Key points to consider upon termination of contract

According to the Standard Employment Contract, both the employer and the domestic helper have the right to terminate the contract by giving one month’s notice or paying one month’s salary in lieu of notice. Notice of Termination of a domestic helper must be submitted to the Immigration Department within seven days.

Employers and domestic helpers may part ways due to finishing a contract or because the contract needed to be prematurely terminated. Either way, there are important points to cover in the parting-ways process. The aim of this article is to give a clear and actionable overview of the process, starting from management advice to the termination documents and entitlements. We have gathered below a few important notes for you to take into consideration when parting ways.

Management

Managing an employee when things are not working out smoothly has its challenges. This can be especially complicated when that employee is also living under the same roof and on a domestic work visa. Management solutions are aimed at heading off further negative consequences, bring about resolutions, and provide direction for the future. 

Feedback is crucial to helping domestic helpers improve their performance. There are several factors to make sure that feedback is delivered effectively. Make sure to select an appropriate time and place for feedback to be received and listened to. Ensure that the feedback is clear and understood. To do this, you may use strategies such as: providing your feedback in writing in addition to talking through them, or you may ask your domestic helper to repeat your instructions in order to make sure they understand. 

Performance Reviews

Performance Reviews are more formal way to provide feedback,  and to set the expectations for future performance. A Performance Review can include the following items:

• Employer’s expectation 
• Worker’s performance 
• Worker’s expected action 
• Timeline for expected action

Warning Letter

If you feel like there are certain things that are just not working, even when having given explicit feedback previously, we strongly recommend that you provide the domestic helper with a formal Warning Letter. The purpose of this is to address a performance or conduct issue, underline the required improved action, and specify the consequences if the expected improvements are not met. To do this, we recommend you include the following points in the Letter:

• Defined problem
• Suggested solution/ Required improvement 
• Timeline for expected action 
• Consequences of unmet expectations

Upon receipt of the Warning Letter, make sure that both you as the employer and the domestic helper sign the Warning Letter.

Parting Ways

You might have tried all of the above measures with no results. Though it pains you, you might feel that it may be time to part ways with the domestic helper.

Before you get started with the necessary documents and calculations, always make it your first step to contact the agency and inform them about the termination. The agency will be able to assist you with any questions you might have, and will make sure to report the termination to the relevant authorities in both Hong Kong and the domestic helper’s country of origin

Termination Process

1. Inform your employment agency if you are experiencing challenges.
2. Read and understand your legal obligations.
3. Inform the domestic helper about the termination and confirm the last working day with a Notice Letter.
4. Prepare termination documents.
5. Settle termination entitlements. 
6. Inform the Hong Kong Immigration Department.
7. Inform your employment agency and provide them with document copies.

1. Inform your agency

Reaching out to your agency in order to receive support with the termination process. If Fair Employment Agency is your agency, our Client Care Team is available to you to support employers in the way of management advice, communication tips, and information on rights and obligations as an employer. 

2. Read and understand your legal obligations.

For more clarification on termination entitlements, please see the Foreign Domestic Helper Guide from the Labour Department or contact your local Labour Relations Division. See other resources below.

3. Giving Notice

According to Clause 10 of the Standard Employment Contract, termination or resignation notice should be submitted in writing. When preparing this, always make sure to date correctly the date of notice and the last working date.

4. Termination Documents

In order to make the contract termination official, whether due to either a termination or resignation, the employer and domestic helper need to prepare and sign a few required documents. Below is a list of the required termination documents. Always make sure that both the employer and the domestic helper keep a copy of each document:

• Termination or Resignation Notice Letter: As mentioned above in point 3. Giving Notice
• Immigration Termination Form (ID407E)
• Termination Entitlement Receipt
• Reference/Recommendation Letter (Optional

Immigration Termination Form (ID407e): here. This form is the official notification to inform the immigration about the termination or expiry of a contract. An employer must inform the HK Immigration Department about the termination of a contract within 7 days of the last working date. 

• The domestic helper has the right to refuse the reason stated on the form by the employer. In that case, the domestic helper may sign a separate form, as it is not compulsory for both parties to sign on the same termination form. 
• For employers who end the contract due to relocation, it is important that you state this under ‘Reason’.
• If you have complaints about the domestic helper, you may submit an additional explanation letter to immigration for their reference when processing future visa applications.

Termination Entitlement Receipt

A Termination Entitlement Receipt lists out all of the termination entitlements included in the final termination payment and confirms that the payment has been made by the employer and received by the domestic helper. (Termination Entitlement calculation details are listed in the section below for your reference).

Reference/Recommendation Letter (Optional)
A Reference/Recommendation Letter is useful to domestic helpers when searching for a new job, as many employers would like to verify domestic helper’ previous working experiences. This is optional, and since this is a personal recommendation, there is no specific format. Even so, common points to cover on a Reference/Recommendation Letter are:

• Employment period 
• Job description 
• Worker’s skills and character 
• Employer’s contact method (if reference check is available)  

5. Entitlements

An important, but tricky, part of the termination process is calculating the entitlements owed to the domestic helper upon termination. The items included in this calculation vary depending on the situation, making the calculation quite confusing. For this reason, we have created a detailed guide below in order for employers to know which items to include and how to calculate them.

***Please note that the employer must settle the termination entitlement payment within 7 days after the last working date, and always remember to have the domestic helper sign the Termination Entitlement Receipt upon receiving the termination entitlements. Failure to provide a signed receipt with the right calculation can open you up for potential claims and complaints at the Labour Department as well as the relevant Consulates.

Wages and Food Allowance 

This includes Wages and Food Allowance for the days worked until the domestic helper’s last working day:

• • Daily wage calculation: Monthly wage*12 ÷ 365
  • Daily food allowance calculation: Monthly food allowance*12  ÷ 365

Wages in lieu of notice

If you intend to end the contract immediately, without giving any notice, you will need to pay one month’s salary in lieu of notice.

• If you have a food allowance arrangement with the domestic helper, food allowance needs to be included in the payment in lieu of notice.
• If you give the domestic helper one month’s notice but decide to ask the helper to leave before the end of the notice period, you are required to settle the remaining notice period with payment. 
• If the domestic helper resigns providing you with one month’s notice, but the domestic helper will be asked to leave immediately, you are required to cover the payment in lieu of notice.
• If the domestic helper resigns without giving one month’s notice, the domestic helper is required to cover the payment in lieu of notice.

Severance Payment

Domestic helpers are also eligible to Severance Payment provided they meet the necessary requirements. A domestic helper is entitled to severance payment if he/she: 

• Is dismissed due to, or the fixed term contract is not being renewed by reason of redundancy (note that relocation is considered a type of redundancy).

And

• Has at least 24 months of service with the same employer immediately prior to the termination .

Severance Payment Calculation: Last Monthly wage x 2/3 x reckonable years of service, service of incomplete year should be calculated on pro-rata basis. 

Long Service Payment

Domestic helpers are also eligible to Long Service Payment provided they meet the necessary requirements. A domestic helper is entitled to long service payment if he/she: 

• Has worked continuously for at least 5 years

  And 

• Is dismissed, or the fixed term contract is not being renewed by reason other than serious misconduct or redundancy. 

Or

• Is certified by a registered medical practitioner or registered Chinese medicine practitioner as permanently unfit for the present job and he/she resigns; 
• Is aged 65 or above and he/she resigns;
• Dies in service 

Long Service Payment Calculation: Last Monthly wage x 2/3 x reckonable years of service, service of incomplete year should be calculated on pro-rata basis

Food and Travel Allowance of HKD100

According to Clause 7(b) in the Standard Employment Contract (SEC) , a daily food and travelling allowance of $HK100 per day should be paid to the domestic helper per each day of travel to their place of origin through the most direct route.  

Payment in lieu of Untaken Annual Leave 

The domestic helper is entitled to payment in lieu of any entitled untaken annual leave. Please note that:

• The domestic helper will only be entitled to annual leave when he/she completes 3-month service.
• For an incomplete year of service, a domestic helper’s entitled annual leave will be calculated on pro-rata basis.
• The domestic helper is entitled to 7 paid annual leave days after her first year of service, with a total of 14 days upon completion of the first two-year contract. After that, the paid annual leave entitlement will increase progressively from 7 days to a maximum of 14 days according to the length of service.
  

Flight Ticket to Place of Origin OR Cash in Lieu 

According to Clause 7(a) in the Standard Employment Contract (SEC), the employer is required to provide the domestic helper with free passage back to his/her place of origin. In order to do this the employer can choose to either:

• Book the flight on behalf of the domestic helper
• Provide the domestic helper with cash in lieu of the flight ticket. Many employers do this as they can leave the flight arrangements to the domestic helper instead.
• If the contract is ending due to relocation, the domestic helper is able to process her next visa in Hong Kong. In this case, for convenience’s sake, it is recommended to settle with cash at a mutually agreed amount. 
• See guide by Labour Department on this

Please be aware of:

• The domestic helper’s place of origin, as you are required to pay for her travels all the way to her place of origin. This might require you to purchase a domestic flight in the Philippines or pay for additional transport costs.
• A 30kg baggage allowance has to be included in the flight ticket. 30kg baggage allowance is a requirement from the Philippines Consulate./ A 20kg baggage allowance has to be included in the flight ticket. 20kg baggage allowance is a requirement from the Indonesian Consulate
• The law does not specify any flight date requirements. As the worker can stay in Hong Kong for 14 days after termination, you can discuss the preferred return date with them.
• You can also choose to book a flexible flight ticket or a flight ticket that allows rebooking. 

It is highly recommended not to book the flight on the same date as the domestic helper’s last working date. The worker must be given time to verify her settlement with the agency and/or the relevant consulate to avoid any future complaints and claims. 

If you choose to provide the domestic helper with cash in lieu of flight ticket, please make sure that: 

• The amount provided covers the cost of the flight ticket within the domestic helper’s timeframe. It is recommended that you take a screenshot of the flight quoted and paid for as proof.
• The amount includes 30kg baggage allowance (a requirement from the Philippines Consulate)/The amount includes 20kg baggage allowance (a requirement from the Indonesian Consulate)
• The amount covers travel to the domestic helper’s place of origin in the Philippines, which might include a domestic flight or other local transportation fares.
  

You are encouraged to send your draft Termination Entitlement to your agency ahead of the termination date in order for us to help review and make any necessary adjustments before the last working day. Additionally, if you encounter any issues or concerns throughout the termination process, your agency may be able to provide further information and assistance.

On the last working day, if not earlier, make sure to:

• Settle Termination Entitlements and sign the relevant Termination Documents 
• Give a copy of ALL the Termination Documents to your domestic helper
• Allow enough time for your worker to pack her belongings 

Please remember that the domestic helper has the right to refuse to sign any documents that she disagrees with or does not understand. In this case, you should respect the domestic helper’s decision and allow them to obtain a copy of the relevant documents in order for them to verify these with the agency or the relevant Consulate.

6. Inform the Hong Kong Immigration Department.

The HK Immigration requires to be informed by either party about the termination within 7 days from the date of termination. Do this by submitting the ID407e form. Normally, the Immigration Department will follow up on this by issuing an acknowledgement letter to you within two weeks. You can do this online here.

7. Inform your employment agency and provide them with document copies.

If you haven’t done so yet, make sure to inform your agency once the termination has been carried out, in order for the agency to update their records and report to the necessary government bodies.

Make sure to provide the agency with the following information:

• Termination or Resignation Notice Letter
• Entitlement Calculation & Signed Receipt
• HK Immigration Termination Form (ID407e)
• Return flight ticket

Other resources

• Immigration Department: 2111 8435
• Labour Department’s 24-hour hotline for domestic helpers: 2157 9537
• Foreign Domestic WorkersHotline: 2157 9537
• Practical Guide For Employment of Foreign Domestic Helpers (English; Chinese)