13 things you should know before signing an employment contract
The Legal Stuff
The legal lingo in employment contracts can often leave us bleary-eyed, but in reality it should be what’s going to make or break a contract for you. Often, employers apply pressure to sign the contract then and there. However, our advice is that if you don’t understand some of the language or feel pressured, ask to take the contract home overnight. This way you can seek the guidance of a legal professional for terminology or simply have more time to weigh up the pros and cons without someone breathing down your neck. Remember most employers allow for some wiggle room when it comes to negotiating contracts too.
- Termination: Carefully consider what is the required length of notice you must give upon terminating your contract and/or, more importantly, are you required to give payment in lieu of notice? Imagine being stuck paying back a full month’s salary because you failed to read the fine print! If you quit within the first few months of your contract, it is likely your termination period will be affected by your probation period.
- Probation: This brings me to the probation period. The probation period should protect both the employer and employee equally and fairly. Typically, probation periods normally last for around 1–3 months and require anything from a few days to a week’s written notice. Make sure this clause sits well with you before signing as it can be the difference between protecting you or taking advantage of you.
- MPF: By Hong Kong law all employees aged 18–64 are automatically members of the Mandatory Provident Fund (unless exempt under the MPFSO). This is Hong Kong’s retirement scheme which typically requires both employer and employee to contribute 5% of their monthly income as a mandatory contribution and can be withdrawn upon reaching the retirement age or leaving Hong Kong for good. To find out about exemptions and other details click here.
Now, this is the section that you’re bound to skip ahead to — the entitlements! These are your obvious draw cards and should be read with grandma’s fine-tooth comb:
- Salary: Always double-check the salary specified is the same as what you verbally agreed upon. Before signing, research your salary and see if it’s fair. This could be via websites like Glassdoor and other competitors to see how you are placed within the industry. Make sure your payday is stated. In Hong Kong employers must legally pay you within 7 days of your wage period. Make sure your contract confirms whether you are entitled to bonuses and when. Note whether you will be paid for overtime and how this is calculated.
- Statutory Leave: In Hong Kong, regardless of what type of employment you hold or the length of said employment, you are entitled to 12 days of statutory/labor holidays.
- Annual Leave: The Hong Kong Employment Ordinance states that all employees are entitled to a minimum of 7 days of annual leave during the first 2 years of employment. After this, an extra day of leave is accumulated for each year worked. Of course, it is at the employer’s discretion to increase this amount as they please, for example, bankers in Hong Kong are typically given 18–30 days annual leave after a year of employment.
- Sick Leave: Employees who are employed for 4 weeks under the same employer (working at least 18 hours per week) are entitled to 2 days of sick leave in their first month. Employers are also required to pay 80% of the employee's salary for that sick day. Paid sick days are accumulated at the rate of two paid sick days for each completed month of employment during the first 12 months of employment, and four paid sick days for each completed month of employment thereafter. Paid sick days can be accumulated up to a maximum of 120 days.
The Finer Details
These are the details that might not seem so significant in the grand scheme of things but can make a huge difference to your overall satisfaction. So take heed of:
- Working Locations: Does your contract specify one working location or will you be required to move between multiple locations? Are you reimbursed for any work-related travel? This could be the difference between a 20 minute or a 1.5-hour commute and no amount of morning caffeine can sweeten that blow.
- Hours: What are your specific hours? Are you working Monday-Friday? Are weekends required? What about shift work or remote work? Make sure the length of your lunch break is noted, along with any other breaks. If you’re wondering what the expectations are surrounding breaks in Hong Kong, click here. Remember, employment and life in general in Hong Kong is fast-paced and demanding, so it’s smart to know what you’re entitled to before starting a new job.
- Types of Employment: This is especially relevant if you’re new to the workforce so you understand and commit to the nature of the position. Make sure the type of employment you’re securing is crystal clear to you. E.g. Fixed Term Employment = you are being hired for a specific period of time but this can be renewed upon expiry. Permanent Job Contract = This is a long term position which is eligible for employee benefits. At-Will Employment = Employees can be terminated at any time without any reason, explanation, or warning. Employees can also quit at any time for any reason — or no reason at all.
The Red Flags
The excitement of landing a new job and rushing into signing an employment contract can make it easy to miss some of the dodgier practices floating around like:
- Arbitration Clauses: These days you might come across an arbitration clause that requires you to pay the full cost of a dispute, or even worse, sets a deadline for filing complaints that is shorter than the law allows.
- Non-competition Clauses: These clauses can stop you from working for another firm in the same industry or even starting your own business, so it’s important to consider them very carefully before signing. Adding to this, they can also stop you from picking up other work on the side while working for them, so if you’re hoping to supplement your income in this way…don’t sign!
- Not Providing Copies: This one seems like a no-brainer, but a sly employer might use someone’s naivety to their advantage by not providing copies of all the documents, including the contract, to their new employee.
Weighing up and signing a new employment contract can be a sweat-inducing act that can feel like signing your life away. But, hopefully, with these pointers in mind, you can maintain the euphoria that comes with landing a new job and sign with confidence. Just remember, if you’re not sure…get a second opinion!
If you would like more legal information regarding the points outlined here, be sure to consult The Ordinance of Hong Kong.