Termination Letter Hong Kong: Cap. 57 ss. 6, 7 and 9

A termination letter is the employer's written notice that the employment relationship ends on a stated date. Hong Kong law prescribes no form for it. Sections 6 and 7 of the Employment Ordinance let either party end a continuous contract by giving notice or paying wages in lieu, orally or in writing, so a verbal dismissal is lawful. It is also a gift to the other side in a dispute: the employer carries the burden of proving what was said and what was offered.

Practitioners keep it apart from three neighbouring documents. A resignation acceptance responds to the employee's decision and carries none of the employer's notice obligations. A mutual separation agreement is a negotiated settlement in which the employee releases claims for an agreed sum, and it sits outside the notice machinery entirely. A certificate of service is a courtesy issued after departure. Our employment and HR templates drafted for the Employment Ordinance keep these instruments separate, because merging them into one termination letter is how employers waive a notice right or promise a reference they later regret.

Termination sits almost entirely inside Cap. 57. Section 6 lets either party end a continuous contract by notice: the contractual period where the contract fixes one, but never less than seven days, and not less than one month where the contract is silent. Section 7 lets the paying party buy out that period instead, on the average daily or monthly wages over the preceding twelve months, with unpaid or partly paid periods stripped out of the average. Section 9 preserves summary dismissal without notice or payment in lieu where the employee wilfully disobeys a lawful and reasonable order, is guilty of misconduct, fraud or dishonesty, or is habitually neglectful of duties. The employer proves the ground, and a single lapse rarely carries it.

Section 25 fixes the money clock. Every termination payment except statutory severance falls due as soon as practicable and within seven days of the last day, severance running instead to two months from the employee's written claim. Interest accrues on late wages, and a wilful failure is an offence that exposes directors personally. Layered on top are the statutory bars no termination letter can cure: section 15 protects a pregnant employee who has served notice of pregnancy, section 33(4B) forbids termination on a paid sickness day, and section 48 of the Employees' Compensation Ordinance (Cap. 282) blocks dismissal of an injured employee before compensation is determined. The Labour Department tables on notice and payment in lieu under Cap. 57 set out the arithmetic the Tribunal applies.

Redundancy is the most common trigger. A closure, a relocation out of Hong Kong or the disappearance of a function generates a dismissal that has to be papered properly. An employee with 24 months of continuous service is owed a severance payment under section 31B and will expect the letter to account for it. Restructuring inside a group raises the same issue more quietly: moving someone to a sister company is a termination and a fresh hire unless continuity is expressly preserved. Poor performance and repeated conduct problems form the next cluster, and there the termination letter follows a warning trail rather than replacing it. Probation confirmations that go the other way are the third, usually served on seven days.

Two situations catch employers out. Where the departing employee is a director or bank signatory, the dismissal must be sequenced with the corporate paperwork, and our Hong Kong company and incorporation documents carry the resolutions that strip authority as the employment ends. Where the employee holds a work visa, the last day drives both the immigration position and the tax filing, so it must be firm rather than floating.

• The identification of the parties and the contract names the employer exactly as it appears on the Business Registration Certificate, the employee as named in the original contract, and the date of that contract. A letter issued on group letterhead by an entity that is not the contracting employer invites an argument at the Tribunal about who dismissed whom.
• The last day of employment is separated from the date notice is given, because that distinction decides whether the twelve month wage average runs to the notice date or the termination date.
• The notice election records whether the employer gives contractual notice, pays wages in lieu, or combines a short worked period with a bought out balance, and cross checks the contractual period against the statutory floor.
• The ground for termination stays optional and is drafted narrowly where it is used, since a stated reason becomes the reason the employer must defend if a Part VIA claim follows.
• The final settlement schedule itemises outstanding wages, payment in lieu, accrued annual leave, pro rata end of year payment and any severance or long service payment. The seven day deadline is stated on the face of the termination letter.
• The return of property and confidentiality reminder lists devices, access cards, records and keys, and restates the surviving confidentiality obligation. Where the employee occupies a company leased flat, it dovetails with the surrender arrangements in our Hong Kong tenancy and property documents.

Probationers are the group employers handle most carelessly. Within the first calendar month of probation the contract can end on the day, with no notice and no payment in lieu, but that window shuts at one month and the seven day floor governs from then on. Probation suspends nothing else: statutory holidays, the wage rules and the anti-discrimination ordinances bite from day one, and a probationer dismissed on a discriminatory ground has the same claim as anyone else.

Part-time and irregular hours staff changed status when the continuous contract threshold moved from the old 418 rule to the 468 rule. An employee now qualifies after four or more weeks if weekly hours reach 17, or if the hours across that week and the three preceding weeks total 68. Rosters deliberately built below 18 hours a week no longer keep staff outside the continuous contract regime, so notice rights, annual leave pay and severance eligibility reach a population many employers still treat as casual.

Employees with two years or more of service carry the heavier bill. Severance under section 31B follows redundancy or lay-off after 24 months, and long service payment under section 31R follows most other dismissals after five years. Part VIA gives that same group a remedy where no valid reason exists among the five statutory grounds. Since the transition date of 1 May 2025, mandatory employer contributions to the Mandatory Provident Fund can no longer be applied against the part of severance or long service payment referable to later service, though voluntary contributions and service based gratuities still can.

Non-profit and subvented employers get no dispensation. A registered society, a company limited by guarantee or a subvented service unit is an employer like any other under Cap. 57, and the constitutional documents in our charity and society governance templates usually require a committee resolution before a paid officer is dismissed. Skipping it turns a valid statutory notice into an invalid internal act.

You begin by choosing the route, notice or payment in lieu or summary dismissal, because the rest of the letter reshapes around that choice. The form asks for the contractual notice period and compares it against the statutory minimum, flagging any clause that drops below seven days. Wage details come next, and the guided fields separate basic wages from the commission and allowances that count when the twelve month average is built. You then enter the last day, and the termination letter calculates the deadline section 25 imposes.

The settlement schedule is assembled line by line, so accrued annual leave, pro rata end of year payment and any severance entitlement appear separately rather than as one figure the employee cannot check. The summary dismissal variant swaps in the statutory ground and the investigation record. You finish with the property return list and the signature block, then download in Word to adapt the wording or in PDF to issue as it stands.

The most expensive error is treating summary dismissal as a shortcut out of a difficult exit. Section 9 is a narrow gate, and a Tribunal that rejects the ground awards payment in lieu, severance or long service payment, often with costs. Close behind sits the seven day settlement deadline, missed because payroll runs monthly and nobody adjusts the cycle. Late payment triggers interest and, where the failure is wilful, prosecution. A third recurring problem is the stated reason: no obligation exists to give one, yet a termination letter routinely offers a vague justification that later locks the employer into defending it.

Two administrative traps complete the picture. Form IR56F goes to the Commissioner at least one month before cessation under section 52(5) of the Inland Revenue Ordinance (Cap. 112), and where the employee is leaving Hong Kong the IR56G route requires payments to be withheld for one month or until the letter of release arrives. Releasing the final settlement to a departing expatriate before tax clearance can leave the employer paying that tax twice. The second is residual authority: a senior employee may hold a bank mandate or a power of attorney that outlives the job, and revocation runs through the powers of attorney and authorisation letters, not the dismissal.