To what extent can employers implement the following cost-reduction strategies as a result of COVID, and what are the primary limitations on each?
There is no provision under the Employment Ordinance on no pay leave and it remains for the parties to reach a mutually agreeable arrangement. If an employee’s remuneration depends on his being provided by the employer with work, and no work is provided to him and no wages is paid for more than half of the total working days in any four consecutive weeks or one-third of the total number of normal working days in any 26 consecutive weeks, he shall be taken to be laid off and may be entitled to severance payment.
- Salary reductions.
Salary reduction is prohibited under the Employment Ordinance save for certain specific exceptions. Failure to pay wages on time willfully and without reasonable is an offence. That said, an employer may reach an agreement with the employee for the variation of terms of employment including a change in salary level.
The redundancy laws of the Employment Ordinance will apply. Eligible employees will be entitled to statutory severance payment and all employees made redundant shall be entitled to termination payments under the statue and their own employment contracts. Any decision to terminate an employee’s employment should never infringe any anti-discrimination ordinances.
- Facility closure.
The change in work location may, depends on the circumstances, amount to a material change of the terms of employment and require the employee’s consent.