Section 31B of the Employment Ordinance confers on an employee the right to receive severance pay when s/he is dismissed by his/her employer by reason of redundancy or when s/he is laid off, provided that the employee has been employed under a continuous contract for a period of not less than 24 months. Many industries in Hong Kong have sought to avoid paying severance payment under Section 31B by using a series of fixed-term employment contracts of less than 24 months. At the end of a fixed-term contract, the employee is required to take a short break before taking up a new fixed-term contract.
In Wong Man Sum v Wonderland Seafood Restaurant (18 October 2006), the Court of Appeal held that a break of more than two weeks between two such fixed-term contracts is sufficient to break the continuity of employment for the purpose of disentitling an employee to severance pay. For an employment relationship to be held to be continuous in this context, a settled expectation that the employee would return to his same old job after a short break is insufficient; there must be evidence of mutual arrangement for the parties which recognise the continuous employment of the employee despite his/her absence from work.