Employment: Contract and wages

A brief explanation of a contract 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 expressed and implied terms.

Employers and employees are free to negotiate and agree on the terms and conditions of employment, provided that they do not violate the provisions of the Employment Ordinance (Cap. 57) and other relevant ordinances. Any term of an employment contract that purports to extinguish or reduce any right, benefit or protection conferred upon the employee by the ordinances will be void. To provide a reference for employers and employees when drawing up contracts, the Labour Department has prepared a sample employment contract that sets out some common terms and conditions of employment.

As required by the Employment Ordinance, an employer must inform each employee clearly of the conditions of employment before that employment begins. Such information should include:

  • wages (including wage rate, overtime rate and any allowance, and whether they are calculated by the piece, job, hour, day, week, month or otherwise);
  • wage period;
  • length of notice required to terminate the contract; and
  • if the employee is entitled to an end of year payment (e.g. double-pay or bonus), the amount of this payment or the proportion and the payment period.

An employer who contravenes these conditions is liable, upon conviction, to a fine of $10,000.