After years of debate, the Government has announced to ease the “continuous contract” requirement (known as the “418” rule) under the Employment Ordinance in February 2024. The Labour Advisory Board (LAB) has reached a consensus that the 418 rule is to be relaxed by using aggregate working hours of four weeks as a counting unit and setting the four-week hour threshold at 68 hours. It means that employees in Hong Kong who have worked aggregately for 68 hours over four weeks are entitled to statutory employment benefits, such as statutory holiday pay, paid annual leave and sickness allowance.
What is the 418 rule?
Under the existing continuous contract requirement, regardless of whether working full-time or part-time, employees employed by the same employer for four weeks or more and having worked for 18 hours or more per week are regarded as being engaged under a “continuous contract”. Under the Employment Ordinance, these employees are entitled to a range of employment benefits, such as statutory holiday pay, paid annual leave, sickness allowance, statutory maternity and paternity leave, severance payment and long services payment.
Calls for changes to the 418 rule
The 418 rule was criticized as it failed to adapt to modern work structures and neglected to offer essential benefits to employees working less than 18 hours weekly. The 418 rule was often regarded as a loophole allowing employers to circumvent the statutory requirement of providing employment benefits to employees who work less than 18 hours per week. In other words, employers may attempt to limit their employees’ weekly working hours to avoid fulfilling their obligations under the Employment Ordinance.
Differences between the 418 rule and the 468 rule
Changes to the 418 rule have led to the introduction of the 468 requirement. The 468 requirement uses aggregate working hours of four weeks as a counting unit and setting the four-week hour threshold at 68 hours. Employees that have worked aggregately for 68 hours over four weeks are entitled to employment benefits.
The differences between the 418 rule and the 468 requirement are as follows:
How does the 468 requirement affect human resource management?
Under the 468 regulations, tracking employees’ working hours accurately becomes crucial. Companies that hire part-time or temporary employees may need to implement an attendance tracking system such as FlexSystem’s Alpha Connect to manage the working hours of their workforce. The system can also provide real-time attendance reports on a daily, weekly or monthly basis. Meanwhile, the system can ensure the accuracy of hours worked, supporting your company to stay compliant with the latest Employment Ordinance.
How the 468 requirement benefits employees in Hong Kong
Under the 468 requirement, the Government anticipated that over 11,000 part-time or temporary workers that originally did not benefit from the statutory entitlements and protection would fall under the revised definition as employees employed under a continuous contract.
Implications for Employers
The relaxation of the 418 rule to the 468 requirement, employers need to review and update their existing human resource policies and work arrangements such as revising employee handbook, employment contracts and internal guidelines to ensure they stay compliant with the updated regulation. On the other hand, employers should keep and maintain employment records of each of their employees at all times.
Hassle-free implementation of the changes in Human Resource Management!
The relaxation of the 418 Rule to 468 results in many changes in HR processes, and it can be a challenge. FlexSystem is well-positioned to help you implement changes that are raised by the new 468 requirement and the other latest reforms of the Hong Kong employment law. With our Human Resource Management Solution, your HR processes such as payroll and attendance management can be automated, ensuring compliance with the updated regulations.
Reference:
https://www.info.gov.hk/gia/general/202402/01/P2024020100252.htm?fontSize=1
