Yes, garden leaves are generally enforceable to prevent an employee from taking a job at a competing business immediately post-termination of their contract. What is garden leave? Garden leave allows an employee who has left their position and no longer needs to report to work but still remains on the payroll and entitled to full wage. This prevents a leaving employee from sharing confidential information when they are on the notice period. This period of garden leave is often used by employees to pursue travel or pursue hobbies – such as gardening – hence the name ‘gardening leave’ or 'garden leave'. Benefits of garden leave 1) It helps employers retain key employees and clients Employers, during garden leave, can consolidate relations with colleagues to ensure they do not get poached by the employee on garden leave when that employee starts their next job. Similarly, employers often consolidate relations with customers, to ensure they retain their business and are not taken by the employee on garden leave. 2) It helps protect confidential information During the garden leave period, an employee is not required to report to work, so they cannot access any new sensitive, confidential and/or proprietary information produced by the company during that period. Also, it ensures that an employee is kept out of the job market for long enough, such that any information in their possession becomes outdated. This prevents competing businesses from obtaining an unfair competitive advantage through the ex-employee. 3) It can prevent employees from immediately joining a competitor or starting their own competing business During the garden leave, an employee is normally restricted from joining a competitor or starting their own business to compete with their employer. When is garden leave enforceable? It is likely that if an employment agreement contains an express garden leave clause it will be enforceable, even if the

Yes, non-competes are enforceable, if they are reasonable. Employers should state the non-compete clauses clearly and precisely in the employment contract. What is a non-compete? A covenant not to compete, also called a ‘non-compete’, is a clause included in an agreement, between an employer and employee, whereby the employee agrees not to work in competition with the employer. They aim to protect an employer’s customers, suppliers and employees from being poached by an ex-employee. Covenants not to compete also prevent confidential, proprietary information and trade secrets of an employer from being used by an ex-employee for their benefit. Covenants not to compete are normally effective both during the course of employment and after the end of an employment relationship. Post-termination non-compete is common in Hong Kong. Should I include a non-compete? There are many factors you should consider on whether it is appropriate to insert a non-compete clause to the employment contract, including: Industry standardsan employer is in client-facing industries and industries where businesses depend on customer loyalty, should consider adding non-compete clausesEmployee seniorityIf the employee is especially senior and plays a central role within the company, a non-competitive agreement may be more enforceable. Exposure to confidential information and trade secrets during the course of their employment What should be included in a non-compete? A non-compete clause should contain a restraint period, which indicates how long a non-compete clause should be effective. An employer should consider the following factors to decide the length of the restraint period: State of the employment market the longer it may take to replace an employee the longer your solicitation agreement should last for. How long an employer’s confidential information will remain ‘confidential’.Industry-standard Normally, the length of the

Yes, employers can offset MPF contributions. How to offset MPF contributions If severance payment/ long service payment has been paid:Employers may make an application with supporting documents to their trustees to withdraw the MPF derived from the employer’s contributions from the employee’s account.Employers may require their employees to acknowledge receipt of such payment in writing to facilitate their application for offsetting with their trustees.If severance payment/ long service payment has not been paid:Employees may make an application in writing to their trustees directly to withdraw the MPF derived from the employer’s contributions from their accounts. If the amount of MPF derived from the employer’s contributions is not enough to cover the LSP/SP, the employee is entitled to recover the shortfall from the employer.The employee may be required by their trustees to provide proof that they are entitled to the severance payment/ long service payment and that such payment has not been paid by their employers.

An employee employed under a continuous contract for not less than 5 years is eligible for long service payment if: he is dismissed (except by reasons of redundancy or summary dismissal due to the employee’s serious misconduct);his fixed term employment contract expires without being renewed;he dies during employment;he has been issued a certificate in a specified form by a registered medical practitioner or a registered Chinese medicine practitioner, certifying that he is permanently unfit for his present job and he resigns; orhe is aged 65 or above and resigns on the grounds of old age. How much should be paid ? Monthly-paid employee(Last month of wages x 2/3) × Reckonable years of serviceDaily-rated/ piece-rated employee(Any 18 days' wages chosen by the employee out of the last 30 normal working days) × Reckonable years of service The maximum amount of payment is $390,000. Long service payment should be paid to an employee as soon as possible and within 7 days after the date of termination of the employment contract.

Severance payment is the compensation an employer provides to an employee if they have been dismissed due to redundancy or laid off, so only these employees are eligible for a severance payment. Redundancy An employee is dismissed due to redundancy if the dismissal is because: the employer closes or intends to close the business;the employer has ceased, or intends to cease, the business in the place where the employee was employed; orthe requirement of the business for the employer/ employee to carry out work of a particular kind, ceases or diminishes or is expected to cease or diminish. Lay-off If an employee is employed on such terms and conditions that the remuneration depends on the amount of work provided by the employer, the employee will be considered to be laid off if the total number of days on which no work is provided or no wage is paid exceeds: half of the total number of normal working days in any four consecutive weeks; orone-third of the total number of normal working days in any 26 consecutive weeks. Rest days, annual leave and statutory holidays should not be counted as normal working days during the above periods. How much should be paid Monthly-paid employee(Last month of wages × 2/3) × Reckonable years of serviceDaily-rated/ piece-rated employee(Any 18 days' wages chosen by the employee out of the last 30 normal working days) × Reckonable years of service The maximum amount of payment is $390,000. When employers should pay Employees who wish to claim severance payments should serve written notice to their employers within three months after the dismissal/layoff takes effect. The employers must make the severance payments to their employees not later than two months from the receipt of such notice. An employer who fails to pay a severance payment to an employee is liable to prosecution and, upon conviction, to a fine of $50,000. Key takeaways Employees who are dismissed due to redundancy or laid

When a dispute arises, an employee should first approach their employer with a written notice of their claim within 3 months of the termination of employment. If they cannot settle the dispute, the employee may bring it to the Labour Tribunal within 9 months of terminating the employment. The Labour Tribunal may order: reinstatement or re-engagement of the dismissed employee;an award of terminal payments against the employer and compensation Reinstatement or Re-engagement Order An order for reinstatement requires the re-employment of the employee by the employer and the employer must treat the employee as if they had not been dismissed. An order for re-engagement is re-employment of the employee by the employer, or by a successor of the employer or by an associated company, on terms comparable to their original terms of employment or in other suitable employment. If the Labour Tribunal considers it appropriate and reasonably practicable to do so reinstatement or re-engagement Order can be made without the employer’s consent. Terminal Payments and Compensation If an order for Reinstatement or Re-engagement Order is not made, the Labour Tribunal can award terminal payments or compensation to the employee. Terminal payments include: 1) the statutory entitlements under the Employment Ordinance which the employee is entitled to but has not yet been paid upon dismissal 2) the entitlements the employee might reasonably be expected to be entitled to under the Employment Ordinance had he been allowed to continue his employment; and 3) any other payments due to the employee under his contract of employment. A compensation of up to a maximum of $150,000 will be awarded if the employee is unreasonably or unlawfully dismissed, irrespective of the Terminal Payment. In determining whether compensation would be awarded: the Labour Tribunal will consider: 1. the circumstances of the employer and the employee; 2. the period of

An employer cannot dismiss an employee whenever they want to, as there are circumstances where dismissal is unreasonable or unlawful. Unreasonable dismissal The Employment Ordinance states 5 valid reasons for dismissal or variation of the terms of an employment relate to: (a) the conduct of the employee; (b) the capability or qualification to perform work; (c) redundancy or other genuine operational requirements of the business; (d) statutory requirements; or (e) other substantial reasons. If an employer dismisses an employee, who has been employed for at least 24 months, without a valid reason, then the dismissal would be unfair/ unreasonable. Unlawful dismissal The Employment ordinance lists 5 circumstances where the dismissal of an employee is unlawful. This includes the dismissal of : A female employee who has been confirmed pregnant and has served a notice of pregnancy to her employer;An employee who is on paid sick leave;An employee because gave evidence or information in any proceedings or inquiry in connection with the enforcement of the Employment Ordinance, work accidents or breach of work safety legislation (engaged in whistle-blowing)An employee for trade union membership and activities; orAn injured employee before having entered into an agreement with the employee for employee's compensation or before the issue of a certificate of assessment. Penalties An employer will be liable to their employee if they unreasonably and/or unlawfully dismiss their employee, and they may be ordered by the Labour Tribunal for a reinstatement/ re-engagement order, terminal payments or compensation. Key Takeaways An employer should give valid reasons to dismiss an employeeAn employer must prevent dismissing an employee in circumstances that would become illegal

Termination payments are paid usually when an employee’s employment contract is terminated. An employer may need to pay a termination payment, which may include: outstanding wages;payment in lieu of notice, if any;payment in lieu of any untaken annual leave, and any pro-rata annual leave pay for the current leave year;any outstanding sum of end of year payment, and pro-rata end of year payment for the current payment period;where appropriate, long service payment or severance payment;other payments under the employment contract, such as, gratuity, provident fund, etc. Calculations on the precise amount of termination payment can be found on the Labour Department’s website. When should it be paid An employer must make any termination payment as soon as possible and may need to consider whether severance or long service payment should be paid too. An employer is required to pay interest on the outstanding wages due to the employee if he fails to pay wages to the employee within seven days after the termination or expiry of the contract. An employer who willfully and without reasonable excuse fails to pay termination payments when they become due may be liable to a fine of $350,000 and to imprisonment for three years. Bibliography 1823.gov.hk, “ Upon termination of employment, what are the obligations and entitlements of employer and employee?”: https://www.1823.gov.hk/en/faq/upon-termination-of-employment-what-are-the-obligations-and-entitlements-of-employer-and-employee-ans-01 

An employer can terminate an employee without notice by paying in lieu of notice, if they want the employee to be dismissed immediately. An employer can summarily dismiss an employee without notice or payment in lieu of notice if the employee had engage in the following circumstances: wilfully disobeys a lawful and reasonable order;misconducts himself;s guilty of fraud or dishonesty; oris habitually neglectful in his duties. An employee can constructively dismiss their employment contract without notice or payment in lieu of notice in the following circumstances: he reasonably fears physical danger by violence or disease;he is subjected to ill-treatment by the employer; orhe has been employed for not less than 5 years and he is certified by a registered medical practitioner as being permanently unfit for the type of work he is engaged in. Payment in lieu of notice An employer may offer payment in lieu of the notice. The length of notice period will affect the amount an employer has to pay, and the payments can be calculated as follows: Continuous employment contractPayment in lieu of noticeWith an expressed agreement on notice periodA sum equivalent to the amount of wages for the notice periodWithout an expressed agreement on notice periodA sum of not less than one month's wages Probation PeriodPayment in lieu of Notice Within the first month of probationNot requiredAfter the first month of probation, if expressly agreedWith an expressed agreementA sum equivalent to the amount of wages for the notice periodWithout an expressed agreementA sum of not less than seven days' wages The payment in lieu of notice must be done as soon as possible and within 7 days after the contract expires. Summary dismissal An employer can summarily dismiss an employee without notice and payment in lieu of notice, but only in very exceptional circumstances. An employer may summarily dismiss an employee without notice or payment in lieu of notice if

The party who requested for termination of an employment contract is required to give the other party due notice, either in writing or orally. Length of notice period The length of notice period will depend on whether the employee is employed in the continuous employment contract or in a probation period. Continuous employment contractLength of notice With an expressed agreementAs per the agreement, but not less than seven daysWithout an expressed agreementNot less than one month Probation PeriodLength of NoticeWithin the first month of probationNot requiredAfter the first month of probationWith an expressed agreementAs per the agreement, but not less than seven daysWithout an expressed agreementNot less than seven days' notice Termination notice by writing The termination letter should include the length of notice period, any payment that the employee is entitled to and the reason for termination. A sample of a termination notice can be found here. Although there is no requirement that a notice of termination must be given in writing and contain the reason for termination, it is advisable that an employer issues a written notice on termination. It can ensure that the notice period is appropriate, employment payments are paid in full and there is a valid reason for the termination. Key Takeaways A party terminating a contract must give an adequate notice periodThe notice should preferably in writing Bibliography Labour Department “Chapter 9: Termination of Contract of Employment”: https://www.labour.gov.hk/eng/public/wcp/ConciseGuide/09.pdf

There are multiple ways an employment contract can be terminated, for example: by resignationconstructive dismissalsummary dismissaldismissal by the employerby mutual agreementthe expiry of a fixed term Resignation An employee can resign from their employment by sending their employer a resignation letter. They must be aware of the notice period before their employment contract will be terminated.  Constructive dismissal An employee can be constructively dismissed from their employment contract if the employer had created a hostile working environment, and they would not need to provide a notice period or payment. Summary dismissal An employer may summarily dismiss an employee without notice or payment in lieu of notice if the employee has committed a serious misconduct. Dismissal by the employer An employer could dismiss an employee by giving them a notice period. However, they could give them a payment in lieu of notice period instead, or summarily dismiss their employee without giving them a notice or payment. Mutual agreement An employer and employee can agree to terminate an employment agreement by mutual consent. Expiry of a fixed term A continuous employment contract is terminated when time has elapsed and the fixed term in the contractual agreement has expired. For an employer to validly dismiss an employee, termination payments including severance or long service payments that must be paid to the employee when the contract is terminated. An employer must avoid circumstances where terminating a contract is unreasonable and unlawful, as they may become liable to claims from the employee dismissed.