Employment Contracts and Restrictive Covenants in Hong Kong

The question many people ask: which parts of the contract are fixed by law, and which are negotiated?

A Hong Kong employment contract has two quite different bodies of law stacked inside it. One is the statutory floor set by the Employment Ordinance (Cap. 57) — write a term below it and that term is simply void. The other — including the clause people worry about most, the non-compete — is not addressed by the Employment Ordinance at all. It belongs entirely to the common law.

That distinction is not academic. It decides where the answer can be found. If you want to know the minimum notice period, or when employment becomes a "continuous contract", the answer is in the Ordinance and its Schedule, word for word, and it is the same for everybody. If you want to know whether your 12-month non-compete is enforceable, the Ordinance has no answer — the Ordinance does not regulate the question. That answer lives in principles built up by the courts over time, and those principles themselves conclude "it depends".

This is where a lot of reader frustration starts. People search the legislation expecting something like "a non-compete shall not exceed X months", and never find it. There is no such provision. None of these nine Ordinances — the Employment Ordinance (Cap. 57) and Caps. 57A to 57D, the Trade Unions Ordinance (Cap. 332), the Control of Exemption Clauses Ordinance (Cap. 71), the Trade Descriptions Ordinance (Cap. 362) and the Competition Ordinance (Cap. 619) — sets a statutory maximum duration, a statutory geographic limit or a statutory compensation requirement for post-termination restrictive covenants. (See "Enforceability" below.)

The thirty-second version

• What is statutory? — minimum notice periods, how payment in lieu is calculated, the first-month exemption during probation, the continuous-contract threshold, and the statutory grounds on which either side may terminate without notice. These sit in the Employment Ordinance (Cap. 57) and its First Schedule. Where a contract falls below that floor, section 70 makes the term void.
• What is not statutory? — non-compete, non-solicitation of clients, non-solicitation of employees, confidentiality, garden leave. That whole block is common law, not the Employment Ordinance.
• The common law's starting point favours the employee — every clause restraining a departing employee's freedom to earn a living starts out void (restraint of trade), and it is for the employer to show it is reasonable. That is a common-law principle, not a section of any Ordinance.
• But "reasonable" has no formula — no statutory duration cap, no statutory geographic cap, and no arithmetic you can run. This guide sets out what the courts actually look at, and why there are no numbers to work in that part of the subject.

What this actually is

The Ordinance and the common law are not two parallel rulebooks. The division of labour is clean: the Ordinance governs the minimum terms of the employment relationship itself; the common law governs what you may still do after it ends.

1. The Employment Ordinance is a floor, not a ceiling

A contract may be better than the statutory standard, but a term worse than it is void. The Ordinance says so expressly.

Section 70 (section heading: "Contracting out"): "Any term of a contract of employment which purports to extinguish or reduce any right, benefit or protection conferred upon the employee by this Ordinance shall be void."

In other words, an employer cannot draft away what the Ordinance gives you. The word used is "void" — the term never took effect, rather than being merely arguable.

2. Post-termination restrictive covenants: the Employment Ordinance does not address them at all

This needs saying as plainly as possible: the Employment Ordinance (Cap. 57) contains no provision dealing with post-termination competition, client solicitation, employee solicitation or confidentiality. It sets no duration cap, no geographic cap, no compensation requirement and no registration regime for such clauses. The only place in the Ordinance that speaks of a commercial secret is section 72A(3) — under the section heading "Duty of public officers not to disclose source of complaint, etc." — which restrains a public officer who learns of "any manufacturing or commercial secret or any working process" while enforcing the Ordinance. It has nothing to do with contractual terms.

It follows that every principle in the "Enforceability" section below — legitimate business interest, reasonableness in activity, geography and duration, restraint of trade being prima facie void, the blue-pencil rule — is common law, not the Employment Ordinance. Any account that presents that framework as something "the Ordinance requires" is wrong. (Hong Kong legislation does use the phrase "restraint of trade" — it appears in the Trade Unions Ordinance (Cap. 332), in sections 40 and 41 and in the definition of "trade union" in section 2 — but those provisions are about the purposes and definition of a registered trade union, not about an employee's post-termination covenants; sections 40 and 41 are set out under "Enforceability" below.)

This site's reading: for the same reason, section 70 does not rescue you. Section 70 voids a term that reduces a right conferred by the Ordinance; a non-compete reduces no right the Ordinance confers (the Ordinance confers no right to compete after leaving), so section 70 does not make a non-compete void. A non-compete lives or dies on the common-law side.

3. The Ordinance itself points to the common law

The Ordinance itself writes this division in. Both of the sections on terminating without notice leave an express door open to the common law:

• Section 9(1)(b) (section heading: "Termination of contract without notice by employer"): "on any other ground on which he would be entitled to terminate the contract without notice at common law."
• Section 10(c) (section heading: "Termination of contract without notice by employee") uses the identical formula: "on any other ground on which he would be entitled to terminate the contract without notice at common law."

That is, the Ordinance lists a set of statutory grounds and then says expressly that beyond them, the common law governs.

Where the law of the employment contract comes from

In Hong Kong, the employment contract is the central legal document between employer and employee. It sets out working conditions, salary, benefits, hours, duties, termination terms, and post-termination restrictive covenants (PTRCs).

The principal source of Hong Kong employment law is the Employment Ordinance (EO) — which sets statutory minimum standards; where a contract's terms fall below the EO, the EO prevails. Contracts may establish terms more favourable than the EO minimum (under freedom of contract).

The Employment (Amendment) Ordinance 2025 — in operation from 28 December 2025 — made a significant change to the continuous contract threshold, replacing the former "418 rule" with a new "417 rule" and an alternative "468 rule" — all three being informal names that appear nowhere in the Ordinance or the First Schedule (see below). They are not two parallel rules but two legs of one per-week test: a week counts if either leg is satisfied. This change expands the range of employees entitled to the full suite of EO statutory benefits and is practically significant to every Hong Kong employer and employee.

(On the operation date and the first fully-governed week, see "Continuous Contract" below.)

This guide covers: the principal terms of an employment contract, the new continuous-contract rules, probation, notice periods, and the enforceability framework for post-termination restrictive covenants. It does not replace solicitor advice on a specific employment contract.

Principal Terms of an Employment Contract

Section 44(1) of the Employment Ordinance requires the employer, before the employment starts, to inform the employee in an intelligible manner of three conditions — the wages and the wage period; where Part IIA applies, the end of year payment (or proportion) and the payment period; and the length of notice required to terminate. The Ordinance does not require a written contract: s.44(3) opens "Where the contract of employment is in writing" and requires a copy only in that case, and s.44(2) expressly contemplates a contract that is not in writing: "Where the contract of employment is not in writing, upon receipt, before such employment is entered into, of a written request therefor from such person the employer shall forthwith deliver to him a notice in writing containing such conditions." In practice employers usually set the following out in a written contract or engagement letter:

• Work location, position, and duties
• Remuneration (amount, basis of calculation, period of payment)
• Working hours and working days
• Termination notice period
• Termination payments (long service payment, severance, and so on — depending on whether the employment meets the "continuous contract" threshold)
• Probation period (if any)

In practice, most Hong Kong employment contracts also cover (though not statutorily required):

• Leave — annual leave, sick leave, public holidays, marriage leave, bereavement leave, maternity/paternity leave (statutory minimums)
• Benefits — medical insurance, MPF, allowances, calculation of bonus/commission
• Employee duties — confidentiality, conflicts-of-interest declarations, diligent work
• Intellectual property — ownership of IP created during employment
• Restrictive covenants (see below)
• Governing law and dispute resolution — typically Hong Kong law, with disputes handled by the Labour Tribunal or the courts

The provision itself: how much does section 44 actually require?

The first list above is practice, not what section 44 itself requires, so the provision is set out here in full.

Section 44(1) (section heading: "Information to persons entering employment"): "Every employer shall inform each person in detail before such person enters his employment, in a manner intelligible to such person, of the conditions with regard to— (a) the wages and the wage period; (b) where Part IIA applies to such person, the end of year payment or proportion of the end of year payment and the payment period; and (c) the length of notice required to terminate the proposed contract of employment, under which he is to be employed."

Section 44(3): "Where the contract of employment is in writing, the employer shall provide such person with a copy of the contract immediately after it is signed or immediately after the procedure to validate the contract is completed where such procedure is required."

Put plainly: the section names three items — wages and wage period, the end of year payment and payment period where Part IIA applies, and the notice period. And section 44(3) says that if the contract is in writing a copy must be given; it does not say a written contract must exist.

This site's reading: the remaining items in the first list (work location, position and duties, working hours and working days, termination payments, probation) are things nearly every contract in practice does record, and which other provisions address in their own right, but they are not what section 44 requires to be stated before employment begins.

Not having a written contract does not mean having no protection. The Ordinance does not make statutory rights depend on having a written document — section 5(1) says: "Every contract of employment, which is a continuous contract, shall, in the absence of any express agreement to the contrary, be deemed to be a contract for 1 month renewable from month to month." An oral contract is still a contract of employment.

Continuous Contract: the new "417/468 rule" (informal names)

Continuous contract is the EO concept that triggers a wide range of statutory benefits — paid annual leave, statutory holiday pay, sickness allowance, severance payment, long service payment.

The old "418 rule" (weeks before the amendment)

The employee had to work: at least 18 hours per week, for 4 or more consecutive weeks, to qualify for continuous contract status.

The new "417 rule" and "468 rule" (in operation 28 December 2025; first fully-governed week 18 January 2026)

The Employment (Amendment) Ordinance 2025 came into operation on 28 December 2025, lowering the threshold:

• "417 rule": the employee works at least 17 hours each week (down from 18), for 4 or more consecutive weeks; or
• "468 rule" (new alternative): even where the employee worked less than 17 hours in a particular week, that week still counts if the employee has worked an aggregate of 68 hours or more across that week together with the 3 weeks immediately preceding it — the provision fixes that one window; it is not any 4-week period the reader may choose. But First Schedule paragraph 2A(1)(b)(i) adds a condition — that the employee "has been employed by the employer concerned during the period of 3 weeks next preceding that week" — so someone in their first 3 weeks with an employer cannot yet use this leg.

The provisions themselves: where the threshold is actually written

"417", "468" and "418" are not statutory terms — neither the Ordinance nor the First Schedule uses them. They are market shorthand. The real provisions come in three layers.

Layer one — the definition. Section 3(1) (section heading: "Meaning of continuous contract and onus of proof thereof") defines a continuous contract as one that "means a contract of employment under which an employee is deemed by virtue of the provisions of the First Schedule to be in continuous employment."

The Ordinance itself, in other words, states no hours at all; it hands the entire threshold to the First Schedule.

Layer two — First Schedule, paragraph 2 (the 4 weeks). "Subject to the following provisions, where at any time an employee has been employed under a contract of employment during the period of 4 or more weeks next preceding such time he shall be deemed to have been in continuous employment during that period."

Layer three — First Schedule, paragraph 2A(1) (the 17 hours and the 68 hours). "A week (except one to which subparagraph (2) applies) does not count for the purposes of paragraph 2 unless— (a) the employee has worked for 17 hours or more in that week; or (b) the employee— (i) has been employed by the employer concerned during the period of 3 weeks next preceding that week; and (ii) has worked for 68 hours or more in the period comprising that week and the 3 weeks described in sub-sub-subparagraph (i)."

Three things there do not line up neatly with the shorthand above:

• The 17 hours and the 68 hours are not two parallel "rules" but two legs of one test. The unit the provision works on is a single week: a week either "counts" or it does not, and it can be made to count either by the 17-hour leg or by the 68-hour leg. Only once four counting weeks have accumulated does paragraph 2 bite.
• The 68-hour leg carries an extra condition. Paragraph 2A(1)(b)(i) requires that the employee "has been employed by the employer concerned during the period of 3 weeks next preceding that week". Someone in their first three weeks of employment therefore cannot yet use the 68-hour leg. The description of the "468 rule" above states that condition.
• Paragraph 7 of the First Schedule defines the week: "week (星期) means a week ending with Saturday." So each week runs Sunday to Saturday — not seven days measured from the start date.

Section 3(2) also places the burden of proof on the employer: "In any dispute as to whether a contract of employment is a continuous contract the onus of proving that it is not a continuous contract shall be on the employer."

The provisions themselves: what "the following provisions" in paragraph 2 are

Paragraph 2 opens "Subject to the following provisions", so it cannot be read on its own. Paragraphs 3 to 6 each rewrite what counts as an hour worked or what breaks continuity, and each can change the answer.

Paragraph 3 — some hours not actually worked still count towards the 17 and the 68. "(1) In determining for the purposes of paragraph 2A whether the employee has worked in any hour, subparagraph (2) applies. (2) If in any hour the employee is, for the whole or part of the hour— (a) incapable of work in consequence of sickness or injury; provided that any such incapability in excess of 48 hours is supported by a certificate issued by a registered medical practitioner, registered Chinese medicine practitioner or registered dentist; (ab) absent from work due to the employee’s compliance with a Cap. 599 requirement; or (b) absent from work in circumstances such that, by law, mutual arrangement or the custom of the trade, business or undertaking, he is regarded as continuing in the employment of his employer for any purpose, then, save as provided in paragraph 4, that hour shall count as an hour in which he has worked."

Paragraph 4 — strike and lock-out hours do not count, but continuity is not broken. "Where an employee is absent from work for the whole or part of any hour— (a) because of a strike (which is not illegal) in which he takes part; or (b) because of a lock-out by his employer, that hour shall not count as an hour in which he has worked, but the continuity of his period of employment shall not be treated as broken by any such absence."

Paragraph 5 — a transfer of the business does not break continuity. "If a trade, business or undertaking is transferred from one person to another, the period of employment of an employee in the trade, business or undertaking at the time of the transfer shall count as a period of employment with the transferee, and the transfer shall not break the continuity of the period of employment."

Paragraph 6 — hours are aggregated across contracts with the same employer. "For the purposes of this Schedule, any reference to hours in which an employee has worked shall mean hours in which he has worked for his employer whether or not the hours were worked under the same or another contract of employment with that employer and whether or not they were consecutive hours."

This site's reading: for part-time and casual staff, paragraphs 3 and 6 are the practical ones. Paragraph 3 makes sickness hours count towards the 17 and the 68 (with a medical certificate where the incapacity exceeds 48 hours); paragraph 6 aggregates hours worked for the same employer under different contracts — so two separate part-time engagements with the same employer are not measured separately against the threshold.

This site's reading: paragraph 2A operates by making a failing week not count, and paragraph 2 requires four weeks, so all four of those weeks must be counting weeks. Which of them counts via the 17-hour leg and which via the 68-hour leg is not restricted by the provision, so the two may be mixed.

The provisions themselves: the transition runs longer than it looks

First Schedule, paragraph 2A(2): "A week falling within either of the following descriptions does not count for the purposes of paragraph 2 unless the employee has worked for 18 hours or more in that week— (a) a week beginning before the date on which the Employment (Amendment) Ordinance 2025 (27 of 2025) comes into operation* (pre-amendment week); (b) a week that is one of the first 3 weeks immediately following the last pre-amendment week."

That editorial note reads: "Operation date: 28 December 2025."

So the old 18-hour threshold applies not only to weeks before the amendment, but to the first three weeks after it as well.

The two dates play different roles: the editorial note in the legislative text gives the operation date as 28 December 2025, while 18 January 2026 is the first week counted wholly under the new threshold. Run the provision's own figures and it is clear how the two fit together.

• First Schedule paragraph 7: a "week" ends with Saturday, so each week begins on a Sunday.
• The operation date is 28 December 2025 (per the editorial note). That day is a Sunday.
• Paragraph 2A(2)(a) speaks of a week "beginning before" the operation date. The week that begins on 28 December does not begin before 28 December. So the last "pre-amendment week" begins Sunday 21 December 2025 and ends Saturday 27 December 2025.
• Paragraph 2A(2)(b) then adds "the first 3 weeks immediately following the last pre-amendment week": the weeks beginning 28 December, 4 January and 11 January. Those three still require 18 hours.
• 21 December + 1 week = 28 December; + 3 further weeks = 18 January 2026 (a Sunday).
• So the first week to which the 17-hour / 68-hour test genuinely applies begins on 18 January 2026 and ends Saturday 24 January 2026.

One step further: paragraph 2 requires four counting weeks, and the first four weeks falling wholly under the new test are those beginning 18 January, 25 January, 1 February and 8 February — ending Saturday 14 February 2026.

This site's reading: the Ordinance's own operation date is 28 December 2025; 18 January 2026 is the start of the first week that can actually be counted under the new threshold.

One more piece of pure arithmetic: 17 × 4 = 68. The four-week total demanded by the 68-hour leg is therefore identical to working a full 17 hours every week. What the second leg relaxes is the distribution of the hours, not the total.

(The above is an arithmetical illustration using the figures and dates in the provision and its editorial note. It is not an assessment of any individual reader's case.)

Impact

The amendment brings more part-time and irregular-hours employees into the scope of continuous contract status and the full suite of EO benefits. Employers need to review their employment arrangements — especially casual, part-time, and irregular-hours workers — ensuring accurate recording of hours, and providing corresponding benefits to employees who now qualify.

Transition: the amendment came into operation on 28 December 2025, but the First Schedule preserves the old 18-hour test for the last pre-amendment week and the 3 weeks immediately following it. The first week counted wholly under the new threshold therefore begins 18 January 2026; hours in the transitional weeks are still counted, but against the old test.

(On the paragraph above, paragraph 2A(2)(b) of the First Schedule separately provides that the first 3 weeks immediately following the last pre-amendment week are also measured against 18 hours; the text of the provision appears above.)

Part-time and casual staff working irregular hours should note: Your threshold has moved, and section 3(2) puts the burden of proving that the contract is not continuous on the employer, not on you.

Probation

No statutory probation — probation is optional under freedom of contract. If it is included:

• Length: market practice is 3 months; can be longer or shorter. No statutory cap
• Significance: during probation, shorter notice periods apply — for example, the first month typically allows termination without notice; thereafter as the contract provides (often 1 week's notice through the balance of probation)
• After probation: the notice period reverts to the standard contractual term
• Can probation be extended: the contract commonly permits extension — requiring mutual agreement and written confirmation

The provisions themselves: sections 6(3) and 6(3A)

Probation is not a statutory institution, but once a contract expressly agrees that the employment is on probation, the Ordinance takes over the notice question. The provisions split into two cases.

Where the contract fixes no notice period — section 6(3) (section heading: "Termination of contract by notice"): "Where in any contract of employment, whether in writing or oral, it has been expressly agreed that the employment is on probation and the contract does not make provision for the length of notice required for its termination such contract may be terminated— (a) by either party at any time during the first month of such employment without notice or payment in lieu; (b) by either party at any time after the first month of such employment by giving to the other party notice of not less than 7 days."

Where the contract does fix one — section 6(3A)(a): "notwithstanding the length of notice provided for in the contract, by either party at any time during the first month of such employment without notice or payment in lieu;" and section 6(3A)(b): "by either party at any time after the first month of such employment by giving to the other party notice of the agreed period, but not less than 7 days."

Three points:

• Express agreement is the precondition. Both provisions open with employment being "expressly agreed" to be on probation. If the contract does not say so, neither provision is engaged.
• The first-month exemption runs both ways and overrides the contract. Section 6(3A)(a) uses the words "notwithstanding the length of notice provided for in the contract" — so even where the contract stipulates a month's notice during probation, the first month may still be ended with no notice and no payment in lieu.
• After the first month there is a 7-day floor. Where a period is agreed, it governs, but "not less than 7 days".
• The first month is a defined period, and section 6 defines it. Section 6(4): "For the purposes of this section the expression month (月) means a period of time commencing on the day when notice of termination of a contract of employment is given or when employment begins, as the case may be, and ending at the end of the day before the corresponding date in the following month or, where there is no corresponding date in the following month or where the commencing day is the last day of a month, at the end of the last day of the following month." So the probationary "first month" runs from the start date to the end of the day before the corresponding date next month — not 30 days, and not a calendar month.

Told after two weeks not to come back? Termination in the first month with neither notice nor payment in lieu is a result the Ordinance expressly permits, not an employer breach.

Notice Periods

Notice periods for termination:

During probation

• First month: no notice is generally required (either party)
• From the 2nd month of probation: per the contract; if the contract is silent, a minimum of 7 days applies

After probation / for contracts without probation

• Per the contract — commonly 1 month, 2 months, or 3 months depending on seniority
• If the contract is silent: the EO provides for not less than 1 month (for continuous contract employees)
• Payment in lieu of notice (PILON): either party may elect to pay the wages for the notice period and terminate immediately

The provisions themselves: the three floors in section 6(2)

Section 6(2) is introduced by section 6(1), which carries its own conditions. Section 6(1) (section heading: "Termination of contract by notice"): "Subject to subsections (2), (2A), (2B), (3) and (3A) and sections 15 and 33, either party to a contract of employment may at any time terminate the contract by giving to the other party notice, orally or in writing, of his intention to do so." The three floors in section 6(2) come first below; sections 15 and 33 follow.

Section 6(2)(a): "in the case of a contract which is deemed by virtue of the provisions of section 5 to be a contract for 1 month renewable from month to month and which does not make provision for the length of notice required to terminate the contract, not less than 1 month;"

Section 6(2)(b): "in the case of a contract which is deemed by virtue of the provisions of section 5 to be a contract for 1 month renewable from month to month and which makes provision for the length of notice required to terminate the contract, the agreed period, but not less than 7 days;"

Section 6(2)(c): "in every other case, the agreed period, but not less than 7 days in the case of a continuous contract."

This site's reading: the three floors have to be matched to the right case. A continuous-contract employee whose contract does fix a notice period falls under (b) — the agreed period, with a 7-day floor — not under (c), which is the residual "every other case" limb. The statement above that "if the contract is silent, the EO provides for not less than 1 month (for continuous contract employees)" is reached in the provisions by way of section 5(1) — which deems a continuous contract to be "a contract for 1 month renewable from month to month" — and then section 6(2)(a), which fixes "not less than 1 month" for that class of contract. The one-month figure is the product of two provisions read together, not a single sentence in section 6. And section 5(1)'s deeming is itself conditional: it applies "in the absence of any express agreement to the contrary", so a contract that expressly provides otherwise leaves that route unavailable.

Note, though, that sections 6(2)(a) and (b) are expressed to apply to a contract deemed "by virtue of the provisions of section 5" — the whole of section 5, not section 5(1) alone. Section 5 has two further deeming limbs besides subsection (1), and neither is conditional on a continuous contract:

Section 5(2): "Notwithstanding that it is proved that a contract of employment is for a period in excess of 1 month such contract shall be deemed to be a contract for 1 month renewable from month to month unless the contract is evidenced in writing signed by each of the parties thereto."

Section 5(3): "Notwithstanding any other provision of this section, a contract of employment entered into by a manual worker for a period of 6 months or more or for a number of working days equivalent to 6 months or more shall be deemed to be a contract for 1 month renewable from month to month."

So an express agreement to the contrary closes off the section 5(1) route only. Section 5(2) deems separately, for a contract in excess of 1 month that is not evidenced in writing signed by each of the parties; and section 5(3) opens "Notwithstanding any other provision of this section", overriding the rest of the section, to deem a manual worker's contract of 6 months or more (or an equivalent number of working days) to be month-to-month. If any limb of section 5 deems, the section 6(2)(a) or (b) floor is available.

The section closes by saying what "the wages per month" then is, once subsection (2) or (3) has done the deeming:

Section 5(4): "Where any contract of employment for a period in excess of 1 month is deemed by virtue of the provisions of subsection (2) or (3) to be a contract from month to month the wages per month shall be such proportion of the total wages agreed under the contract as 1 month bears to the agreed duration of the contract."

That matters because payment in lieu is calculated by multiplying a number of months (section 7(1A)(b), below), so once a contract is deemed month-to-month under section 5(2) or (3), the monthly figure has to be worked out by that proportion rather than carried across from the contract total.

The provisions themselves: two kinds of leave that do not count as notice

Section 6(2A): "Without prejudice to section 41D, annual leave to which an employee is entitled under section 41AA shall not be included under subsection (2) in the length of notice required to terminate a contract of employment."

Section 6(2B): "The period of maternity leave to which a female employee is entitled under section 12 shall not be included under subsection (2) in the length of notice required to terminate a contract of employment."

So where statutory annual leave or maternity leave falls inside a notice period, those days do not count towards the notice, and the notice period that must actually be served is correspondingly longer.

The provisions themselves: two prohibitions on terminating — sections 15 and 33

Both section 6(1) and section 7(1A) open "Subject to sections 15 and 33". Those two sections are not rules about how long notice must be; they are prohibitions on terminating at all:

• Section 15(1) (section heading: "Prohibition against termination of employment") opens with a chapeau — "Subject to subsections (1A) and (1B)—" — and paragraph (a) continues: "after a pregnant employee has served notice of pregnancy on her employer, the employer shall not terminate her continuous contract of employment otherwise than in accordance with section 9 during the period from the date on which her pregnancy is confirmed by a medical certificate to the date on which she is due to return to work on the expiry of her maternity leave or the date of cessation of pregnancy (otherwise than by reason of confinement);"
• Section 33(4B) (section heading: "Sickness allowance"): "Subject to subsection (4BAA), an employer shall not terminate a contract of employment of an employee otherwise than in accordance with section 9 on any sickness day taken by the employee in respect of which sickness allowance is payable under this section."

This site's reading: neither section lengthens a notice period. During those periods, giving notice and paying in lieu are both unavailable as routes; the only exit the provisions leave open is section 9 — the statutory grounds for summary dismissal set out below. Section 15(1A) provides a separate exception for probation, but one capped at 12 weeks: "Where in a contract of employment of a pregnant employee, whether in writing or oral, it has been expressly agreed that the employment is on probation, subsection (1) shall not prevent the termination by an employer of such contract for reasons other than pregnancy during the period of probation if the period does not exceed 12 weeks, or during the first 12 weeks of probation if the period of probation exceeds 12 weeks."

Each of those two prohibitions is followed by a reverse onus — subsection (1B), named in the section 15(1) chapeau, and subsection (4BAA), named in the section 33(4B) chapeau. This is the layer most easily missed, and it decides who has to prove what:

Section 15(1B): "An employer who terminates the continuous contract of employment of a pregnant employee shall be taken for the purposes of subsection (1)(a) or (b) to terminate the contract otherwise than in accordance with section 9— (a) unless the contrary is proved; or (b) subject to subsection (1C), unless the employer proves that— (i) he purported to terminate the contract in accordance with that section; and (ii) at the time of such termination, he reasonably believed that he had a ground to do so."

Section 33(4BAA): "An employer who terminates the continuous contract of employment of an employee on any sickness day taken by the employee in respect of which sickness allowance is payable under this section shall be taken for the purposes of subsection (4B) to terminate the contract otherwise than in accordance with section 9— (a) unless the contrary is proved; or (b) subject to subsection (4BAB), unless the employer proves that— (i) he purported to terminate the contract in accordance with that section; and (ii) at the time of such termination, he reasonably believed that he had a ground to do so."

So where an employer terminates during either period, the starting position is that the termination was not in accordance with section 9, and it is for the employer to prove otherwise; sections 15(1C) and 33(4BAB) then provide that sections 15(1B)(b) and 33(4BAA)(b) do not apply in civil proceedings.

Beyond the civil liability, each section also carries a criminal penalty:

Section 33(4BB): "Any employer who contravenes subsection (4B) shall be guilty of an offence and shall be liable on conviction to a fine at level 6."

Section 15 has the matching provision in section 15(4), which likewise makes contravention of section 15(1)(a) or (b) an offence punishable on conviction by a fine at level 6.

The provisions themselves: how payment in lieu is calculated

The body text above says payment in lieu is "the wages for the notice period". The provision is written in terms of an average, not the wages actually due.

Section 7(1A)(b) (section heading: "Termination of contract by payment in lieu of notice"): "where the length of notice required to terminate the contract under section 6 is a period expressed in months, a sum calculated by multiplying the number of months required by the monthly average of the wages earned by the employee during— (i) the period of 12 months immediately before the date of notification; …"

Put another way: one month's payment in lieu is 1 × the monthly average of wages earned in the 12 months before the date of notification (or the shorter period, where the employee has been employed for less than 12 months) — not "next month's pay packet". For roles with volatile commission or bonus, those two figures can differ substantially.

Before the calculation runs, section 7(1) defines what "wages" includes for the purposes of subsections (1A), (1B) and (1C) — that is, which payments go into the numerator:

Section 7(1): "For the purposes of subsections (1A), (1B) and (1C), wages (工資) includes any sum paid by an employer in respect of— (a) a day of maternity leave, a day of paternity leave, a rest day, a sickness day, a holiday or a day of annual leave taken by the employee; (b) a day of leave taken by the employee with the agreement of his employer; (c) a normal working day on which the employee is not provided with work; (d) a day of absence from work of the employee due to temporary incapacity for which compensation is payable under section 10 of the Employees’ Compensation Ordinance (Cap. 282)."

That average is not, however, simply "12 months' pay divided by 12". Section 7(1B), which immediately follows, requires a list of days — and the wages paid for them — to be left out of the calculation:

Section 7(1B): "In calculating the daily average or monthly average of the wages earned by an employee during the period of 12 months or the shorter period— (a) any period therein for which the employee was not paid his wages or full wages by reason of— (i) any maternity leave, paternity leave, rest day, sickness day, holiday or annual leave taken by the employee; (ii) any leave taken by the employee with the agreement of his employer; (iii) his not being provided by his employer with work on any normal working day; or (iv) his absence from work due to temporary incapacity for which compensation is payable under section 10 of the Employees’ Compensation Ordinance (Cap. 282); and (b) any wages paid to him for the period referred to in paragraph (a), are to be disregarded."

Section 7(1C) extends the same treatment to a day on which only "a fraction of the amount earned by the employee on a normal working day" was paid, and section 7(1D) supplies a fallback where the calculation is "impracticable". This layer changes the number: stripping out unpaid and part-paid days shrinks the denominator, so the statutory average is usually higher than a plain total divided by twelve.

Two further subsections sit outside that calculation and still change what is actually payable.

The first is section 7(2), which allows a party who has already given proper notice to leave early on a proportionate payment:

Section 7(2): "Either party to a contract of employment, having given proper notice in accordance with section 6, may at any time thereafter terminate the contract by agreeing to pay to the other party such proportion of the sum referred to in subsection (1) as is proportionate to the period between the termination of the contract and the time when the notice given would have expired."

The second is the section's closing subsection, and the one most easily missed. Section 7(4) opens "notwithstanding any other provision of this Ordinance" and settles whether "wages" includes overtime pay:

Section 7(4): "For the purposes of this section, and notwithstanding any other provision of this Ordinance, the term wages (工資)— (a) includes overtime pay of a constant character or the monthly average of which over a period of 12 months (or if not applicable, such shorter period of employment) immediately preceding the date on which the termination takes effect is equivalent to or exceeds 20% of his monthly average wages during the same period; (b) except as provided in paragraph (a), shall be deemed not to include overtime pay."

This subsection moves the figure in both directions. Overtime pay is included in wages if it is of a constant character, or if its monthly average over the 12 months (or the shorter period of employment) immediately preceding the date the termination takes effect equals or exceeds 20% of monthly average wages over the same period. In every other case overtime pay is deemed not to be included. Note also that the two provisions run from different dates: section 7(1A) measures from the "date of notification", while section 7(4) measures from the date the termination takes effect.

Summary dismissal

An employer may summarily dismiss (without notice or PILON) where the employee has committed serious misconduct — for example, wilful disobedience, fraud, serious breach of duty. The standard is high — the employer must be able to prove the serious breach. If insufficiently evidenced, the dismissal may be found to be "unreasonable" or "unlawful" (see unreasonable-vs-unlawful-dismissal-hong-kong).

An employee may resign without notice where the employer has committed a serious breach — for example, unpaid wages, non-payment of MPF, serious harassment. The employee's resignation in such circumstances may be treated as constructive dismissal — in substance, being forced out by the employer.

The provisions themselves: sections 9 and 10

Section 9(1) (section heading: "Termination of contract without notice by employer") lists four statutory grounds, where the employee, in relation to his employment: "(i) wilfully disobeys a lawful and reasonable order; (ii) misconducts himself, such conduct being inconsistent with the due and faithful discharge of his duties; (iii) is guilty of fraud or dishonesty; or (iv) is habitually neglectful in his duties; …"

Section 9(1)(b) then adds the common-law exit: "on any other ground on which he would be entitled to terminate the contract without notice at common law."

Section 9 has a closing subsection — section 9(2): "The fact that an employee takes part in a strike does not entitle his employer to terminate under subsection (1) the employee’s contract of employment." Taking part in a strike is therefore not a section 9(1) ground.

The employee's mirror provision is section 10. It sets out three statutory grounds of its own before closing with the common law:

• Section 10(a) (section heading: "Termination of contract without notice by employee"): "if he reasonably fears physical danger by violence or disease such as was not contemplated by his contract of employment expressly or by necessary implication;"
• Section 10(aa): "if— (i) he has been employed under the contract for not less than 5 years; and (ii) by a certificate in the form specified by the Commissioner under section 49 and issued by a registered medical practitioner or registered Chinese medicine practitioner, he is certified as being permanently unfit for a particular type of work specified in the certificate for a reason or reasons stated therein; and (iii) he is engaged in that type of work under the contract;"
• Section 10(b): "if he is subjected to ill-treatment by the employer; or"
• Section 10(c): "on any other ground on which he would be entitled to terminate the contract without notice at common law."

Section 10(aa) is a substantive right that is easy to miss: an employee with at least 5 years under the contract, certified by a registered medical practitioner or registered Chinese medicine practitioner as permanently unfit for the type of work he is engaged in, may resign without notice or payment in lieu.

Section 8 (section heading: "Saving of rights") attaches two savings to sections 6 and 7. Nothing in section 6 or 7 is to be taken:

• Section 8(a): "to prevent either party to a contract of employment from waiving, at the time notice is required to be given for the purposes of section 6(2), (3) or (3A), his right to notice or to payment in lieu of notice;" — either side may waive notice or payment in lieu at the time notice falls to be given.
• Section 8(b): "to affect the right of a party to a contract of employment to terminate the contract without notice or payment in lieu under section 9, 10 or 11(2)."

This site's reading: the phrases used in the body text above — "serious breach of duty", "serious harassment" — are not the statutory language of section 9 or section 10. The statutory grounds are the ones quoted; everything else has to travel through the common law that sections 9(1)(b) and 10(c) point to. That is the same division of labour described at the top of this article: the Ordinance draws a few bright lines and hands the rest back.

Post-Termination Restrictive Covenants (PTRCs)

Hong Kong employment contracts commonly include post-termination restrictive covenants — restricting the employee's conduct for a specified period, area, and activity after leaving. The four main types:

1. Non-Compete

Prohibits the former employee from working in competing businesses for a specified period — for example, not joining a competitor within 6 months of leaving.

2. Non-Solicitation of Clients

Prohibits the former employee from approaching or soliciting the former employer's clients — in some drafting, even where the client initiates contact the restriction applies (depending on the language).

3. Non-Solicitation / Non-Enticement of Employees

Prohibits the former employee from poaching the former employer's staff — preventing the former employee from inducing former colleagues to join their new company.

4. Confidentiality

Protects trade secrets, client information, financial data, product designs, and so on. Confidentiality obligations may be perpetual (unlike the other PTRCs, which typically have a fixed term).

These four categories are practitioners' labels, not classes defined by the Employment Ordinance, nor by the other relevant Ordinances (listed under Sources). How each is defined is a question of the wording of the particular contract.

Enforceability of Restrictive Covenants: The Common-Law Framework

Every principle in this section is common law — judge-made law — and not a provision of the Employment Ordinance.

One boundary needs drawing first. Hong Kong legislation does use the concept of restraint of trade — it occurs three times in the Trade Unions Ordinance (Cap. 332), the third being in the definition of "trade union" in section 2 itself — but never to regulate an employee's post-termination covenants:

• Trade Unions Ordinance (Cap. 332), section 40 (section heading: "Registered trade union not criminal"): "The purposes of any registered trade union shall not, by reason merely that they are in restraint of trade, be deemed to be unlawful so as to render any member of such registered trade union liable to criminal prosecution for conspiracy or otherwise."
• Section 41 of the same Ordinance (section heading: "Registered trade union not unlawful for civil purposes"): "The purposes of any registered trade union shall not, by reason merely that they are in restraint of trade, be unlawful so as to render void or voidable any agreement or trust."

Both operate only on the purposes of a registered trade union, and neither touches a non-compete in an employment contract. So the accurate statement is the narrower one: no Hong Kong statutory provision regulates an employee's post-termination competition, client solicitation, employee solicitation or confidentiality restraints — the relevant Ordinances including the Employment Ordinance (Cap. 57) and Caps. 57A to 57D, the Trade Unions Ordinance (Cap. 332), the Control of Exemption Clauses Ordinance (Cap. 71), the Trade Descriptions Ordinance (Cap. 362) and the Competition Ordinance (Cap. 619).

Hong Kong applies a strict scrutiny framework to PTRC enforceability. Basic principle: all clauses restraining the former employee's freedom to trade are prima facie void ("restraint of trade"), unless the employer can demonstrate that the clause:

• Is designed to protect a legitimate business interest of the employer — limited to:

- Trade secrets / confidential information

- Customer connections (influence the employee has built with customers through the role)

- Workforce stability (preventing the poaching of whole teams)

- Protecting against unfair exploitation only, not protection from competition per se

• Is reasonable in scope — in terms of:

- Scope of activity — restricted only to activities genuinely connected with the former role

- Geographic scope — restricted to a reasonable geographic area (dependent on the business's nature)

- Duration — reflecting the employee's position, the client relationship cycle, and industry practice

• Goes no wider than is reasonably necessary to protect the legitimate interest

Court's review factors

In each PTRC case, the court considers:

• The employee's position and duties — the more senior and the more direct contact with clients or confidential information, the more likely the restriction is upheld
• The employer's business model and geographic market — a 12-month worldwide restriction in a purely local service industry is hard to sustain
• The type/scope of confidential information the employee had access to
• The duration and geographic scope of the restriction — the longer and wider, the harder to enforce
• Reasonableness at the date the contract was made (not at the date of leaving) — the court assesses from the contract's signing perspective

The court will not rewrite unreasonable clauses

Hong Kong courts will not themselves redraw "12 months" as "6 months" to save the clause. If a clause is found unreasonable, it is void in its entirety — the employer has no protection. This is a serious consequence.

In limited cases, the court may apply the "blue pencil" rule — striking out specific words to leave the balance of the clause standing. But this is narrow — the court strikes out, it does not rewrite.

There are no numbers to work here

There is no arithmetic to run in this section, and the reason is itself the point.

The continuous-contract section above can be worked because the provision supplies figures: 17, 68, 4, 18, Saturday. This section has no statutory figure to substitute in — no statutory maximum duration, no statutory geographic radius, no statutory compensation ratio, no safe-harbour line below which a covenant is automatically valid. Any method claiming to calculate whether a non-compete is enforceable is therefore false.

What can be done is a structured walkthrough. Each gate below is one of the common-law elements already set out above, put in order.

Gate 0 — the starting point. The starting point is void. Not "valid unless excessive", but "void unless the employer proves it reasonable". The burden sits with the employer.

Gate 1 — what is the employer actually protecting? Only three interests qualify: confidential information / trade secrets, customer connection, and workforce stability. If the honest answer is "we would rather they did not work in this industry", that is protection from ordinary competition, not a protectable interest — this gate fails and the remaining gates never arise.

Gate 2 — how close was your role to that interest? The more senior the role and the more directly it held client relationships or core confidential material, the more substantial the employer's interest. The same clause applied to a junior role with no client-facing exposure is far harder to sustain.

Gate 3 — three scopes, taken separately: activity, geography, duration.

- Activity: how far does the restricted activity overlap with what you actually did? Drafting such as "any competing business" sweeps in lines of business you never touched.

- Geography: where does the employer genuinely operate? "Worldwide" on a local business does not match the interest being protected.

- Duration: how long is the client relationship cycle? The period has to correspond to how long your influence realistically persists.

Gate 4 — is it wider than necessary? Even where everything above is reasonable, the further question is whether a narrower formulation would have achieved the same protection. If it would, the clause goes wider than necessary.

Gate 5 — as at what date? As at the date the contract was made, not the date you left. So the argument "my role had changed by the end" does not help at this gate.

Gate 6 — what happens if it fails? Not narrowed enforcement — the clause is void in its entirety. The blue pencil can delete words; it cannot rewrite them.

This site's reading: the order of these gates has a practical consequence. Gate 1 asks whether a protectable interest exists at all — a threshold question. Gate 3 asks about scope — a question of degree. If the threshold is not met, no amount of narrow drafting helps. Many clauses fail not because the period is too long, but because the answer at Gate 1 is really "to keep competition away".

How the process actually works

If the dispute is about a statutory entitlement, you are in the Labour Tribunal. If it is about a restrictive covenant, you are facing an application to the court for an injunction — different timetable, different opponent, different outcome.

1. Two different routes

• Statutory entitlement disputes (notice, payment in lieu, severance, long service payment, continuous-contract status) are, as the body text above states, handled by the Labour Tribunal or the courts. On whether a contract is continuous, section 3(2) expressly places the burden of proof on the employer.
• Restrictive covenant disputes have no statutory procedure; they run as ordinary civil litigation. An employer who wants to stop you immediately must apply to the court for an injunction.

2. How a covenant dispute usually unfolds

• The solicitor's letter. Employers sometimes send solicitor's letters when employees leave, reminding them of PTRCs. This does not automatically mean litigation is coming, but should be taken seriously and discussed with a solicitor.
• The injunction application. In practice injunctions are the most common remedy sought, but the threshold for granting them is high.
• What the court has to weigh is more than "is the clause reasonable". The section below, "The injunction application: four things the court weighs", lists four considerations: whether the claimed legitimate business interest is vague or over-extended; whether granting the injunction would effectively amount to final relief (because the restriction would expire before trial); whether damages would be an adequate remedy; and where the balance of convenience lies.
• Other possible remedies: damages (though loss is hard to prove), disclosure orders, and compelled transfer of poached clients or employees (very rare).

3. Time is itself a factor

This site's reading: the third point above — that an injunction may effectively amount to final relief — is a structural problem created purely by time. A 6- to 12-month restriction may well have run its course before the case can be tried. That makes enforcement of short covenants heavily dependent on how quickly the employer moves, and not only on how well the clause is drafted.

A solicitor's letter is not a court order. What actually changes what you may do is an injunction granted by the court. The two are different — though both warrant immediate legal advice.

The injunction application: four things the court weighs

Where an employer applies for an injunction to enforce a post-termination covenant, the court asks more than whether the clause itself is reasonable. It also asks:

• whether the claimed "legitimate business interest" is vague or over-extended;
• whether granting the injunction would effectively amount to final relief — because the restriction period may well expire before the case can be tried;
• whether damages would be an adequate remedy;
• where the balance of convenience lies.

This site's reading: of the four, the second bears hardest on short covenants, and it is a structural problem created purely by time rather than by how the clause was drafted — so "the clause is reasonable" does not mean "the injunction will be granted".

Practical Considerations for Employers Drafting PTRCs

• Tier PTRCs by seniority — a single template applied to all staff may be over-restrictive for junior staff and under-protective for senior staff
• Reasonable durations — there is no fixed safe period. The duration has to match how long the protected interest lasts, and the longer the restraint, the stronger the evidence the employer needs. In Re Cobo Asia Ltd ([2026] HKCFI 2696) the Court of First Instance quoted Cantor Fitzgerald Europe v Boyer that courts typically treat a 12-month non-solicitation period as prima facie too long, and said a non-compete is generally harder to justify (see "Cooling Off" for How Long? The Real Limits on Non-Compete Clauses in Hong Kong ).
• Narrow geographic scope — limited to areas of genuine business presence
• Precise activity definition — define "competition" narrowly, avoiding ambiguity
• Garden leave — an employer may require an employee to stop working during the notice period while continuing to pay them. But a court assessing whether a restraint is reasonable may count the garden leave towards the total restraint; and s.7 of the Employment Ordinance lets either party end the contract by paying in lieu of notice — whether a garden-leave clause can stop an employee doing that has not been decided by a Hong Kong court. Garden leave is not a substitute for PTRCs.
• Draft each PTRC independently — so if one is found unreasonable, the others stand

Practical Considerations for Employees Facing PTRCs

• Read PTRCs carefully before signing — consider actual impact on future career mobility
• Negotiation room: senior-role PTRCs often have negotiation scope — shorter period, narrower activity, restricted geography can be requested
• Existing PTRCs carrying over: if you already have a PTRC from a current role, disclose to the prospective employer and consider litigation risk
• On leaving: seek solicitor advice before changing jobs — assessing the PTRC's enforceability, the risk of challenge, and the practical impact on your career
• Solicitor's letters: employers sometimes send solicitor's letters when employees leave, reminding of PTRCs. This does not automatically mean litigation is coming, but should be taken seriously and discussed with a solicitor

Common Practical Issues

"The contract says 'any competing business is restricted' — is that enforceable?" Almost certainly not — "any competing business" is too broad, capturing activities unconnected to the former role, and violates the "no wider than necessary" principle. An enforceable non-compete should specifically identify the restricted business types.

"Can the geography be 'worldwide'?" Rarely supportable — unless the employer's business is genuinely global (a multinational financial institution), "worldwide" fails the "minimum scope" test. Local businesses should restrict to the local area, perhaps even a specific district.

"Is a 2-year post-termination restriction reasonable?" For an ordinary employee, usually hard to sustain. In Re Cobo Asia Ltd ([2026] HKCFI 2696) the Court of First Instance held a two-year employee non-compete without any compensation prima facie unenforceable, and void as an unreasonable restraint of trade. Sale-of-business or M&A contexts (where a selling shareholder undertakes not to compete with the buyer) are assessed differently from employment (see the FAQ below).

"What remedies does the employer typically have if a PTRC is breached?" Possible remedies: injunction (restraining continued breach); damages (compensation for losses — but losses are hard to prove); disclosure orders; compelled transfer of poached clients or employees (very rare). In practice, injunctions are the most common sought remedy — but the threshold for granting them is high (what the court weighs is set out above, under "The injunction application: four things the court weighs").

Related guides: see also unreasonable vs unlawful dismissal , severance pay and long service payment , and incorporating a Hong Kong company , or browse our Hong Kong employment law overview .

The questions the common law puts to a post-termination restraint are whether the employer had a legitimate business interest to protect (such as trade secrets or stable client connections), whether the restraint's duration, geography and scope went no further than reasonably necessary to protect that interest, and whether it unreasonably prevented the employee from earning a living. Under the same principles, the consequence for an over-broad clause is that it is void in its entirety rather than rewritten more narrowly by the court (see "The court will not rewrite unreasonable clauses" above).