Things You Should Know Before Terminating an Employment Contract

In recent news, a Filipina domestic helper has lodged a complaint on court against her employer for her alleged dismissal. Such circumstance is a result of miscommunication and poor documentation on the part of both parties involved.

ALSO READ: 14 Legal Rights Every Domestic Helper in Hong Kong Should Know

In order to address this properly in the future, both the employee and the employer must both agree on the decision and proceed with proper documentation. In this post, we will share the basic requirements needed and the responsibilities of employers to their employee when terminating a contract. Both the employer and employee can use this as reference as all information here was sourced from the Immigration Department of Hong Kong.

Pointers to Consider when Terminating an Employment Contract

Prior to terminating a contract, an employer must first provide a standard notice as issued by the Hong Kong Immigration Department. This has to be submitted to the department within seven (7) days upon issuance and can be done online by the employer.

The notice may be submitted to the Immigration Department through any of the following methods:

• By post

Foreign Domestic Helpers Section,
Immigration Department,
3/F, Immigration Tower,
7 Gloucester Road,Wan Chai, Hong Kong.

• By Fax, or

(852) 2157 9181

• In person

Receipt and Dispatch Unit,
Immigration Department,
2/F, Immigration Tower,
7 Gloucester Road,Wan Chai, Hong Kong

Also, the domestic helper or any worker must receive a release letter from their employer to legally signify the date of effectivity of separation. This can be used by the domestic helper when looking for a new job. This shall serve as proof that she is no longer tied to her previous employer in any way.

Furthermore, the employer is responsible in settling the following termination entitlements with their employee:

• Outstanding wages

It’s important that any outstanding wage due the employee must be paid along with termination entitlements of the worker.

• Wages instead of notice

If the domestic helper was not given a written one month’s notice of termination. The employer is required to pay one month’s wages in lieu of the notice. If, on the other hand, the worker fails to provide a month’s notice, she will have to settle a month’s worth of earnings to her employer.

• Any earned but unused annual leave
• Any untaken statutory holidays
• Long Service Pay (where appropriate)

A worker is entitled to this benefit if she has worked for an employer in less than five (5) years under a continuous contract and if:

• The worker is not generally dismissed on the premise of bad conduct
• The contract is not renewed because of other reasons than bad conduct
• The worker is certified as permanently unfit (e.g. sick, disabled) to work and resigns
• The worker dies
• The worker is not dismissed due to redundancy

Note: The computation for long service pay is based on the following formula:

(Monthly Wages x 2/3) x Years of Service
(Service of non-completed full year is calculated on a pro-rata basis)

• Severance Pay (where appropriate)

The worker is entitled to this type of pay as part of their termination entitlements if:

• The worker has worked for the same employer in no less than 24 months under a continuous contract
• The worker is dismissed because of redundancy
• The contract is not renewed because of redundancy

Note: The computation for severance pay is based on the following formula:

(Monthly Wages x 2/3) x Years of Service
(Service of non-completed full year is calculated on a pro-rata basis)

• Transport to place of origin

The employer will be held responsible in providing free passage to the worker’s place of origin, which is the address indicated on the front page of the contract. This covers not only air travel, but also any train, bus, car, etc., transport necessary for this purpose.

• Travel and Food Allowance

The employer is also expected to pay the separated employee a food and travel allowance of HKD 100 per day of travel.

Once everything is provided accordingly, both the employer and employee must sign a receipt confirming all necessary payments have been settled upon termination. Both should also have a copy of this receipt.