Frequently Asked Questions about
The Employment Ordinance, Cap. 57
Contract of Employment
Q1. What is a contract of employment? Answer
Q2. What is a continuous contract of employment? Answer
Q3. If an employee agrees to give up his rights and benefits under the Employment Ordinance when he signs his employment contract, will that be considered valid? Answer
Q4. Where the contract of employment is in writing, is it obligatory for an employer to provide a copy of the contract to his employee?Answer
Q5. What are the differences between a "Contract of employment" and a "Contract for service" in relation to the Employment Ordinance?Answer
Q6. How to distinguish a "Contract of employment"from a "Contract for service"?Answer
 
Content
 
Q1. What is a contract of employment ?
A1. A contract of employment is an agreement made between an employer and an employee about terms and conditions of employment. The agreement can be made orally or in writing. Both express and implied terms can be included in the contract.

The Labour Department encourages employers and employees to set out terms and conditions in written employment contracts.

To provide a reference for employers and employees when drawing up contracts, we have prepared a Sample Employment Contract which sets out the essential terms and some common conditions of employment. 

Q2. What is a continuous contract of employment?
A2. A continuous contract of employment means an employment contract under which an employee works continuously for the same employer for 4 weeks or more, with at least 18 hours in each week.
Q3. If an employee agrees to give up his rights and benefits under the Employment Ordinance when he signs his employment contract, will that be considered valid?
A3. Not valid. Any term of an employment contract which purports to extinguish or reduce any right, benefit or protection conferred upon an employee by the Employment Ordinance has no legal effect.
Q4. Where the contract of employment is in writing, is it obligatory for an employer to provide a copy of the contract to his employee?
A4. Yes.  Even if the contract of employment is not in writing, the employer shall provide the employee such information in writing if employee makes such a written request.

An employer who fails to comply with the above requirements is liable to prosecution and, upon conviction, to a fine of $10,000.

Q5 What are the differences between a "Contract of employment" and a "Contract for service" in relation to the Employment Ordinance?
A5. The Employment Ordinance applies to employers and their employees engaged under a contract of employment.  Only employee employed under a contract of employment would be entitled to the rights and benefits provided under the Employment Ordinance.  To avoid unnecessary dispute, it is important to delineate between the status of "an employee" and "a contractor" when both parties enter into a service contract.
Q6. How to distinguish a "Contract of employment"from a "Contract for service"?
A6. There is no one single conclusive test to distinguish a contract of employment from a contract for service.  Some of the factors to be considered in identifying a contract of employment include:

(a) Control

  • Who decides on the recruitment and dismissal of employees?
  • Who pays for the employees' wages and in what ways?
  • Who determines the production process, timing and method of production?
  • Who is responsible for the provision of work?
(b) Ownership of factors of production
  • Who provides the tools and equipment?
  • Who provides the working place and materials?
(c) Economic considerations
  • Does he carry on business on his own account or carrying on the business for the employer?
  • Does he involve in any prospect of profit or is he liable to any risk of loss?
  • How are his earnings calculated and profits derived?
Listed above are some general factors.  The relevant factors to be considered are determined by the circumstances of each case.  In delineating the relationship of an individual case, there should be careful weighting of all relevant factors as well as evaluation and analysis of the factual circumstances in which the work is performed.  In case of dispute, the jurisdiction rests with the court.