributions of HK$760,000 involving 580 staff members.

That development came weeks after another bakery chain, Crostini, which had 15 outlets in Hong Kong, closed suddenly, leaving some 100 staff facing pay arrears. The firm blamed its closure on the end of the government’s rent deferral scheme, which ran for three months and was aimed at keeping businesses afloat.

Meanwhile, the MPF Schemes Authority recently revealed pension fund contribution arrears among employers were at a three-year high. It said an average of 28,500 default notices a month had been issued to non-compliant businesses since April. Chairwoman Ayesha Macpherson Lau highlighted “a growing trend of default contribution cases since the pandemic began” and warned her organisation would take action to protect affected workers.

A number of firms have been prosecuted by the Labour Department in recent weeks for failure to pay wages on time:

  • Two directors of an engineering company appeared at Shatin Magistrates’ Court after the firm failed to pay 11 staff within seven days of termination. One director was sentenced to 160 hours’ community service and ordered to pay an outstanding sum of HK$483,000 while his colleague was fined HK$22,500.
  • An apparel firm and its director were fined a total of HK$58,800 at Eastern Magistrates’ Courts for late settlement of wages and end-of-year payments totalling HK$154,000 to three employees.
  • A director and company secretary of an investment firm appeared at Shatin Magistrates’ Court over late payment of wages to four employees who had been terminated. The firm and defendants were fined a total of HK$60,000 and ordered to pay an outstanding sum of HK$91,000.
  • An apparel firm was fined HK$60,000 and ordered to pay an outstanding sum of HK$15,000 by Kwun Tong Magistrates’ Courts. The company was late in making payments amounting to HK$175,000 to four employees.

According to the Employment Ordinance (Cap. 57), an employer should pay wages as soon as practicable but, in any case, not later than seven days after the end of the wage period. If they fail to comply, they are also required to pay interest on the outstanding amount.

An employer who “wilfully and without reasonable excuse” fails to pay wages when they are due is liable to prosecution and, upon conviction, a maximum fine of HK$350,000 and imprisonment for up to three years. An employer who is no longer able to pay wages should terminate the employment contract in accordance with its terms. If wages are then not paid within one month, an employee may deem his contract to have been terminated without notice and is entitled to payment in lieu of notice in addition to other statutory and contractual termination payments.

The court cases outlined above serve as a timely reminder to all employers that it is essential to pay wages on time. Even if the business is struggling due to the pandemic, employers are obliged to adhere to the terms of the contract of employment and Employment Ordinance, otherwise they risk prosecution. Here at Boase Cohen & Collins, we have an experienced legal team well versed in all aspects of Employment Law and are happy to assist with any queries.

A Partner in BC&C since 2000, Alex Liu’s key areas of practice include commercial and corporate litigation, investigations by governmental bodies such as the SFC, ICAC and Commercial Crime Bureau, insolvency and debt restructuring, employment matters, property and commercial contract drafting. He can be contacted at alex@boasecohencollins.com.

37+ years of legal experience is just a click away.

Friendly and approachable, we are ready to answer your questions and offer you sound advice.

Contact us now

BC&C-contact-us

News & Knowledge

Learn more about what we do and what we say. Subscribe to our newsletter to ensure you receive our updates.

  • This field is for validation purposes and should be left unchanged.

Move along, nothing to see here

Hong Kong, 1 February 2023: There is a wonderful sketch in BBC comedy classic The Two Ronnies where Messrs Corbett and Barker send up the uber-serious quiz show, Mastermind. Contestant Charlie Smithers (Corbett), having previously replied to questions before they were asked, this time answers the question before last, with hilarious results. Alas, nothing so […]

Read more

Seeking a divorce? It’s good to talk

By Gabriella Chan  Hong Kong, 30 January 2023: Separation and divorce are, by nature, stressful. Couples who choose to go their separate ways inevitably have differences over matters such as children arrangements, assets, maintenance and numerous other personal issues to resolve.  In such circumstances, protracted court proceedings, with perceived taking of sides and associated costs, […]

Read more

Ten takeaways from a month in Qatar

By Colin Cohen Hong Kong, 26 January 2023: It is several weeks since I boarded my Qatar Airways flight out of Doha to Brisbane for a festive break Down Under. Time enough to reflect on my trip to the World Cup, where the off-field experience was just as brilliant as the football. 1. When less […]

Read more

Rankings recognition for Family Law team

Hong Kong, 20 January 2023: We are delighted to announce that our Family Law team has once again been recognised by Chambers and Partners, publishers of the world’s premier legal guide. Welcoming the news, Senior Partner Colin Cohen comments: “Family Law is a core practice area for our firm and we have a particularly strong […]

Read more

The rule that bugs our bunny celebrations

Hong Kong, 18 January 2023: “You do things and do things and nobody really has a clue.” So opines novelist John Updike in the first volume of his feted Rabbit tetralogy chronicling the mundane life of fictional post-war American everyman Harry “Rabbit” Angstrom. As our government continues to impose its science-denying mask mandate, wonders what […]

Read more