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Hong Kong Employment Law Alert - March 2017
Submitted by // K Bowers, Partner / Solicitor Advocate; P Yeung, Senior Associate
15 March 2017

 

EMPLOYMENT AGENCIES BEWARE!

Introduction

On 13 January 2017, the Labour Department published a new Code of Practice for Employment Agencies ("Code"). The Code is particularly relevant to employment agencies engaging in the placement of foreign domestic helpers. Significantly however, it also applies to all "businesses operated for the purpose of obtaining employment for another person or to supply the labour of another person to an employer" ("Employment Agency").

Statutory requirements relating to Employment Agencies

Chapter 3 of the Code conveniently sets out the statutory requirements that an Employment Agency should review from time-to-time. For example:

(1) Employment Agencies must make sure that they hold a valid licence prior to commencing any operations. A duplicate licence must be obtained for each office from the Commissioner of Labour, as licences are only valid for the place of business specified in the licence.

(2) Employment Agencies must ensure that they do not, directly or indirectly, receive any extra payment or advantages from job-seekers with the exception of the prescribed commission. For Employment Agencies dealing with foreign job-seekers (including foreign domestic helpers), this includes fees for visa processing. The maximum commission is set at an amount not exceeding 10% of the job-seeker's first month's wages after he/she is successfully placed in employment. This commission cannot be charged in advance of a job placement.

(3) The address at which an Employment Agency carries on business cannot be used for any other purposes without prior approval from the Commissioner of Labour. This includes providing boarding facilities or living spaces for foreign job-seekers.

(4) Employment Agencies are prohibited from aiding or abetting employers in offering foreign domestic helpers a wage that is lower than the prevailing minimum allowable wage. Although the current statutory minimum wage is HK$32.50 per hour, it will be raised to HK$34.50 with effect from 1 May 2017. Any person (including an Employment Agency) found guilty of this offence is subject to a maximum penalty of a fine of HK$150,000 and imprisonment of up to 14 years upon conviction on indictment.

Standards expected of Employment Agencies

The Commissioner for Labour has the discretion to refuse or revoke the issue of a licence if the Employment Agency is not "fit and proper". Before the Code was issued, it was unclear what would be deemed as "fit and proper". The minimum expectations are now set out in Chapter 4 of the Code, which does not restrict the Commissioner's discretion to examine all other relevant factors, but does provide guidance as to what would be good practice.

Chapter 4 starts off with the expectation that the management of an Employment Agency must closely supervise its staff. The management will be held accountable for all misconduct and failure to meet statutory requirements and/or the standards of the Code. The Employment Agency is expected to perform due diligence in ensuring the accuracy of information provided by both the employer and the job-seeker. If there are reasonable grounds to suspect the accuracy or completeness of any information provided (e.g. information provided that is inconsistent with the facts made known by the job-seeker), such information should not be used before it is clarified.

The Code also requires separate service agreements between the Employment Agency and the employer and job-seeker respectively. The scope of service and any related service fees should be clearly set out in the agreement. The expectation is that service agreements should be signed at the beginning of the job placement process and/or before any payment is made. In relation to the placement of foreign domestic helpers, the Code provides a more specific list of items that must be incorporated into the service agreement.

Conclusion

The Labour Department's Employment Agencies Administration will closely monitor the Employment Agencies' compliance with the Code and will conduct regular inspections. It may also issue warning letters to Employment Agencies which fail to meet the statutory requirements and/or standards set out in the Code.

In view of the newly published guidelines in the Code, Employment Agencies should:-

(1) assess whether current service agreements and work processes adhere to the standards in the Code;

(2) carry out internal training for management and employees and in relation to the statutory requirements and standards set out in the Code;

(3) provide regular updates and training to management and employees for other employment-related legislation (e.g. anti-discrimination ordinances, Employees' Compensation Ordinance and Personal Data (Privacy) Ordinance); and

(4) prepare user-friendly publications for both employers and job-seekers, which set out their respective rights and duties under employment-related legislation.

The penalties for infringing the Code are harsh and could well have a devastating impact upon the businesses of Employment Agencies which do not run and operate their businesses in compliance with the mandatory provisions of the Code.


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