Annual Leave in Hong Kong: Entitlement, Pay, and Payout Rules

Annual leave in Hong Kong starts at 7 paid days a year and rises with length of service to a statutory maximum of 14 days, provided you hold a “continuous contract” with your employer under the Employment Ordinance (Cap. 57). Your contract can offer more, never less. A change that took effect on January 18, 2026 loosened the hours test for continuous-contract status, so some part-time and irregular-schedule workers who did not previously qualify now do.

Who Qualifies for Paid Annual Leave

Paid annual leave only applies once you hold a continuous contract with the same employer. Until January 2026, this meant working at least 18 hours a week for four consecutive weeks. Fall short in a single week and the count restarted.

The current test, sometimes called the “468 Rule,” still requires four continuous weeks with the same employer, but the hours side works two ways:¹

At least 17 hours in each week, or
At least 68 hours across any four-week window, made up of that week and the three weeks immediately before it.

The aggregate test opens a realistic path for part-time and seasonal workers whose hours swing week to week. One limit: the 68-hour aggregate test cannot apply during your first three weeks of a new job, because there are not yet three preceding weeks to add up. In that opening stretch, you have to meet the 17-hours-a-week test on its own.¹

Once you hold a continuous contract, annual leave begins accruing, but your entitlement only comes into effect after you complete your first 12 months of service.²

How Many Days You Get by Length of Service

The statutory minimums scale with each year you stay:²

Years 1 to 2: 7 days
Year 3: 8 days
Year 4: 9 days
Year 5: 10 days
Year 6: 11 days
Year 7: 12 days
Year 8: 13 days
Year 9 and beyond: 14 days

Many employers offer more, particularly in professional and financial-services roles where 15 to 20 days from day one is common. Whatever your contract says, the statutory floor cannot be reduced or waived.

Scheduling and Splitting Your Leave

Leave earned in one year of service should be taken during the following 12 months. Your employer picks the dates after consulting you, and must give at least 14 days’ written notice, unless you both agree to a shorter period.²

By default, leave is taken as one continuous block. You can ask to split it, within these limits:³

If your entitlement is 10 days or fewer, up to 3 days can be taken separately and the rest must be consecutive.
If your entitlement is more than 10 days, at least 7 days must be taken consecutively and the remaining days can be split.

An employer who forces all leave into scattered single days is not complying with the Ordinance.

When Leave Can Be Paid Out Instead of Taken

You cannot trade annual leave for extra pay across the board. The Ordinance prohibits contracts that let an employee give up leave in exchange for payment. The single exception: if your total entitlement is more than 10 days, you may choose to accept payment in lieu for the portion above 10 days.²

So an employee in their fifth year, entitled to 10 days, cannot cash out any of it. An employee in their ninth year, entitled to 14 days, can take payment for up to 4 days and use the other 10 as actual time off. The choice belongs to the employee, not the employer.

Company Shutdowns That Use Your Annual Leave

Some employers close over Lunar New Year, Christmas, or another period and require staff to use annual leave for the closure. This is allowed, but the employer must give affected employees written notice at least one month before the shutdown begins.⁴

If you have not yet earned enough leave to cover the closure, the employer must still grant paid annual leave for the full shutdown. If your entitlement is longer than the shutdown, you can take the remaining days immediately after it ends.

How Your Leave Pay Is Calculated

Annual leave pay is based on your average daily wages over the 12 months immediately before the leave period. Employees with less than a year of service use the shorter actual period.⁵

Wages for this calculation include base salary, commissions paid under a contractual formula, overtime, tips, service charges, and regular allowances. Discretionary bonuses, non-recurring expense reimbursements, MPF or other pension contributions from the employer, gratuitous year-end payments, and termination gratuities are excluded.⁶ The line that matters most is contractual versus discretionary: a formula-based commission counts, a bonus handed out at the boss’s discretion does not.

When calculating the 12-month average, your employer has to strip out any period where you were not paid full wages, along with the wages tied to that period. Unpaid rest days, sick leave, and maternity or paternity leave all come out, so those low-pay stretches do not drag the daily average down. Fully paid periods such as annual leave and paid statutory holidays stay in.⁵

Statutory Holidays and Rest Days Within a Leave Block

Hong Kong currently provides 13 statutory holidays a year, and these sit apart from annual leave. If a statutory holiday falls inside a stretch of annual leave, that day counts as the statutory holiday, not as one of your leave days, and your employer must give you an alternative rest day or holiday to replace it.³

The same protection applies to weekly rest days that fall inside a leave block. They do not consume your annual leave balance, and the employer has to designate a replacement rest day. This matters most on long consecutive blocks, where embedded weekends and public holidays should not eat into the leave you actually get.

Unused Leave When Your Job Ends

When employment ends, your employer owes you pay for any annual leave earned in a completed leave year that you did not take. That balance is payable regardless of who ended the job or why.²

You are also entitled to pro-rata leave pay for the current, incomplete leave year, as long as you have worked at least three months of that year. The pro-rata amount reflects the fraction of the leave year you actually worked.⁷

The exception is summary dismissal for serious misconduct. In that case, the employer does not have to pay the pro-rata portion for the current leave year, but leave already earned in completed years is still protected and must be paid out.²

All termination payments other than severance must be made within seven days of the termination date.⁸

Employer Records and Penalties

Employers must keep records of each employee’s leave entitlement, the dates leave was taken, and the pay for those periods, covering at least the preceding 12 months and continuing for six months after the employee leaves.⁹ Failing to keep records carries a fine of up to HK$10,000 on conviction, and failing to grant annual leave to an eligible employee carries a fine of up to HK$50,000. If you ever need to dispute what you were paid or given, these records are usually the deciding evidence.

1
Labour Department. Education Tool on New Continuous Contract Requirement
2
Labour Department. The Employment Ordinance, Cap. 57
3
Labour Department. A Concise Guide to the Employment Ordinance – Chapter 4: Rest Days, Holidays and Leave
4
Labour Department. A Concise Guide to the Employment Ordinance
5
Labour Department. A Guide to the Calculation of Relevant Statutory Entitlements on the Basis of the 12-Month Average Wages
6
Labour Department. A Concise Guide to the Employment Ordinance – Chapter 3: Wages
7
Labour Department. Notes for Preparing an Employment Contract
8
1823 Online. What Is the Deadline for Making Termination Payments
9
Labour Department. A Concise Guide to the Employment Ordinance: Wage and Employment Record Keeping