C. Termination of employment and the relevant payments

C. Termination of employment and the relevant payments

1. Termination by notice or payment in lieu of notice

Regardless of whether you are an employer or employee, you should give either (i) formal advance notice or (ii) wages in lieu of notice to your existing employer/ employee for the termination of an employment contract.

The term “wrongful termination” in the Employment Ordinance refers to termination without a sufficient notice or payment in lieu of notice in breach of section 6 or 7. In that case, the employee is entitled to claim against the employer for the outstanding payment in lieu of notice.

1. Termination of fixed-term contract
2. Termination by notice
3. Payment in lieu of notice
4. Can statutory annual leave or maternity leave be included in the notice required to terminate a contract of employment?
5. Do employees need to serve notices of termination or make payments in lieu of notice if I back out of accepted job offers prior to their commencement dates?

2. Termination by summary dismissal

An employer has a right to terminate the employment of an employee without notice on any ground on which he would be entitled to terminate the contract without notice at common law. Such ground arises when there is repudiation or fundamental breach of contract by an employee, such as serious misconduct.

1. Summary dismissal
2. I suspect that my sales executive has repeatedly sent client details to a rival company and I want to dismiss him. Can I terminate his employment contract immediately without giving him advance notice or wages in lieu of notice?
3. My employee was absent from work for a few days without reason. Can I dismiss him?
4. I am going to dismiss a staff member with one of the “valid reasons for dismissal”. Am I required to give him advance notice or wages in lieu of notice?
5. Do employers need to give reasons for termination?
6. Suspension from employment
7. As an employer, do I have to pay employee's wages during the suspension?

3. Unreasonable termination or unreasonable variation of employment terms

If an employee has been employed under a continuous contract for not less than 24 months and is dismissed by the employer without a valid reason, then the dismissal would be unreasonable.

1. Unreasonable termination
2. Unreasonable variation of employment
3. Unreasonable and unlawful termination
4. Compensation for unreasonable dismissal
5. If I (as an employee) am facing unreasonable dismissal or unreasonable variation of the terms of my employment contract, then what can I do to protect my rights?
6. If I am unreasonably and unlawfully dismissed by my boss, then what can I do to protect my rights?

4. Termination by constructive termination

Constructive termination occurs when an employee chooses to resign in response to the employer’s breach of employment contract. Only serious breach will amount to constructive termination.

1. Constructive termination
2. I am an office clerk and my boss always orders me to move heavy goods inside the warehouse. I think that this is not commensurate with my job duties because my boss did not specify it duty during the job interview. Can I resign without giving him prior notice or wages in lieu of notice?

5. Relevant payments payable to an employee on termination of employment

The items and amount of payments that are payable to an employee on termination of employment or the expiry of an employment contract depend on a number of factors, such as the length of service, the terms of the employment contract and the reason for the termination of the contract. For quick reference, termination payments usually include:

• outstanding wages;
• wages 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 or provident fund payments.

An employer must pay all termination payments, except for severance payments, to the employee as soon as practicable and in any case not later than 7 days after the date of termination or expiry of the contract.

For severance payments, an employer must make payment not later than 2 months from the receipt of a notice from an employee who is claiming a severance payment.

Employers who fail to pay termination payments when they become due are liable to prosecution and, upon conviction, to a fine of $200,000 and to imprisonment for one year.

1. When is an employer required to pay a severance payment to an employee?
2. When is an employer required to pay a long service payment to an employee?
3. I am going to terminate the employment contract of one of my staff members. Can I use my previous contribution to his mandatory provident fund (mpf) to offset part of the severance payment/long service payment payable to him?
4. My employee has tendered his resignation and his last day of employment is the 30 september. He has 10 days of untaken annual leave. If he takes all the annual leave continuously from the 21 to the 30 september as final leave, when should I make the termination payments?

6. Other post-termination matters

1. Post-termination restrictive covenants
2. What can employers do if a former employee misuses confidential information to set up a rival business?
3. Are employers under a legal obligation to provide an employee with a reference letter at the end of the employment relationship?  Are they under a duty to exercise skill and care in preparing it?