Entering into an employment contract

Article exclusively contributed by the
Labour Relations Promotion Unit
of the Labour Department

Maggie is a secretary who works in a trading firm. When Maggie was hired, Mr. Lam, her employer, did not draw up a written employment contract with her. After Maggie completed her probation, Mr. Lam asked her to sign a written employment contract. Maggie was reluctant to do so because some employment terms were different from those they agreed on before.

This morning, Mr. Lam urged Maggie again to return the signed contract to him. "Why don't you sign and return it to me promptly?" Mr. Lam demanded.

"You have promised me overtime payment for work exceeding normal working hours and 14 days annual leave when you offered me the job. Why aren't these terms included in my contract?" Maggie asked.

Mr. Lam denied that overtime payment was promised. Besides, the company would not grant her 14 days annual leave as agreed previously because its leave policy had just been revised. Maggie was unhappy and she had a heated argument with Mr. Lam.

Can this situation be avoided? Can Mr. Lam unilaterally change Maggie's terms of employment?

* A contract of employment is an agreement on the employment conditions made between an employer and an employee. The agreement can be made orally or in writing and it includes both express and implied terms.

* However, employers are advised to draw up written employment contracts with employees because it is a good human resources practice, which will benefit both employers and employees. These advantages include:
1. Remind employers and employees of their obligations under the contracts;
2. Strengthen protection of the rights of both parties;
3. Reduce possible misunderstandings and disputes;
4. Maintain a comprehensive set of employees' records.

* Employers and employees are free to draw up their own employment contracts provided that the terms and conditions do not violate the provisions of the Employment Ordinance. Any term of a contract, which purports to extinguish or reduce any right, benefit or protection conferred upon the employee by the Employment Ordinance shall be void.

* Employers should consult their employees and must obtain the latter's consent before making any subsequent changes to the terms of the contract, whether made orally or in writing.

* To avoid any unnecessary misunderstanding and subsequent dispute, Mr. Lam should have drawn up a written employment contract with Maggie once she was employed. Moreover, unless Mr. Lam has obtained the prior consent of Maggie in changing the employment terms, he cannot unilaterally reduce the number of paid annual leave days previously agreed on with Maggie.

The above case only serves as an illustration of the provisions of the Employment Ordinance on employment contract. The Employment Ordinance, however, remains the sole authority for the provisions explained above and in case of dispute, the final decision rests with the court.

Q & A about Employment Protection
Q1 What are the valid reasons for dismissal or variation of the terms of an employment contract?

Under the Employment Ordinance, the five valid reasons for dismissal or variation of the terms of an employment contract relate to -
(a) conduct of the employee;
(b) capability or qualification of the employee for performing his work;
(c) redundancy or other genuine operational requirements of the business;
(d) statutory requirements; or
(e) other substantial reasons.

You may refer to Chapter Nine of the "Concise Guide to the Employment Ordinance" ( which explains, in simple terms, the circumstances in which an employee is protected against dismissal or variation of contract terms, the kinds of remedies an employee may be awarded and the procedures to claim such remedies.

Q2 i) Under what circumstances can an employee make a claim for remedies against an employer for unreasonable variation of the terms of the employment contract? (ii) What are the remedies?

(i) An employee employed under a continuous contract may make a claim for remedies against an employer for unreasonable variation of the terms of an employment contract if:
(a) the terms of the employment contract are varied without the employee's consent and the employment contract does not contain an express term which allows such a variation; and
(b) the terms of the employment contract are varied because the employer intends to extinguish or reduce the right, benefit or protection to which the employee is or will be entitled under the Employment Ordinance. The employer will be taken as having that intention and the variation of the contract terms will be taken as being unreasonable if the employer has not shown a valid reason for the variation as specified in the Employment Ordinance.

(ii) The Labour Tribunal, in considering the case, may order:
(a) reinstatement or re-engagement (subject to the mutual consent of both the employer and employee); or
(b) an award of terminal payments against the employer.

Source : Labour Department

Taken from Career Times 02 August 2002

(Last review date: 23 August 2013)

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