What Should a Hong Kong SME Include in an Employee Handbook? Building an HR Policy Framework from Scratch
What Should a Hong Kong SME Include in an Employee Handbook? Building an HR Policy Framework from Scratch
Many Hong Kong SMEs face a familiar situation: the company already has more than ten or twenty employees, but questions about leave, lateness, overtime, probation, remote work and even employee handover after resignation are still decided by asking the owner each time or through an ad hoc WhatsApp message.
This may look flexible in the short term, but over time it can create three problems:
• Different employees receive different answers on the same issue;
• New joiners do not understand what the company really expects; and
• When a dispute arises, the company may find it difficult to show that it has always applied clear and consistent management arrangements.
An employee handbook does not have to be dozens of pages long, and it should not simply copy a large corporation’s documents. For an SME, the priority is to build an HR policy framework that is clear, workable and consistent with the way the company actually operates.
If your company has these problems, the question may be more than whether you need a handbook
• Different supervisors handle the same leave or lateness issue differently;
• The owner or administrative staff answer the same HR questions repeatedly every day;
• Company policies are scattered across WhatsApp, emails and different Excel files;
• The company wants to introduce a new benefit or working arrangement but is concerned that it may conflict with the employment contract or the law; or
• The company has previously lacked sufficient records to explain clearly why a particular employment decision was made.
These situations often indicate that the company needs more than an “employee handbook”. It needs an HR framework made up of policies, procedures, forms, responsibilities and the way managers apply them in practice.
What is the difference between an employee handbook and an employment contract?
An employment contract records the employment conditions of an individual employee, such as the position, wages, wage period, notice period and end-of-year payment arrangements. Under Section 44 of the Employment Ordinance (Cap. 57), an employer must clearly inform an employee of the relevant conditions of employment before employment begins. Where the contract is in writing, the employer must also provide the employee with a copy of the contract.
An employee handbook sets out company-wide work rules and management principles, such as:
• Daily working arrangements;
• The process for applying for leave and reporting absence;
• Workplace conduct standards;
• Confidentiality and the use of company assets; and
• Complaint, disciplinary and employee communication channels.
The two documents should not contradict each other. An employee handbook must not be used to reduce the rights granted to employees under the Employment Ordinance (Cap. 57), the Minimum Wage Ordinance (Cap. 608) or any other applicable legislation. The Labour Department states that any employment term that purports to extinguish or reduce an employee’s rights under the Employment Ordinance is void.
Which sections should an SME write first?
1. Company information and scope of application
Start by making the following clear:
• Which employees the handbook applies to;
• Whether different arrangements apply to full-time, part-time and contract employees;
• Which department or position is responsible for updating the handbook; and
• What should happen if the handbook differs from an individual written employment contract.
This section may look simple, but it helps prevent employees from assuming that every policy applies in exactly the same way to every situation.
2. Working hours, attendance and leave procedures
Do not simply write that “employees must arrive at work on time”. Be specific about matters such as:
• Normal working hours and clock-in arrangements;
• Who should be informed about lateness, early departure or absence;
• What information is required for sick leave or unexpected absence;
• How annual leave, sickness days and other leave should be applied for; and
• How far in advance employees should request a roster change or shift swap.
Arrangements involving statutory holidays, rest days, annual leave and sickness allowance should be handled in accordance with the Employment Ordinance (Cap. 57) and the applicable contractual terms. They should not be governed only by a blanket internal statement that requests will “always be rejected”.
3. Pay, allowances and overtime arrangements
The employee handbook can explain payroll procedures, but it should not replace an individual employment contract. Consider stating clearly:
• The pay date and wage period;
• The arrangement for payslips or electronic payslips;
• The principles for calculating allowances, commissions and bonuses;
• Whether overtime requires prior approval; and
• The process for business expenses and reimbursement.
If the company has commissions, transport allowances, shift allowances or other variable pay, review the handbook against the employment contracts and relevant statutory calculation requirements. This helps avoid policies that are too vague to apply consistently.
4. Probation, performance management and training
“Performance will be assessed during probation” is not enough. Employees should understand:
• The length of the probationary period and the assessment timing;
• Who is responsible for the assessment;
• Which work requirements will be considered;
• Whether guidance or an improvement period may be provided when performance falls below expectations; and
• The process for confirming employment, extending the assessment or ending the contract.
Avoid unmeasurable phrases such as “poor attitude” or “not committed enough”. Use job-related, observable and recordable work requirements instead.
5. Code of conduct, conflicts of interest and confidentiality
This section may cover:
• Basic professional conduct towards clients, colleagues and suppliers;
• Declaration of conflicts of interest and receipt of benefits;
• Confidentiality requirements for company documents, client information and login accounts;
• Principles for using company computers, email, communication software and social media; and
• The return of company assets and removal of access rights when employment ends.
Where personal data is involved, the policy should reflect the company’s actual data-handling practices. As appropriate, refer to the Personal Data (Privacy) Ordinance (Cap. 486) and the relevant guidance issued by the Office of the Privacy Commissioner for Personal Data.
6. Equal opportunities, anti-discrimination and anti-harassment
An employee handbook should not merely say that everyone must “respect one another”. It should explain that the company does not accept discrimination, harassment or retaliation, and should provide a trusted reporting and follow-up channel.
The Equal Opportunities Commission notes that the employment field is covered by anti-discrimination legislation relating to sex, disability, family status and race. Depending on the company’s size, the handbook can clearly set out the complaint channel, confidentiality principles, investigation arrangements and ways to avoid conflicts of interest.
7. Complaints, discipline and leaving the company
The policy should explain:
• Who employees can approach with a work-related complaint;
• How the company receives and records a case;
• Whether the employee will have an opportunity to respond before disciplinary action is taken;
• Who keeps warnings, improvement arrangements and follow-up records; and
• The process for notice of resignation, handover, and returning company property and information.
The objective is not to predetermine every possible sanction. It is to ensure that management follows a basic process that is consistent and traceable when a case arises.
Five common employee-handbook mistakes
Mistake 1: Copying a large company’s template directly
The structure, shift patterns, benefits and approval levels of a large corporation may not suit an SME. Copying a template often creates a document that says one thing while the company is unable to operate that way in practice.
Mistake 2: Stating employee responsibilities without explaining company procedures
If the handbook only says that “employees must comply” but does not explain the application, approval, review and appeal process, the policy will be difficult to implement. Employees may also feel that the rules impose requirements only on them.
Mistake 3: Making the policy inconsistent with the contract or actual practice
For example, the handbook may state that a certain type of leave requires a particular document, while different supervisors actually apply different standards. Before launch, compare the policy with the employment contracts, payroll process and current operations.
Mistake 4: Writing it once and never updating it
Laws, systems, working arrangements and company structures change. Whenever a policy is revised, record the version, date, scope of application and how employees will be notified.
Mistake 5: Ignoring manager training
An employee handbook is not complete simply because it has been placed in a shared folder. Supervisors need to know what they can handle themselves and when they must refer a matter to HR or management, especially in sensitive situations involving discipline, complaints, sickness absence, discrimination or termination of employment.
A practical order for building an HR framework from scratch
1. Interview the owner, supervisors and frontline employees to identify the disputes that occur most often;
2. Address high-risk and high-frequency policies first, such as attendance, leave, pay, confidentiality and complaints;
3. Review separately what the company wants to do and what the legal minimum requires;
4. Assign an owner, approver and record-retention location for each policy;
5. Explain the policies to employees in a clear version first, then collect feedback on implementation problems; and
6. Set a policy review point every six or twelve months.
If the company has limited resources, it can establish core policies first and add sections gradually according to business needs. There is no need to wait until every chapter is complete before putting the essential framework into practice.
Should a company without an in-house HR team write the handbook itself or engage a consultant?
If the company only needs to organise a simple set of internal rules, management may begin by documenting its daily procedures. However, at least one HR policy review is advisable where:
• The company is preparing to grow from a team of a dozen or so employees into a larger workforce;
• The policies involve pay, leave, discipline, confidentiality or termination arrangements;
• Current practice relies mainly on verbal decisions by individual supervisors;
• The company has experienced employee complaints, inconsistent treatment or compliance concerns; or
• Management wants to outsource part of its HR administration but has not clarified the division of responsibilities.
Get More can help review HR policy gaps, organise an employee handbook, draft and improve policies, and clarify who is responsible for implementation, approval and record keeping. The objective is not to deliver a generic template, but to create policies that work in the company’s actual day-to-day operations.
Conclusion: A good employee handbook reduces reliance on memory
The value of an employee handbook does not depend on its page count. It lies in helping employees and managers understand, when an everyday HR question arises:
• What the rule is;
• Who to approach or notify;
• Who is responsible for approval and review;
• How to keep an appropriate record; and
• When to seek professional HR or legal advice.
For a Hong Kong SME, building an employee handbook is a way to turn scattered management habits into a sustainable HR framework.
Need Professional HR Advice? Let Get More Help You Stay Compliant
Hong Kong employment regulations continue to evolve, creating increasingly demanding challenges for businesses in compliance management and HR operations. With more than 15 years of professional consultancy experience, Get More Resources Limited provides comprehensive HR strategy and compliance solutions. Our services cover employment contract drafting, employee handbook preparation, company policy development, compensation and benefits structure design, and working arrangements during adverse weather. We help businesses build compliant internal management systems, reduce operational risk and improve the effectiveness of employee management.
If you are unsure whether your company should start with an employee handbook, revise existing policies, or address contract and process risks first, speak to Get More about your actual situation. We can begin with an HR policy gap review and provide employee-handbook preparation, policy design and HR process improvement support as needed.
Let a professional team support your business. Contact us to arrange a complimentary business consultation:
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Further Reading
• Labour Department: Employment Ordinance (Cap. 57)
• Labour Department: Chapter 2 of the Employment Ordinance — The Employment Contract
• Labour Department: Keeping Proper Employment Records
• Equal Opportunities Commission: Good Management Practices
Disclaimer
This content is for general informational purposes only and does not constitute legal advice. For specific situations, please consult a qualified HR consultant or legal professional.
