Termination Letter (Hong Kong)

A Termination Letter in Hong Kong states formally the matter at hand and what the writer asks the recipient to do.

The Employment Ordinance (Cap. 57) was enacted to provide a complete framework for employment protection in Hong Kong. Part II of the Ordinance governs the termination of contracts of employment, establishing minimum notice requirements under Section 6, the right to summary dismissal under Section 9, protections against unlawful termination under Section 32B, and the calculation of wages in lieu of notice under Section 7. Part VA of the Ordinance provides protection against unreasonable dismissal for employees with two or more years of continuous employment, allowing the Labour Tribunal to award terminal payments and, in appropriate cases, reinstatement or re-engagement.

A Termination Letter must be distinguished from related documents used in the employment termination process. A Warning Letter documents prior disciplinary concerns and establishes a record of the employer’s attempts to address misconduct before dismissal. A Redundancy Letter specifically notifies an employee that dismissal is by reason of redundancy within the meaning of Section 31A of the Employment Ordinance, triggering the entitlement to severance payment under Section 31G. A Settlement Agreement for Employment Matters is used where both parties agree to resolve the termination and any potential claims on mutually agreed financial terms, typically with a full and final release of claims. The Termination Letter is the foundational document from which the other instruments follow.

Under Hong Kong’s common law framework applied by the Court of First Instance and the Labour Tribunal, an employer who terminates employment without adequate notice, without proper grounds for summary dismissal, or in breach of the statutory protections in the Employment Ordinance exposes the employer to claims for wrongful dismissal, unpaid wages, notice pay shortfalls, and statutory payments. The Labour Tribunal, established under the Labour Tribunal Ordinance (Cap. 25), provides accessible adjudication for employment claims with no upper monetary limit on statutory entitlement claims.

The Mandatory Provident Fund Schemes Ordinance (Cap. 485) governs employer contributions to the MPF system and applies on termination. The employer must confirm that all MPF contributions accrued to the termination date are remitted to the relevant MPF trustee within the statutory period, and that the employee is provided with account balance information.

Practical established procedures in Hong Kong requires that a Termination Letter be delivered in person where possible, with a copy retained by the employer and acknowledgement of receipt obtained. Where the employee refuses to acknowledge receipt, the letter should be sent by registered post to the employee’s last known address. The letter should be prepared and reviewed before delivery to confirm all calculations of notice pay, accrued annual leave, and statutory payments are correct, as errors in the final payment calculations frequently give rise to Labour Tribunal claims.

A Termination Letter in Hong Kong is needed in every case where an employer brings an employment relationship to an end, regardless of the reason for dismissal. The Employment Ordinance (Cap. 57) does not in terms require a termination letter in all cases, but issuing one is universally regarded as essential practice under Hong Kong employment law for the following categories of termination.

Termination with notice is the most common situation. Where the employer decides to end the employment relationship without alleging serious misconduct — for example, due to performance concerns, restructuring, or operational requirements — a Termination Letter must state the effective date, the notice period being given or the payment in lieu of notice being made under Section 7 of the Employment Ordinance, and the final payment entitlements.

Summary dismissal for serious misconduct requires a Termination Letter that specifies the ground or grounds for dismissal under Section 9 of the Employment Ordinance — wilful disobedience, misconduct, fraud, habitual neglect of duty, or other serious breach — together with the specific conduct and date of the incident. Without a clear written statement of the reason, the employer will face difficulty defending a wrongful dismissal claim before the Labour Tribunal or the Court of First Instance.

Redundancy dismissal requires a Termination Letter that specifically identifies redundancy within the meaning of Section 31A of the Employment Ordinance as the reason for termination. This is essential to trigger the employee’s severance payment entitlement under Section 31G and to avoid the employee arguing that the dismissal was for another undisclosed reason.

Fixed-term contract expiry requires a Termination Letter where the employer does not intend to renew the contract. Notice of non-renewal should be given in accordance with the contract terms, and any applicable end-of-term payments should be set out in the letter.

Mutual agreement termination, where both parties agree to end the employment, should be documented in a Termination Letter or a combined Termination Letter and Settlement Agreement for Employment Matters, to confirm there is no subsequent dispute about whether the employee resigned or was dismissed — a distinction that affects entitlement to severance payment, long service payment, and unemployment benefits.

Termination during the probationary period requires attention to the minimum notice provisions in Section 6(1) of the Employment Ordinance, which require no notice in the first month and seven days’ notice thereafter during the probationary period. A Termination Letter confirms the basis for termination and the effective date, protecting the employer against claims of insufficient notice.

Finally, a Termination Letter is needed when an employee on sick leave, maternity leave, or paternity leave is being terminated — situations that engage specific statutory protections under sections 15, 33, and related provisions of the Employment Ordinance — and where specialist legal advice should be obtained before the letter is issued.

A Termination Letter in Hong Kong must address the following key elements to comply with the Employment Ordinance (Cap. 57) and to provide a complete and defensible record of the termination.

Party Details: Full legal names of the employer company and the employee, the employee’s job title, department, and employment start date. The employer’s company registration number and registered address should be included where the employer is a corporate entity registered with the Companies Registry.

Effective Date of Termination: A clear and unambiguous statement of the date on which employment terminates. Where notice is being given, the letter should state both the date of the letter and the date on which the notice period expires. Where payment in lieu of notice is being made, the effective date is typically the date of the letter or the following day.

Reason for Termination: A statement of the reason for dismissal, categorised by reference to the Employment Ordinance (Cap. 57) — whether notice termination, summary dismissal under Section 9, redundancy under Section 31A, or non-renewal of a fixed-term contract. For summary dismissal, the specific conduct, the date of the incident, and the Section 9 ground relied upon should be stated. For redundancy, the letter should confirm that the position has been identified as redundant and that selection was carried out on a fair basis.

Notice Period or Payment in Lieu: Confirmation of whether the employee is required to work through the notice period or whether payment in lieu is being made. If payment in lieu, the calculation of the amount — based on average wages over the preceding twelve months under Section 7 of the Employment Ordinance — should be set out. Garden leave arrangements, where the employee is paid during the notice period but relieved of duties, should also be addressed.

Final Salary and Entitlements: A schedule of all amounts payable on termination, including outstanding wages to the termination date, payment in lieu of notice (if applicable), accrued but untaken annual leave calculated under sections 41 and 41A of the Employment Ordinance, pro-rata end-of-year payment under Part IIA, severance payment under Section 31G (if applicable), and long service payment under Part IVA (if applicable). Mandatory Provident Fund contributions accrued to the termination date must also be addressed.

Return of Company Property: A requirement for the employee to return all company property — access cards, laptops, mobile phones, company vehicles, credit cards, and any confidential documents — by a specified date, together with any consequences for failure to return property.

Post-Employment Obligations: Reference to any post-employment restrictive covenants in the employment contract — non-competition, non-solicitation, and confidentiality obligations — that continue beyond the termination date. Hong Kong courts apply the Employment Ordinance and common law reasonableness tests to such restrictions, and the letter should not purport to extend obligations beyond what the contract actually provides.

MPF and Benefits: Confirmation of the arrangements for the employee’s Mandatory Provident Fund account, health insurance coverage, and any other employee benefits, including the date on which benefits coverage ceases.

Signature and Date: Signature of an authorised officer of the employer — typically a director, senior HR officer, or company secretary — together with the date and the employer’s contact details for any queries. Using the forms-legal.com Termination Letter template confirms all required elements are addressed in the correct sequence, reducing the risk of omission and providing a solid foundation for any subsequent Labour Tribunal proceedings. Related documents such as a Warning Letter and a Settlement Agreement for Employment Matters complete the documentation framework.

Statutory References: Section 6 of the Employment Ordinance (Cap. 57) sets minimum notice requirements. Section 7 governs calculation of wages in lieu of notice. Section 9 sets out the grounds for summary dismissal. Section 23 requires wages to be paid within seven days of termination. Section 31A defines redundancy and Section 31G prescribes the severance payment formula. Section 32B prohibits dismissal by way of reprisal. Sections 41 and 41A govern accrued annual leave payments. The Labour Tribunal, the Equal Opportunities Commission, the Commissioner for Labour, and the Mandatory Provident Fund Schemes Authority are the key bodies with jurisdiction over termination disputes.