Hong Kong lowers threshold for continuous contracts | Hong Kong Court clarifies limits on summary dismissal
Hong Kong lowers threshold for continuous contracts
The Employment (Amendment) Bill 2025 (the “Amendment”), gazetted on 27 June 2025 and coming into force on 18 January 2026, has revised the definition of “continuous contract” under the Employment Ordinance by lowering the working-hours threshold and introducing greater flexibility. These changes are intended to expand the number of employees eligible for statutory benefits, with a particular impact on part-time staff.
The new ‘468’ rule
Under the Amendment, the number of working hours to be fulfilled for a worker to qualify as being employed under a “continuous contract” has been lowered from 18 hours to 17 hours per week over a period of 4 or more consecutive weeks.
As an alternative to the above test, the Amendment provides that if an employee has worked less than 17 hours in a week, she/he will still qualify as being employed under a “continuous contract” if she/he has worked an aggregate of at least 68 hours in that week and in the 3 weeks immediately preceding such week.
The Amendment aims at extending the category of workers who are entitled to statutory benefits, such as sickness allowance, maternity leave, statutory holiday pay, statutory annual leave and statutory severance or long service payments, thereby affording additional protection to part-time workers.
Conclusion
The revised threshold under the Amendment relaxes the “continuous contract” working-hours requirement, thereby extending statutory protections to a wider group of part-time employees.
From 18 January 2026, employers should review their workforce arrangements and ensure that all employees who qualify as being employed under a “continuous contract” under the new “468” rule are accorded the statutory benefits to which they are entitled.
Hong Kong Court clarifies limits on summary dismissal
In the recent decision of Hu Yangyong v Alba Asia Limited [2025] HKCFI 2484, the High Court confirmed that summary dismissal is an extreme course of action that shall only be resorted to in exceptionally serious cases in which the employee’s misconduct is so grave that it amounts to a fundamental breach of the employment agreement.
Importantly, this case illustrates that a summary dismissal may be held to be wrongful where the employer has acquiesced to the employee’s irregular practices and/or where the employer is incapable of establishing dishonest intent on the part of the employee.
The facts
The plaintiff was the Chief Operating Officer of Alba Asia Limited (the “Employer”). His contract allowed him to claim up to RMB 20,000 per month in family-related expenses, provided he submitted official invoices (“fa piao”).
The Employer summarily dismissed him for allegedly dishonest reimbursement claims after he submitted three hotel invoices (the “3 Hotel Invoices”) that did not in fact relate to his personal expenses.
The plaintiff admitted this practice was irregular but argued it caused no loss to the Employer because:
- He had genuine family expenses exceeding RMB 20,000 each month that he could have claimed;
- He submitted the 3 Hotel Invoices only because they were issued in the Employer’s name, as required by company policy, whereas many of his actual family invoices (such as tuition fees or mortgage payments) were in the names of his wife or son and therefore not acceptable under the policy.
He also relied on the facts that:
- The Employer’s CFO had previously told him it was acceptable to submit invoices “from other sources.”
- The Employer’s staff had reviewed and approved the 3 Hotel Invoices on multiple occasions without raising any objections.
The judgment
The court held that the Employer had wrongfully dismissed the plaintiff because:
- In submitting invoices from “other sources”, the plaintiff had relied on the CFO’s representations, who was found to have the apparent authority to bind the Employer.
- The plaintiff had not acted dishonestly because he had genuine family expenses exceeding RMB20,000 per month which were claimable under his employment agreement anyway and that therefore the submission of the 3 Hotel Invoices would not result in any financial gain for the plaintiff and/or loss for the Employer.
- The Employer’s staff reviewed and approved the 3 Hotel Invoices on separate occasions and at different levels, thereby representing to the plaintiff that it was acceptable to submit them for reimbursement.
Conclusion
This judgment illustrates that in the absence of strong evidence of dishonesty the court may find that an irregular conduct on the part of an employee may be insufficient to justify a summary dismissal. Also, very importantly, this judgment serves as a reminder that employers who have previously tolerated or accepted employees’ irregular conduct may be unable to rely on such conduct to summarily dismiss employees.
