Since the entry into force of the Competition Ordinance (Ordinance) in December 2015, the Hong Kong Competition Commission (Commission) reports having encountered many practices relating to employment terms and hiring that are potentially illegal.
To address this, on 9 April 2018, the Commission published an advisory bulletin for human resources professionals, employers and employees to raise awareness of potential risks under the Ordinance related to hiring practices and determination of employment terms.
The advisory bulletin stresses that, in a free market economy, competition among employers for the procurement of labour leads to better employment terms and increased opportunities for employees. To facilitate free competition, employers must make their decisions about hiring and the terms and conditions of employment offered to employees independently.
Conversely, any conduct that influences businesses' free choice to hire employees may contravene the Ordinance. The Commission goes quite far suggesting that a breach of the Ordinance could occur even where employers do not compete in the provision of the same products or services downstream. Some common practices which the advisory bulletin explicitly singles out as potentially problematic under the Ordinance include:
- Reaching agreements with other businesses, whether done directly or through a third party, about employee wages, other terms of compensation or other employment terms (such as benefits and allowances, relocation support, severance payments etc.) or entering a no-poaching pact.
- Sharing of competitively sensitive information such as business-specific information about employee compensation or terms of employment or the companies' intentions related to pay or terms of employment or the hiring of employees.
Importantly, the Commission's interpretation of information sharing is very far-reaching, including exchanges through third parties and unilateral disclosures (that is, uni-directional flow of one company to another).
The advisory bulletin is a timely reminder that the Ordinance applies to a breadth of practices and in a variety of contexts. To ensure compliance with the Ordinance, businesses should:
- independently determine policies they intend to adopt;
- avoid communicating employment policies to other companies; and
- conduct market surveys to benchmark compensation and benefits only through independent and reliable third parties which aggregate/anonymise the results.