The beginning of a new calendar year provides an opportunity for reflection on past events and to set future goals. As we embark on 2025, it is important to review key developments in employment and immigration law that occurred in 2024 and consider the evolving landscape ahead.

 

Key Developments in 2024

 

Valid Grounds for Summary Dismissal

 

In cases of summary dismissal, Section 9 of the Employment Ordinance (EO) necessitates that an employee's conduct constitutes a fundamental breach of contract. The Court in Hum Matthew Ta v. Allied Way Security Management Ltd[1] established that a week of unauthorised absence followed by false accusations of termination justified summary dismissal. Similarly, in Sparkle Capital Limited v. Chan Wai Man,[2] the Court ruled that an employee who failed to report for duty and worked for another company without the employer's consent had breached their employment contract, allowing for immediate dismissal.

 

Reasonableness of Post-Termination Restrictions

 

Employers must demonstrate the necessity of post-termination restrictions to protect their legitimate business interests. The Court denied injunctive relief in Manulife Financial Asia Ltd v. Kenneth Joseph Rappold and Others,[3] citing the unreasonable breadth of a non-compete clause that improperly restricted the employee's ability to work worldwide without sufficient justification. Further, in Moxie Communications Ltd v. Lai Cheuk Lok,[4] the two-year restriction imposed on an entry-level employee was deemed excessive as it lacked a connection to the employee's role and experiences.

 

Confidentiality and Trade Secrets

 

The Court's decision in Tahoe Life Insurance Company Ltd v. Cheung Wai Yi[5] reaffirmed that an implied duty of confidentiality applies to trade secrets, which can warrant injunctive relief against former employees. However, simply labelling information as "confidential" is insufficient, as demonstrated in Conpak Management Consultants Limited v. Luk Wai Ting,[6] where client contact details were ruled not confidential due to their public availability.

 

Rational Discretion in Employment Decisions

 

In Yang Zhizhong v. Nomura International (Hong Kong) Ltd,[7] the Court highlighted the importance of employers exercising discretion rationally. The employer successfully defended its decision to terminate the employee based on non-compliance found during inspections - highlighting the necessary transparency and justification required in employment practices.

 

Launch of the New Capital Investment Entrant Scheme (CIES)

In March 2024, the new CIES was launched, requiring applicants to possess net assets or net equity valued at a minimum of HK$30 million (or its equivalent) during the two years prior to application. Applicants must also commit to making certain investments in permissible assets. By October 2024, the programme's attractiveness was further enhanced as the investment options were expanded to include residential properties.

 

Compensation claims from employees vs. independent contractors

 

In Gurung, Sanjaya Man v. Deliveroo Hong Kong Ltd,[8] a former rider sought employees' compensation from Deliveroo following a traffic accident in February 2022 while handling deliveries for the company, after having already received HK$100,000 under a voluntary insurance policy purchased by Deliveroo (which is not mandated by the Employees' Compensation Ordinance (Cap. 282)).

 

The court concluded that the former rider was classified as an independent contractor. Awarding employees' compensation in this instance would have led to double jeopardy for Deliveroo. As a result, the claim was dismissed for being an abuse of process, deemed both groundless and vexatious.

 

Enhancing the review mechanism of the statutory minimum wage (SMW)

 

The Government approved changes to the review mechanism put forward by the Minimum Wage Commission for determining the SMW.  Key changes include instituting an annual review of the SMW rate and adopting a structured formula for its implementation.  These enhancements are anticipated to come into effect in May 2026.

 

Implementation of the Re-employment Allowance Pilot Scheme (REA)

 

The REA is designed to support non-employed middle-aged and elderly citizens in Hong Kong by incentivising them to reignite their passion and pursue career opportunities.  Through this initiative, eligible individuals will receive a cash allowance aimed at encouraging their return to the workforce.

 

In conjunction with the REA's implementation, the on-the-job training period under the Employment Programme for the Elderly and Middle-aged has been extended.  This programme provides subsidies to employers who offer training to middle-aged and elderly workers, thereby enhancing their employability.  Under the new terms, the training period has been extended to six months for workers aged 40 to 59 and to 12 months for those aged 60 and above.

 

Revised Code of Practice in Times of Adverse Weather and "Extreme Conditions" (COP)

 

Following Hong Kong's first announcement of "extreme conditions" in 2023, the Labour Department has revised the COP to provide guidelines for employers on how to adjust work arrangements during such adverse weather events.  The guidelines take into account the nature of each business, its operational needs, and the urgency of work tasks.

 

While the COP is not legally binding, it serves as a reminder for employers regarding their responsibilities to maintain a safe working environment for their employees.  Employers must be aware of their potential liability for any injuries or fatalities that may occur as a result of employees working or commuting during extreme weather conditions.

 

Increases in Statutory Holidays

 

The Employment (Amendment) Ordinance 2021 introduced significant changes to the EO, which will lead to a progressive increase in the number of statutory holidays from 12 to 17 days by 2030.

 

As part of these enhancements, the first weekday following Christmas Day - falling on Boxing Day in December 2024 - has been recognised as an official statutory holiday.  Additionally, Easter Monday, Good Friday, and the day following Good Friday will also be recognised as statutory holidays, with the next holiday addition planned for 2026.

 

What 2025 has to offer

 

Abolition of the MPF offsetting mechanism

 

The MPF offsetting mechanism will be abolished on 1 May 2025, after which employers can no longer offset severance and long service payments owed to employees against the MPF benefits derived from employers' contributions.

To alleviate the strain on employers, the Government is set to launch a 25-year subsidy scheme exceeding HK$33 billion to share employer's expenses upon abolishing the MPF offsetting mechanism.

 

Amending the "418" 'continuous contract' requirement

 

Proposed amendments to the "418" continuous contract requirement aim to modify the approach to qualifying for employment benefits.  Instead of the current requirement of working a minimum of 18 hours per week for four consecutive weeks, employees would be able to accumulate a total of 68 hours of work over any four-week period.  

 

This change may provide more opportunities for part-time workers or those with irregular schedules to qualify for benefits that were previously less accessible.  An amendment bill is expected to be introduced in due course.

 

Enhancements to the New CIES

 

Following the Chief Executive's October 2024 Policy Address, enhancements to the new CIES, which will take effect in March 2025, aim to expand the investment and ownership options available to applicants.  The scheme will allow investments through eligible privately-owned companies, potentially providing individuals and aspiring entrepreneurs with increased financial access.

 

The reduction of the asset-holding period is aimed at streamlining access to investments, which may enable faster participation in the programme.  The allowance for joint ownership with family members is also expected to provide opportunities for collaborative investments.  Collectively, these enhancements seek to stimulate economic activity and support entrepreneurship while offering individuals and families additional options for improving their financial circumstances.

 

For further inquiries regarding these developments, please reach out to Patricia Yeung at Howse Williams via telephone (+852 2803 3688) or email ([email protected]).