The 2026 Employment Ordinance Reform: A New Era for the Definition of Continuous Contracts under the 468 Rule

athenasiu
5 days ago
5 min read

Hong Kong’s Employment Ordinance is about to undergo a major reform, with the revised definition of continuous contracts taking effect on 18 January 2026. At the core of this reform is the adjustment of the original “4-18 rule” to the new “4-68 rule”, which will have far-reaching implications for both employers and employees. This article will explore the background, key details, historical evolution of this change, and how businesses and employees should respond, with the aim of helping all parties better understand and adapt to the new legal environment, safeguard employee rights, and promote healthier labour relations.

Background and significance of the 2026 Employment Ordinance reform

The Hong Kong SAR Government has amended the Employment Ordinance to plug loopholes in the existing legislation and better protect the rights of employees engaged in part-time, casual, or other non-traditional work arrangements. In the past, some employers exploited gaps in the law by adjusting working hours so that employees could not meet the continuous contract standard under the “4-18 rule”, thereby avoiding the obligation to provide statutory benefits.

This amendment is not only an improvement to the current labour law framework, but also a firm step to protect grassroots employees, reflecting the Government’s determination to “boost the economy and pursue development” while also “improving people’s livelihood”. The reform is particularly significant in practice because Hong Kong’s labour market has become increasingly diversified, with more employees engaging in part-time, temporary, or flexible work. These employees often have irregular working hours, making it difficult to meet the traditional “4-18 rule” and, as a result, they fail to enjoy proper labour protection.

The 4-68 rule explained: New definition of continuous contracts and its impact

Under the new 4-68 rule, the definition of a continuous contract is revised so that an employee will be regarded as employed under a continuous contract if he or she works for the same employer for at least 68 hours in any continuous period of four weeks. This means that even if an employee works fewer than 17 hours in a particular week, as long as his or her total working hours in that week plus the preceding three consecutive weeks reach or exceed 68 hours, the standard for a continuous contract is met.

Details of the new standard

Change in calculation of working hours: The requirement has shifted from at least 18 hours per week to at least 68 hours over any continuous four-week period.
Wider coverage: More part-time and casual workers with unstable working hours will be brought under the protection of continuous contracts.
More comprehensive protection of rights: Employees who meet the 4-68 rule will be entitled to a range of statutory benefits, including paid annual leave, sickness allowance, statutory holiday pay, long service payment, and severance payment.

Impact of the new standard

Improved employee benefits: More employees will become eligible for benefits under the Employment Ordinance, and labour rights will be better protected.
Increased costs for businesses: Employers will need to provide benefits to more employees, leading to a potential rise in human resources costs.
Compliance and management challenges: Companies will need to adjust their HR systems and processes to ensure compliance with the new legal requirements.

From 4-18 to 4-68: Historical evolution of the continuous contract standard

The original 4-18 rule required an employee to have been continuously employed by the same employer for four weeks or more, with at least 18 working hours in each week, in order to be regarded as a continuous contract employee. This standard played an important role in the past under the Employment Ordinance. However, with the transformation of Hong Kong’s economic structure and changes in the labour market, more employees have engaged in non-traditional employment modes, such as part-time and temporary work.

The limitations of the 4-18 rule gradually became apparent, as it could not adequately protect these employees. For example, in sectors such as retail, catering, security, and cleaning, many employees have irregular working hours and may fail to meet the weekly 18-hour threshold, thereby missing out on statutory labour benefits. This situation gave rise to labour disputes and perceptions of social injustice, prompting the SAR Government to revise the Employment Ordinance to better fit the new labour market landscape.

How to prepare for the 4-68 rule: Strategies for employers and HR

With the imminent implementation of the 4-68 rule, businesses and HR departments must prepare in advance to ensure compliance while managing human resources costs effectively.

Strategies for employers

Review existing HR policies and procedures:Examine current employment contracts, working hours records, and pay and benefits policies to ensure they meet the requirements of the 4-68 rule.
Upgrade HR management systems: Consider adopting more advanced HR management systems to accurately track employees’ working hours, automatically calculate benefit eligibility, and generate compliance reports.
Strengthen employee communication and training: Clearly communicate the new regulations and their impact to employees, address their questions, and provide necessary training so they understand their rights and obligations.
Consult professional advisers: Where necessary, seek advice from labour law specialists or consultants to obtain more tailored compliance guidance.

Strategies for HR professionals

Adjust methods of recording working hours: Shift from traditional weekly records to tracking total working hours across continuous four-week periods, ensuring that all working time is accurately captured.
Reassess eligibility for benefits: Re-evaluate all employees’ entitlement to benefits under the 4-68 rule so that those who qualify receive what they are due.
Optimise roster and scheduling management: Arrange employees’ working hours reasonably to avoid unnecessary additional benefit costs caused by poor scheduling.
Establish contingency plans: Develop contingency plans for handling labour disputes so that issues can be addressed promptly and effectively.

Legal rights and benefits after the 4-68 rule takes effect

Once the 4-68 rule is in force, employees who meet the continuous contract standard will enjoy the following statutory rights and benefits:

Paid annual leave: Based on length of service, employees will be entitled to 7 to 14 days of paid annual leave.
Sickness allowance: Eligible employees will be entitled to paid sick leave and sickness allowance.
Statutory holiday pay: Employees who rest on statutory holidays will be entitled to full pay from their employers.
Long service payment / severance payment:
Employees who have been continuously employed for a specified period will be entitled to long service payment or severance payment upon termination of employment.
Maternity leave / paternity leave: Eligible female employees will be entitled to maternity leave, and eligible male employees will be entitled to paternity leave.

Conclusion

The 2026 reform to the definition of continuous contracts under the Employment Ordinance marks an important milestone in the development of Hong Kong’s labour laws. The implementation of the 4-68 rule will help better protect the rights of employees engaged in part-time, casual, and other non-traditional work arrangements, and promote fairer and more harmonious labour relations. Both employers and employees should respond proactively to this change and work together to build a healthier and more sustainable labour market. The SAR Government should also continue to monitor labour market trends, review and refine relevant legislation in a timely manner, ensure that labour rights are fully protected, and support the prosperous development of Hong Kong’s economy and society.