Redefining Continuous Employment in Hong Kong: The New Rule Every Employer Must Know
Overview
In Hong Kong, statutory entitlements of the employees are primarily governed by the Employment Ordinance (Cap. 57) (“EO”), with most statutory benefits, such as rest days, paid annual leave, statutory holiday pay, sickness allowance, severance and long service payment, available only to those engaged under a continuous contract.
Starting 18 January 2026, the criteria for determining continuous employment will change with the introduction of the new 417/468 Rule, replacing the longstanding 418 Rule. Employers should understand these updates to ensure compliance and manage workforce risks effectively.
What’s Changing – and Why It Matters?
Unlike many jurisdictions, Hong Kong’s EO does not distinguish between full-time, part-time, or casual employees when it comes to statutory benefits. Instead, eligibility depends on whether the employee is employed under a “continuous contract”, which is defined by minimum working hours.
Current 418 Rule: At present, an employee is deemed to be employed under a continuous contract if they have been employed by the same employer for four or more consecutive weeks and have worked at least 18 hours in each of those weeks.
When counting these working hours, it is not just the hours actually worked that matter. Certain time away from work such as certified sickness or injury for more than 48 hours, absences because of disease control measures, or other periods of absence recognised by law or agreement that the employee is treated as continuing in employment, are also included in the calculation of working hours, while absence due to illegal strikes or lock-outs are not. For these purposes, a week means a week ending on Saturday.
New 417/468 Rules (from 18 January 2026): The new rules retain the four consecutive weeks requirement but the definition of a qualifying week changes:
- 417 Rule: A week will count if the employee has worked at least 17 hours; or
- 468 Rule: If the employee has worked less than 17 hours in a week, that week will still count if, together with the 3 immediate preceding weeks, the total number of the working hours add up to at least 68 hours.
As long as the working hours threshold in one of either the 417 Rule or 468 Rule is met, that week will count for the purpose of determining if the employee is employed under a continuous contract.
As with under the current 418 Rule, certain authorised absences are included as working hours and a week continues to mean a week ending on Saturday.
The new rules will not apply retrospectively. The current 418 Rule applies to all employment periods before 18 January 2026, and the 417 Rule / 468 Rule will take effect thereafter.
Navigating the New Rules – How to determine if an employee is employed under a continuous contract?
To assess whether an employee is employed under a continuous contract, employers need to check if the relevant working hours requirements are met under the new rules. If there is any disagreement, the employer bears the burden of proving that it is not continuous. The examples below illustrate how the new 417/468 Rule applies.
Example – the simple case (417 Rule)
| Hours worked by the employee | Week count towards “continuous contract” ? | |
| Week 1 | 18 | Yes – 417 Rule |
| Week 2 | 20 | Yes – 417 Rule |
| Week 3 | 19 | Yes – 417 Rule |
| Week 4 | 17 | Yes – 417 Rule |
The employee works at least 17 hours each week for four consecutive weeks, so by the end of Week 4, the employee meets the criteria for continuous employment under the 417 Rule.
Example – one short week (468 Rule)
| Hours worked by the employee | Week count towards “continuous contract” ? | |
| Week 1 | 20 | Yes – 417 Rule |
| Week 2 | 18 | Yes – 417 Rule |
| Week 3 | 17 | Yes – 417 Rule |
| Week 4 | 15 | Yes – 468 Rule |
The employee works at least 17 hours in Weeks 1, 2, and 3, so those weeks count under the 417 Rule. In Week 4, the employee works only 15 hours, which is less than 17. However, if you add up the hours for Weeks 1 to 4 (20 + 18 + 17 + 15 = 70 hours), the total is more than 68 hours. This means Week 4 still counts towards a continuous contract under the 468 Rule. Again, by the end of Week 4, the employee will be considered as being employed under a continuous contract.
When is continuity of employment broken?
Under the current 418 Rule, continuity of employment is broken if an employee does not work any hours in a given week. This is because the 418 Rule requires an employee to work at least 18 hours in each of four consecutive weeks; missing a week entirely means this threshold is not met, and the chain of continuous employment is interrupted.
In contrast, the new rules introduce greater flexibility. While the 417 Rule, requiring at least 17 hours of work in a week, would not be satisfied in a week with zero hours, the 468 Rule provides a safeguard. The 468 Rule allows employers to look back over the three preceding weeks and, if the total hours worked across the four-week period (including the week with zero hours) reach at least 68, continuity of employment is preserved. This approach recognises the realities of fluctuating work patterns and ensures that employees are not unfairly deprived of certain benefits for occasional weeks with no work, provided their overall engagement remains substantial.
Example
| Hours worked by the employee | Week count towards “continuous contract” ? | |
| Week 1 | 18 | Yes – 417 Rule |
| Week 2 | 40 | Yes – 417 Rule |
| Week 3 | 40 | Yes – 417 Rule |
| Week 4 | 40 | Yes – 417 Rule |
| Week 5 | 0 | Yes – 468 Rule |
| Week 6 | 0 | Yes – 468 Rule |
| Week 7 | 0 | No – both 417 Rule and 468 Rule are not satisfied |
In Weeks 1 to 4, the employee works at least 17 hours each week, so each week counts under the 417 Rule. By the end of Week 4, the employee will be considered as being employed under a continuous contract.
In Weeks 5 and 6, the employee works zero hours, but the total number of hours worked in each four-week period (including the three preceding weeks) is still more than 68 hours, so these weeks count under the 468 Rule. The employee remains employed under a continuous contract in Weeks 5 and 6.
However, in Week 7, the employee again works zero hours. If you add up the hours for Weeks 4 to 7 (40 + 0 + 0 + 0 = 40 hours), the total is less than 68 hours, and the employee did not work at least 17 hours in Week 7. Therefore, neither the 417 Rule nor the 468 Rule is satisfied, and continuity of employment is broken in Week 7.
Continuity of employment will be broken if, in any four consecutive week period, the employee does not work at least 17 hours in any week and the total number of hours worked across those four weeks is less than 68 hours. Unless you track the hours accurately, the safest way to ensure a break in continuity perhaps is to have four consecutive weeks with no work assigned.
Practical tips for employers
Accurately identifying whether an employee is engaged under a continuous contract is essential. Misclassification of employment status can expose employers to significant civil and criminal liabilities. To navigate this transition effectively, employers should:
- Audit and Update Internal Systems: Review engagement practices (especially for employees not currently under a continuous contract) and working-hour records to ensure they are up to date and compliant with the new rules.
- Maintain Accurate Records: Implement robust systems for tracking weekly working hours, absences and the reasons for those absences. This is essential for determining eligibility for continuous contract status and to ensure compliance with the EO.
- Educate and Communicate: Carefully consider how work schedules and assignments may impact continuous employment status, particularly during the transition to the new rules. Ensure line managers (especially those responsible for rostering) and payroll teams are fully briefed and trained on the new requirements.
- Seek Legal Advice: If you are unsure about any aspect of the new requirements, seek legal advice to ensure compliance.
