Once you start developing a business in Hong Kong and operating your business by hiring employees, it is necessary to understand the rules of employment ordinance. Among the different types of rules, the 418 and 468 rules stand out as essential for understanding employee benefits and rights. However, many people are confused between the 418 and 468 rules. Therefore, this article aims to deep dive into the rules and differences between the 418 and 468 rules. By understanding this, you can stay compliant and manage workforce effectively without breaking the employment laws.
Understanding 418 Rules (The Origin)
If you are in a doubt about 418 rules in Hong Kong, then you need to know that this rule concerns the computation of statutory obligations pertaining to employees. It is determined by Employment Ordinance. And, it is used to determine entitlement for earned privileges like, Annual leave, sick leave, and even severance pay.
Definition: The 418 rule applies to the employee who has been working under the contractual relation for a period of not less than four weeks. The working hours must complete at least 18 hours per week.
Implications: Employees fulfilling the criteria have a right to receive statutory advantages that are protected under the law.
Example: Jane spends 20 hours a week employed with a retail store. She also qualifies under the 418 rule means after four consecutive weeks of employment she is now eligible. Thus, Jane has the right to statutory employee’s rights such as annual leave, sick leave and severance pay.
Why 418 has changed to 468?
After going through some mutual disagreement among employees and employers, the 418 rule was considered as having loophole. The reason was that the 418 rules failed to adapt with today’s work culture and to provide benefits fairly to employees who work less than 18 hours weekly. Therefore, speculations were risen that Employers might try to limit their employees’ weekly working hours to avoid meeting their obligations under the Employment Ordinance. On this matter, Hong Kong has Launched a new and updated version of “418” which is called “468”.
Understanding the 468 Rule
Hong Kong’s employment ordinance replace 418 with 468 to provide more flexible rules to all the employees including part-time, temporary, or casual workers under continuous contract.
Definition: The 468 rule counts the total working hours over four weeks. Under the 468 rules, employees who work at least 68 hours within four weeks are eligible for employment benefits.
Implications: As a rule, this is crucial when estimating remunerations and other employments benefits in order to provide an appropriate form of part-time and causal employees.
Example: Working hours of Sarah for the respective week are twenty hours in the first week, fifteen hours in the second week, eighteen hours in the third week, and twenty hours in the fourth week. Sarah has worked for a total of 73 hours four weeks which more than the required 68 hours. Thus, according to the 468 rule, she is able to receive employment benefit.
The Differences between 418 and 468 Rules
While both rules aim to protect employees and ensure fair treatment, there are distinct differences that employers must be aware of:
Eligibility Criteria
418 rules: It Requires at least 18 hours of work per week for a minimum of 4 weeks.
416 rules: It counts the total working hours (Total 68 hours) over four weeks.
Focus Areas
418 Rule: Primarily focuses on entitlements such as statutory benefits
468 Rule: Stresses the priority given to maintaining employment and calculating wages.
Application
418 Rule: Useful to a greater extent in the sphere of full-time employment.
468 Rule: Usually found among employees working under contract such as the part-time and casual employees.
FastLane HR’s Suggestion for Employer
Since there is a Change in rules, we suggest fellow HRs and employers to update the employment contract and employee handbook by following the updated rules. Besides, it is very important to keep detailed records of working hours and employment period. As for more detailed information on Hong Kong’s employment regulations feel free to contact our HR professionals at Fastlane HR. We deliver unique services to assist you in dealing with separate employment matters without much hassle.