How to prepare an employment contract?

Key Takeaways For Founders

• An employment contract must inform the employee of core conditions (wages, wage period, notice length, end-of-year payment) under section 44 of the Employment Ordinance. Any term that reduces statutory rights is void under section 70.
• For directors, go far beyond job title and salary: spell out banking authorities, transaction limits, dual-approval requirements, response-time SLAs to instructions, signing authority, good-faith and conflict-of-interest obligations, sickness contingencies, and reasonable post-termination restrictions.
• Understand the operational gap between standard staff and director contracts using a structured checklist before drafting.
• Hong Kong has no statutory standard working hours or maximum weekly hours for most adult employees. For senior roles, explicitly require reasonable after-hours availability for urgent matters.
• Non-compete clauses are enforceable only if they protect legitimate interests and are reasonable in scope, duration, and geography, courts apply stricter scrutiny to junior roles than to senior directors.
• Document everything in writing. Changes require consultation and, on request, a written copy (section 45).

After completing Hong Kong company formation and registration, the next critical step for many founders is appointing or hiring a director (or senior executive who also serves as a director). Most entrepreneurs can act as directors themselves, as Hong Kong law does not require a local resident director. However, foreign investors or busy shareholders often lack the bandwidth for day-to-day operations and prefer hiring an experienced executive to lead the business and represent their interests locally.

Many founders download a generic employment contract template online or rely on basic HR wording. That approach works for junior staff. It creates serious operational, banking, and legal risks when the person sits at the heart of your company, controlling bank accounts, signing on the company’s behalf, and making day-to-day decisions.

This guide is written specifically for entrepreneurs and founders who have just started a Hong Kong company. It goes beyond the minimum requirements of the Employment Ordinance (Cap. 57) and the Labour Department’s Concise Guides. We focus on the practical details founders frequently forget when drafting an employment contract for a director-level role. These details protect both parties, reduce disputes, and align with director fiduciary duties under the Companies Ordinance (Cap. 622).

Get Started HK specialises in Hong Kong company formation, accounting, and related support for non-local founders. We emphasise planning ahead, exactly as we do in pre-incorporation advice, so you avoid costly problems later. This is not legal advice; consult a practising solicitor for your specific situation. We are not an employment agency.

What Most Templates Miss (and Why Founders Get Burned)

Most generic employment-contract templates and standard accounting-firm samples only cover the statutory minimums (wages, notice, leave). They almost never address the operational realities of hiring a director in a newly formed Hong Kong company. Specifically, they miss:

• Explicit banking and financial authority limits (daily/transaction caps, dual-signatory rules, restrictions on changing mandates or opening new accounts)
• Response-time SLAs for instructions (same-day or 24-hour action on banking/regulatory matters)
• Contingency and backup plans for the director’s sudden sickness or unavailability (who temporarily holds the banking keys)
• Clear after-hours / weekend emergency availability language tailored to senior operational roles
• Properly tailored non-compete and non-solicitation clauses that actually stand a chance of being enforced against a director (not blanket junior-staff wording)
• Direct mirroring of fiduciary duties (good faith, conflict disclosure, proper purpose) into concrete contractual obligations

A template that works for a clerk leaves a founder exposed when the hire controls the company’s bank accounts and signing power.

Standard Staff Contracts vs. Director Employment Contracts

Variable	Standard Staff Contract	Director Employment Contract
Banking Control & Financial Authority	No direct access to corporate bank accounts; limited to minor petty cash or business expenses with pre-approval.	Explicit daily/transaction limits, mandatory dual-signatory approvals for large wires, and strict authorization protocols for changing account details.
Notice Period & Probation	Typically 1 month (or statutory 7-day minimum post-probation); standard handover of daily tasks.	1 to 3+ months; structured transitional handover of banking keys, signing authority, statutory registry duties, and client relationships.
Non-Compete & Restrictive Covenants	Rarely enforceable in HK courts; blanket bans on junior roles are routinely struck down.	Tailored, reasonable post-employment restrictions (3–6 months) protecting trade secrets, key client lists, and staff solicitation.
Working Hours & After-Hours Availability (SLA)	Fixed standard hours (e.g., Mon–Fri, 9–6); no legal duty to respond to business demands outside standard hours.	Contractual obligation for reasonable emergency availability (including Saturdays/weekends) and strict response-time SLAs for time-sensitive corporate transactions.

Statutory Baseline: What Every Employment Contract Must Cover

Under section 44 of the Employment Ordinance, before employment begins the employer must clearly inform the employee of:

• Wages (rate, overtime rate if any, allowances)
• Wage period
• Length of notice to terminate the contract
• End-of-year payment details (if applicable)

A written contract is not mandatory, but it is strongly recommended. Any term purporting to extinguish or reduce rights under the Ordinance is void (section 70). Continuous-contract employees (generally those working at least the required hours over four weeks—note the updated “468” threshold effective from 2026) enjoy additional protections such as rest days, paid annual leave, and sickness allowance.

The Labour Department’s Concise Guides (Chapters 3 on Wages, 4 on Rest Days/Holidays/Leave, and 5 on Sickness Allowance) set out the practical rules:

• Wages become due at the end of the wage period and must be paid within seven days.
• Continuous-contract employees are entitled to at least one rest day in every seven days (a continuous 24-hour period free from work).
• Paid annual leave starts at 7 days after 12 months and rises to a maximum of 14 days.
• Sickness allowance (generally four-fifths of average daily wages) applies after four consecutive days of sick leave when paid sickness days have been accumulated (two per month in the first year, four thereafter, capped at 120 days).

Generic templates usually stop here. For a director they are incomplete.

Director-Specific Duties: Banking, Signing Authority, and Operational Control

A director is not a standard employee. Under the Companies Ordinance, directors owe fiduciary duties: act in good faith in the best interests of the company, exercise powers for proper purposes, avoid conflicts of interest, and exercise reasonable care, skill, and diligence. These duties should be expressly mirrored and operationalised in the employment contract.

Founders commonly forget to detail:

Banking and payment authorities

Specify exactly what the director may do with company bank accounts:

• Daily or per-transaction limits (e.g., up to HK$100,000 without further approval).
• Higher limits (e.g., up to HK$500,000) only with written consent from another director, the CFO, or a designated second signatory.
• Whether the director may change standing instructions, add/remove signatories, or open new accounts, and under what dual-control rules.
• Obligation to act on written or emailed instructions within a defined timeframe (e.g., same business day or within 24 hours for urgent matters).

These provisions are almost never found in ordinary employment contracts. They prevent ambiguity when the director holds the keys to the company’s cash flow, especially important for newly incorporated companies that have just opened bank accounts.

Get Started Client Scenario 1: How Dual-Approval Banking Rules Saved an E-Commerce Entity

A European tech group established a Hong Kong holding company to manage Asian supplier payments. They hired a local Managing Director to run daily operations. Following Get Started HK’s governance checklist, the group inserted a dual-approval mandate in the director’s contract: any wire transfer exceeding HK$200,000 required electronic counter-authorization from the overseas parent board.

Six months after launch, the local director fell victim to a sophisticated business email compromise (BEC) phishing scam, receiving a forged instruction to transfer HK$1.5 million to an overseas account. When the director attempted to execute the wire, the banking system triggered the contractual dual-approval hold. The overseas board flagged the anomaly during verification and stopped the transaction immediately. Had the founder relied on a standard template without explicit transaction caps and dual-signatory clauses, the single-signatory transaction would have cleared instantly, wiping out the new entity’s working capital.

Signing and representation authority

State the scope of the director’s power to bind the company (contracts, government filings, banking documents, etc.). Require that the director always act in good faith, disclose any actual or potential conflict of interest immediately, and refrain from using company information or opportunities for personal gain. These clauses reinforce statutory and common-law fiduciary duties and make expectations crystal-clear from day one.

Sickness, Absence, and Contingency Planning for Key Roles

Ordinary employees can be absent under the sickness-allowance rules. For a director who controls banking and critical functions, the contract should go further:

• Clear notice and medical-certificate requirements aligned with the Ordinance.
• Explicit backup arrangements: who may temporarily assume banking or signing authority, how quickly a replacement director or authorised person can be appointed, and any interim dual-control rules.

You can still provide a contractual notice period, but build in the ability to protect company operations.

Working Hours, Flexibility, and After-Hours Availability

Hong Kong has no statutory standard working week or maximum hours for most adult employees (unlike many Western jurisdictions that impose 48-hour averages or explicit “right to disconnect” rules). Rest days, statutory holidays, and annual leave remain protected.

For a director role, state that normal hours may be 9–6 (or whatever baseline you choose) but that the position requires reasonable flexibility. Explicitly include the duty to remain contactable and to respond to urgent calls, emails, or messages outside office hours when the company’s interests require it. Hong Kong law does not prohibit employers from contacting employees after hours; stating the expectation in the contract for a senior operational role removes later disputes.

Get Started Client Scenario 2: The Cost of a Missing Operational & Weekend Availability Clause

An overseas investment firm set up a Hong Kong company to acquire regional commercial assets. They hired a senior local director on a standard HR template that defined working hours strictly as “Monday through Friday, 9:00 AM to 6:00 PM.”

On a Saturday morning, a critical acquisition opportunity required an urgent, time-sensitive earnest money deposit of HK$2 million via counter transfer before a noon deadline. Commercial bank branches in Hong Kong open on Saturday mornings for over-the-counter services while online transaction limits sometimes prevented a remote transfer. The overseas board contacted the director to walk to the local bank branch to complete the transfer.

The director refused, citing that their employment contract did not require weekend work or emergency coverage. The director opted to handle the transfer on Monday morning instead. As a result, the transaction expired at noon on Saturday, the seller awarded the deal to a competing bidder, and the firm lost a high-value asset.

To avoid such operational failures, senior contracts should include an explicit emergency response clause and weekend availability SLA, accompanied by appropriate executive remuneration to compensate for the requirement.

Notice Periods and Non-Compete Clauses for Senior Roles

Notice periods are governed by section 6 of the Employment Ordinance. During the first month of probation, either party may terminate without notice. Thereafter, the contractual notice applies (minimum 7 days if specified; otherwise at least 1 month for continuous contracts after probation). Payment in lieu is always available.

For directors and senior management, longer notice (commonly 1–3 months) is market practice and gives the company time to arrange an orderly handover of banking and signing authorities.

Non-compete and restrictive covenants

Post-termination non-compete clauses are restraints of trade and are void unless they protect a legitimate proprietary interest (trade secrets, confidential information, customer connections) and are reasonable in duration, geography, and scope. Courts are more willing to uphold carefully drafted restrictions against senior employees and directors than against junior staff. A cleaner or low-level employee cannot realistically be prevented from joining a competitor; a director who has run the company’s banking and client relationships can be subject to a tailored, reasonable restriction.

Hong Kong case law consistently reinforces that courts will strike down unreasonable post-employment restraints. For instance, in PCCW-HKT Telephone Ltd v. Interactive Telecommunications Ltd, the High Court highlighted that non-compete clauses designed merely to stifle market competition without protecting a specific, legitimate business interest are unenforceable as contrary to public policy. Similarly, in PCCW Services Ltd v. VF Hong Kong Ltd, the court reiterated that wide geographical scopes or blanket bans across entire industries without time limits will be declared void in their entirety, Hong Kong courts will not “rewrite” an over-broad clause to make it reasonable.

Tailor the clause to the director’s actual role, limit it to competing businesses in relevant markets, and keep the duration proportionate (often 3–6 months for many senior roles, longer only with strong justification). Non-solicitation of clients or staff is often easier to enforce than a pure non-compete. Always seek legal advice on drafting; a poorly worded clause gives false comfort.

Common Founder Mistakes and How to Avoid Them

• Relying on a generic template that never mentions banking limits, dual control, or response SLAs.
• Omitting explicit good-faith, conflict-disclosure, and fiduciary-language clauses.
• Failing to plan for the director’s sudden unavailability.
• Inserting an unenforceable blanket non-compete.
• Leaving working-hour flexibility and after-hours expectations unstated.
• Changing material terms without consultation and written confirmation.

A well-drafted director employment contract sits alongside your company’s articles, board resolutions, and bank mandate. Together they form the operational backbone of a newly formed Hong Kong company.

How This Links to Company Formation and Ongoing Support

At Get Started HK, we help foreigners and entrepreneurs incorporate Hong Kong companies, open bank accounts, and establish proper governance from day one. The same planning mindset applies to hiring your first director: clear written terms prevent disputes, protect the company’s assets, and let you focus on building the business.

If you need a starting framework tailored to a director role, practical experience from other founder-led companies, or support with company secretarial and accounting matters, our team is happy to share insights (while reminding you that independent legal advice remains essential).

Draft the contract carefully, align it with both the Employment Ordinance and directors’ duties under the Companies Ordinance, and treat the document as a living operational tool rather than a formality. That is the difference between a template and a founder-ready agreement.

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Frequently Asked Questions