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Employee Rights When an Undertaking is Transferred in Hong Kong

1. Employees’ Rights

There is currently no law in Hong Kong providing for an automatic transfer of an employee’s contract from one entity to another where there has been a change of ownership of business or a transfer of an undertaking. If an employee’s contract should be terminated as a result of the change of ownership of the business, he would be entitled to the usual entitlements upon termination provided that the relevant preconditions have been met.

If however, an employee is re-engaged or re-employed by the new owner subsequent to the transfer of a trade, business or undertaking, the period of employment of an employee in the trade, business or undertaking at the time of transfer shall count as a period of employment with the transferee, and the transfer shall not break the continuity of the period of employment.

2. Requirements for Predecessor and Successor Parties

The contractual relationship between a particular employer and employee cannot be transferred to another employer. The new owner will need to conclude new employee contracts with those employees who continue to be employed by the business after the transfer of ownership.

For more information, please contact L&E Global.
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