Key Developments in Hong Kong Employment Law: Looking Ahead to 2026

2025 has seen a series of significant employment law updates in Hong Kong that employers should note. These include an adjustment to the minimum wage, the long-anticipated abolition of MPF offsetting, new diversity and reference checking requirements for listed companies and financial institutions, and an expanded definition of “continuous contract” set to take effect in January 2026. Alongside these, recent court decisions provide further clarity on key employment issues. In this article, we summarise the key developments from 2025 and highlight what employers should watch out for as we approach 2026.

Key Developments in 2025

1. Minimum Wage Increase: Effective 1 May 2025, the statutory minimum wage increased to HK$42.10 per hour and the monthly cap for recording work hours increased to HK$17,200. Read more.

2. Abolition of MPF Offsetting: From 1 May 2025, employers can no longer offset post-transition severance or long service payments against Mandatory Provident Fund (MPF) scheme contributions. Pre-transition offsets remain valid, and a government subsidy scheme is available to support employers through this transition. Proactive planning is essential to manage cost implications and ensure compliance. Read more.

3. Workforce Diversity Disclosure for Listed Companies. Starting 1 July 2025, listed companies in Hong Kong must adopt and disclose workforce diversity policies and report annually on board diversity implementation. This move reinforces diversity and inclusion as a boardroom priority. Read more.

4. Mandatory Reference Checking (MRC). The Hong Kong Monetary Authority’s MRC scheme expanded from 30 September 2025, covering a broader range of regulated roles. Financial institutions must now conduct rigorous vetting of candidates’ misconduct histories, raising the bar for due diligence in recruitment. Read more.

5. Judicial Clarifications.

• Marital Status Discrimination: Cheuk v FWD clarified that “marital status” under the Sex Discrimination Ordinance refers to general status, not marriage to a specific individual—narrowing the scope of protection. Read more.
• Frustration of Contract: Stahl v Brilliant Jet reaffirmed that frustration in employment requires an unforeseen, external event making performance impossible, with no fault by either party. Read more.
• Group Employment Arrangements: Li v Hoilung Group highlighted the critical need to clearly identify the employing entity in cross-border or multi-entity structures. Read more.
• Duty of Care in Adverse Weather: Khan v Delivery Hero reinforced the obligation for robust safety protocols during extreme weather events. Read more.
• Work Injury Claims Threshold: Chan v Elegantia College clarified that, under the Employees’ Compensation Ordinance, only injuries arising from an “accident”— interpreted as an unusual, inappropriate, sudden, and unfortunate event—are compensable. Routine HR actions, even if they cause emotional distress, typically do not meet this threshold. Read more.

What to Expect in 2026

1. Expanded “Continuous Contract” Definition. Effective 18 January 2026, the existing “418 Rule” for determining whether an employee is employed under a “continuous contract” (hence entitled to majority of the benefits under the Employment Ordinance) will be replaced by the new “417/468 Rule”.. Under the new rule, an employee will qualify as employed under a “continuous contract” if, in any four consecutive week period, they have either (i) worked at least 17 hours in a given week, or (ii) worked a total of 68 hours or more over that week and the three preceding weeks. In other words, a week will count towards the four consecutive weeks requirement if either threshold is met, and the thresholds can be applied interchangeably within any four-week period. Read more.

Action point: Audit current workforce arrangements and update HR systems and policies to ensure compliance with the new eligibility criteria.

2. Addition of Easter Monday Holiday. From 2026 onwards, Easter Monday will be added as a new statutory holiday, bringing the total to 15 statutory holidays. This change forms part of the Employment (Amendment) Ordinance 2021, which aims to gradually align the number of statutory holidays with the number of general holidays, reaching 17 by 2030.

Action point: Update the holiday policies and payroll systems to ensure employees are granted the new statutory holiday and receive statutory holiday pay in accordance with the Employment Ordinance.

3. Digital Platform Worker Protections. There is currently no specific piece of legislation on the rights and protections of platform workers and the Hong Kong courts have ruled variably on whether platform workers are employees or independent contractors. The 2025 Policy Address alludes to legislative changes to improve work injury compensation mechanisms. This reflects a growing global trend toward redefining employment relationships in the gig economy, balancing flexibility with fair protection. Read more.

Action Point: Review platform worker contracts and control mechanisms to mitigate misclassification risks. Consider implementing voluntary safeguards (such as clear contractual terms and insurance coverage) to mitigate legal risks. Stay alert to any legislative developments.

4. AI in HR and Compliance. Artificial intelligence (AI) is increasingly integrated into HR functions including recruitment, performance management and job design. While the wide adoption of AI offers significant efficiency gains, this also introduces heightened risks such as algorithmic bias, privacy breaches and lack of transparency in automated decisions. Employers must be vigilant in ensuring that AI tools comply with anti-discrimination and privacy laws. The Privacy Commissioner may conduct compliance checks on AI’s impact on personal data privacy. Where AI-driven restructuring leads to redundancies, it is essential to ensure that termination processes meet all legal requirements, including fair selection criteria and proper consultation.

Action Point: Regular audits of AI systems, transparency in decision-making, and clear communication with employees about AI use are recommended best practices.

5. Staff Misconduct in Digital Age. Digital misconduct—ranging from online harassment to misuse of confidential information—is on the rise. Investigations require careful handling of digital evidence, privacy, and procedural fairness. For financial institutions, incidents may trigger mandatory reporting to regulators such as the SFC and HKMA.

Action Point: Update policies and training on digital conduct. Ensure readiness for regulatory reporting and review investigation protocols and monitoring practices.

6. Mental health conditions. Mental health conditions continue to be important priorities for many employers. Mental health conditions may fall within the definition of “disabilities” under the Disability Discrimination Ordinance meaning employees are protected from discrimination and harassment under the law. Employers should foster an open and supportive environment, ensure fair treatment, and consider reasonable adjustments for those experiencing mental health challenges.

Action Point: Review policies and provide training to support mental health, prevent discrimination and harassment and encourage a positive workplace culture.

For further information, please contact our Hong Kong Employment Team.