After much heated debate over the years, the Minimum Wage Ordinance (Cap. 608) (“Ordinance”) came into force in Hong Kong on 1 May 2011. Before the implementation of the Ordinance, Hong Kong was one of the few places in the world without any sort of minimum wage law. The Ordinance is undoubtedly a milestone as far as the protection of the rights of employees, particularly low-income workers, in Hong Kong is concerned. The Ordinance provides for a statutory minimum wage (“SMW”) for all employees in Hong Kong, except for persons to whom the Employment Ordinance (Cap. 57) (“EO”) does not apply, such as independent contractors; live-in domestic workers; student interns; and work experience students during a period of exempt student employment.
An employee who is eligible to receive minimum wage should be paid at least a sum equivalent to total number of “hours worked” by him in the wage period multiplied by SMW rate. When the Ordinance first came into force, the SMW rate was fixed at HK$28 per hour. It has been revised, generally in line with inflation, and has increased to HK$32.5 per hour on 1 May 2015. The Minimum Wage Commission has estimated that approximately 150,000 employees (accounting for about 5% of all employees) will benefit from the increase in the SMW rate.
The “hours worked” by any employee in a wage period (meaning the period in respect of which wages are payable under a contract of employment or under s.22 of the EO which is deemed to be 1 month unless a different period is specified) include any time during which the employee is, in accordance with his/her contract of employment or with the agreement or at the direction of the employer:-
- in attendance at a place of employment, irrespective of whether he/she is provided with work or training at that time; or
- travelling in connection with his/her employment excluding travelling (in either direction) between his/her place of residence and his/her place of employment other than a place of employment that is outside Hong Kong which is not his/her usual place of employment.
Meal breaks are generally not included in “hours worked”, unless an employee is required to stay at their place of work while having his/her meal,.
If an employee, at the direction of the employer, travels from his company to a client’s office to deliver some documents, the time spent by the employee in travelling between his company and the client’s office is included in “hours worked” for the purpose of computing their wages.
Under s.70 of the EO, any term of a contract of employment which purports to extinguish or reduce any right, benefit or protection conferred upon the employee by the EO will be void. Accordingly, any provision in the contract of employment seeking to extinguish or reduce the employee’s SMW entitlement will be void. Therefore, if the wages payable to the employee for the wage period are less than the SMW, the employer should pay the difference to the employee. Employers are also required to pay interest on the outstanding amount of the additional remuneration to the employee if it is not paid within 7 days from the date on which it becomes due. Employers who fail to pay SMW may be liable to prosecution and, upon conviction, a fine of HK$350,000 and imprisonment for up to three years.
In addition since the statutory entitlements under the EO (e.g. annual leave pay, sickness allowance, maternity leave pay, severance payment, long service payment, wages in lieu of notice, etc) are calculated according to the definition of wages, the amount of these statutory entitlements should also take into account any additional remuneration.
Evidence has been given by the Labour and Welfare Bureau that, as at 31 December 2014, labour inspectors had conducted over 149,000 workplace inspections of establishments in low-paying sectors such as catering, retail and security industries, and discovered 169 cases of suspected violations of the Ordinance. Follow-up action carried out by the Labour Department on the 169 cases of these suspected violations confirmed that the employees in most of those cases had either received SMW or recovered the shortfall in wages from their employers. As at the end of 2014, there were 37 conviction summonses against employers for under-payment of SMW concerning industries, including elderly care homes, security companies, import and export trades, and personal services. The highest fine for a single case was HK$25,000.