Hong Kong: Labour Department Enforcement Actions in 2017

The Legislative Council Panel on Manpower has released a report on enforcement actions taken by the Labour Department during 2017 (Paper) which shows an increase in the number of convictions for breaches of the Employment Ordinance (EO) and other labour legislation. The Labour Department has committed to taking continued enforcement action against employers and responsible individuals to ensure compliance as well as sustained measures to increase employee awareness of their rights and avenues for remedy under labour legislation.

Increased convictions in 2017

As evidenced by the statistics reported in the Paper, the Labour Department increased its enforcement actions against employers and responsible individuals in 2017 with a focus on the prosecutions of breaches of the wages, leave and holiday provisions of the EO.

Wage payment offences

The Paper reports that in 2017, the Labour Department obtained 766 convictions for breach of the wage payment provisions of the EO. This represented an increase from 503 convictions for similar offences in 2016. Of the 766 convictions in 2017, there were 249 convictions against company directors or responsible officers, an increase from 163 such convictions in 2016.

During 2017, the most substantial penalties imposed for wage payment offences were a fine for a single wage payment offence of HK$238,000 and the conviction and imprisonment of one employer and three company directors for wage offences, as well as a community service order in respect of another company director.

Breach of leave and holiday provision offences

In addition to convictions for breaches of the wage payment provisions, there were a substantial number of convictions of employers breaching the holiday and leave provisions of the EO. In 2017, there were a total of 231 convictions for holiday and leave offences: an increase from the 97 convictions on holiday offences recorded in 2016.

The Labour Department has indicated it will take 'sustained stringent enforcement efforts on these provisions'.

Other enforcement actions

The Paper sets out other enforcement actions taken by the Labour Department in 2017, including:

• a total of 628 convictions for breach of orders made by the Labour Tribunal and Minor Employment Claims Adjudication Board,
• a total of 688 inspections of the work conditions of non-skilled workers engaged in government service contracts,
• the recovery of a shortfall of wages and measures to prevent abuse of the Protection of Wages on Insolvency Fund, and
• a total of 697 convictions for a failure to take out employees’ compensation insurance as required under the Employees’ Compensation Ordinance.

Key takeaways

The incidence of labour legislation offences in 2017 demonstrates the Labour Department's increased willingness to prosecute breaches of the EO against employers and, in particular, company directors or responsible officers. To ensure compliance with Hong Kong labour legislation, HR and legal counsel should consider the following:

• Conducting a compliance audit of employment contracts and policies as well as its systems and practices to ensure that they comply with the current requirements of the EO and other labour legislation.
• Monitoring proposed legislative and regulatory changes and providing briefings on any changes to ensure internal processes and systems accommodate such changes and employment contracts and policies are updates as required.
• Assessing any historic breaches which are identified to determine steps to rectify such issues and mitigate risk.

Written by Gareth Thomas, Partner; Tess Lumsdaine, Registered Foreign Lawyer; and Susan Leung, Consultant