The Minimum Wage Bill ('Bill') has been a source of controversy in Hong Kong since it was gazetted in June 2009.  Supporters contend that the proposed law will prevent excessively low wages, whilst opponents argue that it will be detrimental to a free economy, resulting in fewer jobs for the least competitive workers.

Under the Bill, an employee who is covered by the law is entitled to payment of not less than the minimum wage. The minimum wage is the amount derived by multiplying the total number of hours worked by the employee in a wage period by the minimum hourly wage rate applicable to the employee. The Bill, mirroring section 70 of the Employment Ordinance, voids any provision in an employment contract that purports to extinguish or reduce any right, benefit or protection conferred on the employee by the law.

A public survey conducted in May/June 2009 found that 45% of respondents backed the legislation.

The key point of contention is whether live-in domestic helpers should be covered by the Bill.  Currently, domestic helpers are not covered and the government has argued they should be excluded from the Bill because of their 'distinctive working pattern' — unlike other workers, live-in domestic helpers are present in the employer's residence almost all the time and they enjoy free accommodation.  That would make it difficult for an employer to determine the actual hours worked by a live-in domestic helper and, as a result, their remuneration.

On the other hand, the Hong Kong Domestic Workers General Union has argued that the law should protect all workers regardless of race and job type, and the proposed exclusion of live-in domestic workers amounts to discrimination against women and foreign workers.

Another, less disputed, aspect of the Bill is that it will not apply to student interns who are required to attend internships as part of their studies in order to gain credits to graduate.  A reduction in training opportunities is believed to be unavoidable if employers are required to pay student interns at a minimum rate.

The Bill also proposes a special arrangement for disabled persons.  Currently persons with a disability are covered by the Bill subject to a mechanism to assess their productivity in order to determine whether they should be paid the statutory minimum wage rate or an adjusted lower rate according to their productivity.

The Bill is being scrutinised by the Legislative Council and is likely to come into force by the end of 2010 or early 2011.  We will keep you updated on developments.

Winnie Ng, Head of Greater China Employment Practice
T: +852 2841 6832

Winnie Wong, Lawyer
T: +852 2841 6897

When an employee is departing a company, the employer is keen for the employee to execute a release document in favour of the company freeing it from all obligations and liabilities. Under the law, an employer cannot force an employee to enter into a release document, and if an employer is aware that the employee was mentally disordered when executing the release, the document may be set aside in the future.  These principles were analysed in the recent case of Knight John Lee v. Global Force Limited trading as The Mix.

In that case, Mr Knight was employed by Global Force Limited as the general manager of The Mix, a fruit juice and salad retailer. Subsequently Mr Knight secretly set up and operated a competing business.

After Global Force discovered Mr Knight's competing business, it prepared a deed:

• recording that Mr Knight had been secretly operating a competing business
• providing that Mr Knight would immediately resign from his employment
• stating that Global Force was under no obligation to pay Mr Knight any money to which he would ordinarily have been entitled, and
• providing that Mr Knight agreed not to bring any action against Global Force concerning his employment and in return, Global Force would not take any action against Mr Knight in respect of his disloyal acts. 

Mr Knight and Global Force executed the deed. 

Several years after he left The Mix, Mr Knight alleged that he was wrongfully dismissed by, and sought termination payments from, Global Force.  He claimed the deed was not enforceable because (a) he was mentally unstable at the time when he executed the deed and (b) the deed was executed by him under duress. 

In the court's view, there was no evidence that Mr Knight was so mentally unstable or insane at the time he executed the deed that he did not know what he was doing.  In addition, there was no evidence that the person who executed the deed on behalf of Global Force had knowledge, or was aware, of Mr Knight's alleged mental instability at the time.

The court also ruled that Mr Knight was not subject to any duress when he executed the deed.  The court found it unbelievable that Mr Knight would agree to execute the deed to acknowledge that he had been secretly operating a competing business, and agree to waive his termination payments, if Global Force had no basis for making those claims.  The court also took into account of the fact that Mr Knight did not take any action until five years after he had executed the deed.  In the court's opinion, this was evidence of his affirmation of the transaction.

As a result, the deed was valid and enforceable and Mr Knight was not entitled to any termination payments.

Implications for employers

• An employee must execute a release document without duress from the employer, otherwise the employee can apply to the court to set it aside and declare the release unenforceable.
• A release may also be set aside if the employee was mentally disordered at the time of executing the release and the employer was aware of the employee's mental incapacity at that time.
• An employee's delay in applying to set aside the release may be deemed as evidence of affirmation of the transaction.

Winnie Ng, Head of Greater China Employment Practice
T: +852 2841 6832

Winnie Wong, Lawyer
T: +852 2841 6897