In recent years, the Hong Kong government has introduced measures to attract mainland enterprises and talent to the region. Mainland businesses must pay attention to differences in employment laws between the two jurisdictions. This article compares and analyses the legal requirements for employee dismissal in both regions.

Grounds for termination

In mainland China, employee dismissal must be based on statutory grounds, with arbitrary termination prohibited. The Labour Contract Law outlines valid grounds for unilateral termination including serious misconduct, gross negligence, incompetence, inability to work after a medical treatment period, and large-scale layoffs because of business or economic circumstances.

Hong Kong follows the common law principle of freedom of contract, allowing employers and employees to freely enter into or terminate employment agreements. Termination typically requires verbal or written notice, subject to specific restrictions under the Employment Ordinance. These include prohibitions on dismissing employees during pregnancy or paid sick leave, or for participating in a trade union or its activities. Similar provisions are found in article 42 of mainland China’s Labour Contract Law.

Notice and payment in lieu

In mainland China, the notice period is set by law. An employee may be dismissed without prior notice in cases of the employee’s misconduct such as serious offences or gross negligence. For terminations under article 40 of the Labour...

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