In 2020, the luxury fashion sector in Hong Kong took a major hit due to the pandemic. The sharp fall in the number of tourists and the lockdown measures hurt the luxury fashion sector. The Hong Kong Tourism Board reported a nearly 100 per cent drop of visitor arrivals in 2020 as compared to 2019. While the Hong Kong government offered some financial support via its employment support scheme to provide financial subsidy to employers to retain employees, a number of luxury fashion brands were reported to have terminated the lease of their flagship stores in Hong Kong early or have completely quit the Hong Kong market.
Manufacture and distribution
Manufacture and supply chain
What legal framework governs the development, manufacture and supply chain for fashion goods? What are the usual contractual arrangements for these relationships?
The supply chain for fashion goods encompasses a wide range of business activities, from development and manufacturing to distribution and sale of goods. Hong Kong does not have legislation specific to fashion goods. Instead, the applicable laws will depend on the particular activities undertaken by the parties. The development, manufacture, and supply chains for fashion goods are governed by general contract law in Hong Kong. Parties are generally free to negotiate the terms of their contracts, subject to certain statutory provisions, for example, restrictions on the exclusion and limitation of liability and implied terms in contracts for the sale of goods and services. Supply chains for fashion goods commonly involve distribution agreements, sale of goods agreements, sales representative agreements (or agency agreements), and franchise agreements. Contractual arrangements will often be based on standard terms and conditions of the supplier or purchaser, with varying degrees of negotiation depending on the counterparties.
Distribution and agency agreements
What legal framework governs distribution and agency agreements for fashion goods?
Distribution and agency agreements for fashion goods in Hong Kong are governed by general contract law, comprised of statutory rules and common law.
Distribution agreements are subject to Hong Kong competition law, including the requirements of the Competition Ordinance (Cap 619), which prohibits anti-competitive conduct and conduct amounting to an abuse of market power in Hong Kong. Parties should ensure that any exclusive dealing clauses or selective distribution agreements, both common arrangements in the fashion industry, will not contravene the Competition Ordinance. Agency agreements are not generally subject to the Competition Ordinance.
Agency agreements are governed by the common law principles and rules regarding agencies, which relate to the relationship between agent and principal, including the power of an agent to bind the principal, and the respective rights of the principal and third parties in such dealings. Parties to agency agreements may be able to contract out of the relevant common law provisions to the extent permitted by the law. Further, the Factors Ordinance (Cap 48) governs the rights and obligations of mercantile agents, which are defined as agents in the business of buying, selling, or consigning goods for sale, or raising money on the security of goods.
What are the most commonly used distribution and agency structures for fashion goods, and what contractual terms and provisions usually apply?
Distributors are commonly appointed on an exclusive or non-exclusive basis. Further, selective distribution systems are commonly used by high-end fashion brands. Under a selective distribution system, the supplier will agree to supply goods only to those distributors who meet certain minimum criteria, including, for example, financial stability and level of profitability. The purpose of a selective distribution system is to maintain brand image, as suppliers will retain more control over the resale of their goods. Since a selective distribution system restricts certain suppliers and distributors, the parties should consider whether their arrangements have competition law implications.
The usual contractual terms in distribution and agency structures for fashion goods include, but are not limited to, exclusivity, intellectual property ownership, product classification, trademark usage, duration, terms of sale, payment terms, delivery terms, obligations of the distributor or agent, subcontracting of contractual obligations, termination, assignability and dispute resolution mechanisms.
Import and export
Do any special import and export rules and restrictions apply to fashion goods?
No specific import and export rules and restrictions apply to fashion goods. In some cases (eg, jewellery or watches containing radioactive substances), an import licence will be required. Other than that, Hong Kong Customs are active in inspecting and seizing suspected counterfeit fashion goods at the border.
Corporate social responsibility and sustainability
What are the requirements and disclosure obligations in relation to corporate social responsibility and sustainability for fashion and luxury brands in your jurisdiction? What due diligence in this regard is advised or required?
There are no such requirements specifically for fashion and luxury brands in Hong Kong. The Companies Ordinance (Cap 622) requires companies registered in Hong Kong (generally public companies and larger private companies) to provide business reviews in their annual director’s reports. Such business reviews should include, among other things, a discussion on the company’s environmental policies and performance and an account of the company’s key relationships with employees, customers, suppliers, and others that have a significant impact on the company and on which the company’s success depends. For companies that are listed on the Stock Exchange of Hong Kong, they are required to produce annual environmental and social governance ‘ESG’ reports to make certain ‘comply or explain’ disclosures.
What occupational health and safety laws should fashion companies be aware of across their supply chains?
The Occupational Safety and Health Ordinance (Cap 509) and the Occupational Safety and Health Regulation (Cap 509A) apply to almost all Hong Kong workplaces.
The Occupational Safety and Health Ordinance imposes on employers a duty to provide and maintain a safe and healthy workplace, plant, and work systems, and safe access to and egress from the workplace. Employers are also required to make arrangements to ensure safety and health regarding the use, handling, storage, or transport of plant or substances, and to provide all necessary information, instruction, training, and supervision for ensuring safety and health.
The Occupational Safety and Health Regulation stipulates further requirements in relation to the prevention of fire and other accidents, maintenance of workplace hygiene and environment control, first aid, and the expectation of employers in manual handling operations.
The Commissioner for Labour may issue improvement notices for specific measures or arrangements to be put in place, or issue suspension notices against workplace activities that may cause imminent danger to employees, or both. Failure to comply with these notices constitutes an offence that is punishable by fines up to HK$500,000 and imprisonment up to 12 months.
What legal framework governs the launch of an online fashion marketplace or store?
There are no specific e-commerce laws in Hong Kong. In addition to the general legal framework applicable to consumer goods safety and contract formation, there are two pieces of legislation that have specific aspects relevant to e-commerce. One is the Payment Systems and Stored Value Facilities Ordinance (Cap 584) which governs the use of stored value facilities, such as e-wallets and prepaid cards. The other is the Electronic Transactions Ordinance (Cap 553), which recognises and facilitates the use of electronic transactions and electronic signatures.
Sourcing and distribution
How does e-commerce implicate retailers’ sourcing and distribution arrangements (or other contractual arrangements) in your jurisdiction?
E-commerce can blur the line between traditional borders. Therefore, in contracts conferring exclusivity arrangements, one important aspect is to specify whether the principal retains the right to sell online.
Terms and conditions
What special considerations would you take into account when drafting online terms and conditions for customers when launching an e-commerce website in your jurisdiction?
Specific attention should be paid to the Trade Descriptions Ordinance (Cap 362) which imposes obligations on traders not to use false or misleading trade descriptions and not to omit material information. In particular, adequate disclaimers or explanations should be included to address issues such as discrepancies between the online descriptions and the actual products, availability of stock, pricing (including tax and delivery charges), any applicable right of withdrawal or cancellation, etc. The Trade Descriptions Ordinance has certain extra-territorial effect: a trader may commit an offence under this Ordinance even if the practice is directed to consumers who are outside Hong Kong if the trader is in Hong Kong or has Hong Kong as its usual place of business.
Are online sales taxed differently than sales in retail stores in your jurisdiction?
Broadly speaking, the same taxation principles apply to both online sales and sales in retail stores. The Inland Revenue Ordinance (Cap 112) does not contain any specific provisions that deal with the taxation of e-commerce. Broadly speaking, profits tax shall be charged on every person carrying on a trade, profession, or business in Hong Kong in respect of profits arising in or derived from Hong Kong from such trade, profession, or business.
Recognising the rapidly changing landscape of e-commerce, in March 2020, the Inland Revenue Department of Hong Kong issued a revised version of its Departmental Interpretation and Practice Notes No. 39 to provide updates on Hong Kong’s tax treatment of e-commerce businesses. For example, the Practice Notes clarify that a server in Hong Kong utilised by a business can be regarded as a ‘permanent establishment’ in Hong Kong if an essential and significant part of its business activities is conducted through that server. The Practice Notes also clarify that profits tax treatment of digital tokens would depend on their nature and use. For example, an e-commerce business may accept cryptocurrencies as payment from customers for purchasing goods. The market value of the cryptocurrencies accrued at the date of transaction should reflect the amount of sales and purchases for taxation purposes.
Which IP rights are applicable to fashion designs? What rules and procedures apply to obtaining protection?
A wide range of IP rights, such as trademarks, copyright, registered designs, and patents are applicable to fashion designs. Sometimes there can be an overlap between the different IP rights. For example, a logo attracts copyright protection, while also being registrable as a trademark. Another example is pattern prints, whichare protectable as copyright works but may also be protected as trademarks and registered designs. In addition, fashion designs may also be protected as unregistrable trade dress if they have acquired goodwill in Hong Kong.
The main IP legislation in Hong Kong includes Trade Marks Ordinance (Cap 559), Trade Marks Rules (Cap 559A), Copyright Ordinance (Cap 528), Patents Ordinance (Cap 514), Patents (General) Rules (Cap 514C), Registered Designs Ordinance (Cap 522), and Registered Designs Rules (Cap 522A). The Trade Descriptions Ordinance (Cap 362) contains criminal offences targeting trademark counterfeiting.
Trademark registrations, registered designs, and patents must go through an application and examination procedure. On the other hand, there are no formalities required to obtain copyright protection.
With regards to commissioned work, the Copyright Ordinance provides that if there is an agreement between the author and the commissioner of the work that expressly provides for the entitlement to the copyright, copyright in the commissioned work shall belong to the person who is entitled to the copyright under the agreement; whereas the commissioner will have an exclusive licence to exploit and the power to restrain exploitation of the commissioned work. Practically, the rule of thumb is that it is always desirable to specify in the commissioning contract who owns the IP rights.
What difficulties arise in obtaining IP protection for fashion goods?
One example is that sometimes patterns may face difficulties in being registered as a trademark. In principle, marks consisting of a pattern are equally registrable as with other text or logo marks as long as these patterns are capable of identifying the goods or services as originating from a particular undertaking. However, sometimes repeating patterns consisting of simple geometric shapes or designs are refused registrations because these patterns may be perceived as purely decorative and are not capable of guaranteeing the trade origin to the average consumer.
Another practical consideration is that fashion trends are fast-moving and can become outdated in matters of weeks or months, whereas IP registrations (eg, trademarks and registered designs) usually take at least a few months. This can be a practical deterrence for fashion companies to invest in IP registrations in each and every one of their designs.
How are luxury and fashion brands legally protected in your jurisdiction?
The most common way to protect one’s brand is through trademark registration. In Hong Kong, in addition to conventional marks such as word and device marks, it is possible to register smell, colour, sound, movement, and 3D marks. Unregistered trademarks are also protected under the common law of passing off.
Brand owners may also register ‘.hk’ or ‘.香港’ domain names. These are domain names that target the Hong Kong market. These domain name strings are administered by the Hong Kong Internet Registration Corporation.
Qualifying works (eg, logos, graphics, audiovisual works) may also be protected by copyright.
What rules, restrictions and best practices apply to IP licensing in the fashion industry?
No specific rules or restrictions apply to IP licensing in the fashion industry.
Generally, IP rights are licensed by way of a written licence agreement. There are requirements to register certain IP licensing arrangements. For example, under the Trade Marks Ordinance (Cap 599), the parties should register their trademark licence with the Trade Marks Registry. Unless the particulars of the trademark licence are registered, the licence is ineffective against a person acquiring a conflicting interest without knowledge, and the licensee will also not be able to enjoy certain statutory rights under the Trade Marks Ordinance (eg, rights in relation to infringement). Further, unless the trademark licence is registered within six months from the date of the licence, the licensee will not be entitled to damages or an account for profits for infringement for the period before the particulars of the licence are registered.
What options do rights holders have when enforcing their IP rights? Are there options for protecting IP rights through enforcement at the borders of your jurisdiction?
Various enforcement options are available to IP rights holders in Hong Kong. For example:
As a first step, IP rights owners may issue cease and desist letters before proceeding with formal civil actions. Further options include lodging opposition or invalidation proceedings at the Registry level and infringement or passing off actions with the Courts. A wide range of remedies such as injunctions, damages, account of profits, delivery up of infringing goods, etc. may be granted by the Courts.
Criminal proceedings/Customs actions
Hong Kong Customs investigates and prosecutes criminal offences relating to trademark and copyright infringement. IP owners must first record their rights with Customs. The recordal process involves appointing an examiner and attending interviews with Customs. Customs officers have the power to arrest suspected infringers and seize infringing goods found within Hong Kong and at its borders. Once infringing goods are seized, rights owners are asked to assist in examining the goods. If Custom decides to prosecute, brand owners are required to testify in court.
Data privacy and security
What data privacy and security laws are most relevant to fashion and luxury companies?
The legislation governing data privacy is the Personal Data (Privacy) Ordinance (Cap 486). It is applicable to both the public and private sectors, including fashion and luxury companies.
The Privacy Commissioner for Personal Data is the authority that oversees the compliance of the Personal Data (Privacy) Ordinance. From time to time, the Privacy Commissioner issues codes of conduct, guidelines and guidance notes, and provide industry-specific resources to assist companies in understanding compliance requirements under the law.
What challenges do data privacy and security laws present to luxury and fashion companies and their business models?
The Personal Data (Privacy) Ordinance imposes strict requirements on direct marketing. Companies must first obtain customers’ explicit consent (in practice, explicit written consent is recommended) before using their personal data for direct marketing purposes. Companies must also comply with customers’ opt-out requests and maintain an opt-out list. Failure to comply with the above requirements constitutes a strict liability offence and companies may be liable for conviction and a fine or imprisonment, or both. Therefore, companies must implement robust measures and provide sufficient training to their staff to ensure compliance.
Retail companies often collect large amounts of personal data and financial information of customers for the purposes of providing goods and services through different means (at physical stores, via online shopping platforms, etc). Companies must implement appropriate security measures to protect personal data from unauthorised or accidental access. It is recommended that luxury and fashion companies regularly review their security policies and data retention practices, and align the practice internally.
What data privacy and security concerns must luxury and fashion retailers consider when deploying innovative technologies in association with the marketing of goods and services to consumers?
Some important issues to consider include:
- Is there collection of personal data? Technologies such as facial recognition functions deployed in surveillance cameras involve the collection of biometric data, which may constitute personal data.
- Is collection of biometic data ‘necessary and not excessive’? The collection of such data for the purpose of marketing may be considered unnecessary and amount to excessive data collection.
- Furthermore, how secure are these innovative technologies? Do they store personal data or only capture them transiently?
Luxury and fashion retailers should also gauge consumer perception and their readiness to innovative technologies. Technologies that work well in other jurisdictions may be considered intrusive in other markets.
Finally, before using these innovative technologies, retailers should also consider whether sufficient notice has been given to customers, and whether their consent is required or desirable.
Content personalisation and targeted advertising
What legal and regulatory challenges must luxury and fashion companies address to support personalisation of online content and targeted advertising based on data-driven inferences regarding consumer behaviour?
Hong Kong currently does not have data privacy legislation targeting content personalisation and targeted advertising. However, providing personalised online content and targeted advertising often involves collecting some sort of online behavioural data. In principle, if it is reasonably practical to ascertain the identity of an individual from the behavioural data collected, then such data constitutes personal data and as a matter of prudence, companies should observe the requirements under the Personal Data (Privacy) Ordinance regarding the collection, handling, and use of personal data. The Privacy Commissioner has issued an information leaflet on online behavioural tracking with its recommended best practices.
Advertising and marketing
Law and regulation
What laws, regulations and industry codes are applicable to advertising and marketing communications by luxury and fashion companies?
There are no specific laws, regulations, and industry codes regulating advertising and marketing for the luxury and fashion goods industry in Hong Kong.
A key piece of legislation is the Trade Descriptions Ordinance (Cap 362), which prohibits false trade descriptions, false, misleading, or incomplete information, false trademarks, and misstatements regarding goods or services. These prohibitions would apply generally to advertising and marketing content.
Direct marketing is also regulated by the Personal Data (Privacy) Ordinance (Cap 486). Among other requirements, the marketer should inform the targeted individual that his or her personal data would be used for direct marketing, obtain consent from the targeted individual and provide a way for individuals to opt out of direct marketing.
There are also two codes of practice relating to advertising published by the Communications Authority in Hong Kong:
- The General Code of Practice on Television Advertising Standards: Television programme services licensed under the Broadcasting Ordinance (Cap 562) must comply with this code.
- The Radio Code of Practice on Advertising Standards: Sound broadcasting services licensed under the Telecommunications Ordinance (Cap 106) must comply with this code.
Under the two codes of practice, the general standard provided is that advertising should be legal, clean, decent, honest, and truthful. Indirect advertising (also known as product placement) is allowed under the General Code of Practice on Television Advertising Standards under certain criteria.
Online marketing and social media
What particular rules and regulations govern online marketing activities and how are such rules enforced?
The Trade Descriptions Ordinance is applicable to online marketing activities. The ‘Enforcement Guidelines for the Trade Descriptions (Unfair Trade Practices) (Amendment) Ordinance 2012’ provide some guidance applicable to online marketing. For instance, marketers should clearly identify the commercial intent of their posts and reviews. Non-disclosure may constitute a misleading omission offence under the Trade Descriptions Ordinance. In particular, this would catch out activities such as a business instructing its employees or marketing agency to pose as consumers and post positive reviews on e-commerce websites.
Enforcement of the Trade Descriptions Ordinance is conducted primarily by the Customs and Excise Department and (for the telecommunications sector) the Communications Authority. Contravention of the provisions may attract criminal proceedings. For less serious cases of contravention, the enforcement authorities may, as a first step, issue a warning and demand an undertaking from the business not to continue or engage in the criminal conduct.
Product regulation and consumer protection
Product safety rules and standards
What product safety rules and standards apply to luxury and fashion goods?
There are no industry specific product safety rules and standards for the luxury and fashion goods sector in Hong Kong.
As consumer goods, luxury and fashion goods are subject to the Consumer Goods Safety Ordinance (Cap 456), which imposes a statutory duty on manufacturers, importers, and suppliers to ensure consumer goods they supply are reasonably safe. Although the Consumer Goods Safety Ordinance does not prescribe mandatory safety tests on products before they are put up for sale, suppliers are encouraged to have their consumer goods tested by an approved laboratory to ensure reasonable safety.
The Consumer Goods Safety Regulation (Cap 456A) provides that any warning or caution regarding the safekeeping, use, consumption, or disposal of any consumer goods should be legible, placed in a conspicuous position and written in both Chinese and English.
What regime governs product liability for luxury and fashion goods? Has there been any notable recent product liability litigation or enforcement action in the sector?
Product liability could arise under common law contract and tort law. This includes potential negligence or breach of contract.
The Sale of Goods Ordinance (Cap 26) implies certain terms into contracts for sale of goods, for example:
- the goods sold should be of merchantable quality;
- they should be fit for purpose, including any particular purpose mentioned to the seller by the buyer;
- they should be as described on the packaging or display sign; and
- they should correspond with a sample (in cases of bulk purchase).
In addition, breach of the general standard of reasonable safety under the Consumer Goods Safety Ordinance could also attract liability.
There have not been notable product liability litigation cases or enforcement actions in the luxury and retail sector in recent years. However, there have been some Consumer Goods Safety Ordinance enforcement cases in recent years by the Customs and Excise Department in relation to children’s clothing – a particular area of concern is whether cords and drawstrings on children’s clothing may constitute a strangulation hazard.
M&A and competition issues
M&A and joint ventures
Are there any special considerations for M&A or joint venture transactions that companies should bear in mind when preparing, negotiating or entering into a deal in the luxury fashion industry?
It is important to select an acquisition strategy that is appropriate to the maturity of the business and the objectives of the integration. Common acquisition strategies include horizontal acquisitions of competitors or owners of similar brands and vertical acquisitions of distribution channels or suppliers. Owners of more mature brands may seek to strengthen their brand and increase market share through a horizontal acquisition of similar companies. A company wishing to expand into a new market sector or region may do so by acquiring a company or brand in that sector or region. For a younger brand, it may be more appropriate to consider partnerships or licensing arrangements in order to strength its presence. A brand owner wishing to maintain brand integrity and strengthen their control of the supply chain could consider acquiring their distribution channels or suppliers. Other contractual arrangements may also be considered in lieu of acquisitions, such as licensing arrangements, joint ventures, or partnerships.
Proper due diligence should be undertaken prior to any acquisition or joint venture. Specifically for the fashion industry, care should be taken to identify and verify the target’s or joint venture party’s intellectual property rights, including its copyrights, trademarks, and registered designs. It is important to ensure that designers involved in the development of a brand or product have appropriately assigned any intellectual property they may have acquired personally. It is may also be advisable to conduct a supply chain audit in relation to the business of a proposed target or joint venture partner.
A key part of a successful acquisition strategy is likely to involve retaining and incentivising key personnel to help maintain and enhance the brand. This may be achieved through a combination of earn-outs, options, performance bonuses, and non-cash incentives. It is also important to consider how much involvement and influence talent will retain over the business going forward. Acquirers should consider including restrictive covenants in employment contracts to limit the potential for key personnel to compete with the business or solicit its customers or employees in future.
For joint ventures, companies should ideally be incorporated in a jurisdiction which provides specific performance as a legal remedy. This is particularly important for companies in the fashion industry to aid the enforcement of provisions in a joint venture agreement relating to brand protection and equity transfers. To the extent possible, brands should also consider the possibility of contributing only a limited licence of their assets into the joint venture vehicle and have tight controls over how their intellectual property rights can be used. Companies should also ensure that exit provisions are well developed to facilitate an orderly unwinding of the business and adequate protection of their rights and assets. This could involve the termination of intellectual property licences or a retransfer of intellectual property assets to the relevant parties, the de-branding of goods and premises and arrangements for the handling of any remaining inventory.
There are no Hong Kong foreign investment restrictions relevant to the fashion industry and Hong Kong’s merger control regime is not applicable.
What competition law provisions are particularly relevant for the luxury and fashion industry?
In general, the luxury and fashion industry in Hong Kong is highly competitive. While luxury and fashion companies should abide by the Competitions Ordinance (Cap 619), generally speaking it should be relatively less likely for the luxury and fashion sector in Hong Kong to commit ‘serious anti-competitive conduct’ specified in the Competitions Ordinance such as cartel and bid-rigging. It may also not be straightforward to determine whether a particular luxury and fashion player possesses the required ‘substantial degree of market power’ in Hong Kong to be accused of abusing that power by engaging in conduct that has the object or effect of harming competition in Hong Kong (Second Conduct Rule). That said, it is not uncommon for the luxury and fashion industry to enter into franchise or distribution agreements for the Hong Kong market, hence they should pay special attention to topics such as retain price maintenance.
Employment and labour
Managing employment relationships
What employment law provisions should fashion companies be particularly aware of when managing relationships with employees? What are the usual contractual arrangements for these relationships?
The Employment Ordinance (Cap 57) governs almost all employment relationships in Hong Kong with limited exceptions, and stipulates the benefits and entitlements that employers have to provide to their employees, such as payment of wages, sick leave and sickness allowance, annual leave, and termination payments. However, only employees engaged by ‘continuous contracts’ of employment will be entitled to full protection under the Employment Ordinance. Employees who are employed by the same employer for a continuous period of four weeks or more, working for a minimum of 18 hours each week, are considered employed under a continuous contract of employment. Workers who do not qualify under a ‘continuous contract of employment’, typically part-time workers and freelancers who work less than 18 hours each week, are only afforded limited protection under the Employment Ordinance (for example, they are not entitled to paid annual leave or sickness allowance).
In addition to the benefits and protections under the Employment Ordinance, employers in Hong Kong are required to enrol their employees, within 60 days of employment and subject to certain exceptions, to a Mandatory Provident Fund scheme (which is a compulsory retirement scheme for employees that is governed by the Mandatory Provident Fund Schemes Ordinance (Cap 485)). Both employers and employees are required to contribute monthly to the Mandatory Provident Fund accounts of the employees.
The Employees’ Compensation Ordinance (Cap 282) requires employers to maintain insurance to cover their liabilities for injuries at work for all their employees, irrespective of the length of employment or hours of work of the employees.
Fashion companies should also be mindful of the Minimum Wage Ordinance (Cap 608), which provides for the minimum hourly rate (currently set at HK$37.5) payable to any employee with limited exceptions, such as those engaged under a registered contract of apprenticeship, student interns and work experience students.
The common categories of workers are employees and independent contractors. Employees are engaged under contracts of employment, which are often, but not legally required to be, in writing. Independent contractors are engaged under contracts for services, and are usually appointed for specific assignments, often on a short-term basis. Independent contractors are not subject to protection and benefits under employment laws and regulations, but the appointing entity may nonetheless still have obligations to such individuals under statute (ie, occupier’s liability) and common law (ie, duty of care in tort).
Are there any special legal or regulatory considerations for fashion companies when dealing with trade unions or works councils?
Article 7 of the Basic Law guarantees freedom of association and the right to form and join trade unions. The Trade Union Ordinance (Cap 332) stipulates the rights and duties of trade union members, and the Employment Ordinance (Cap 57) protects employees against anti-union discrimination. However, unlike many jurisdictions, collective bargaining rights are not recognised by law in Hong Kong. Hence, where employees intend to rely on the relevant collective bargaining provisions, those provisions must be clearly stated in the employees’ employment agreement such that normal contractual principles can apply for them to take effect. In reality, there is a relatively low level of employee participation in trade unions. It should be noted that there is no requirement to conduct collective consultation when carrying out redundancies in Hong Kong.
The Employment Ordinance prohibits employers from dismissing employees for trade union membership and activities.
The Labour Relations Ordinance (Cap 55) also aims to improve labour-management relations and settle trade disputes via mediation, arbitration and other means.
Are there any special immigration law considerations for fashion companies seeking to move staff across borders or hire and retain talent?
Employers are required under the Immigration Ordinance (Cap 115) to ensure that each of their employees in Hong Kong are lawfully employable. This requirement applies as long as the employee is working in Hong Kong, irrespective of who the employee is, even if it is a foreign entity or individual. Being lawfully employable means that the employee must have the right of abode, right to land in Hong Kong with no condition of stay which prohibits him or her from taking up employment in Hong Kong, or holds a valid employment visa. The Director of Immigration has complete discretion to decide whether to grant an employment visa. Employers should be mindful that employing a person who is not lawfully employable may constitute an offence and expose the employer to a fine of up to HK$350,000 and to imprisonment of up to three years.
While overseas nationals cannot commence their employment in Hong Kong until they are granted an approval or a valid employment visa by the Director of Immigration, they would not require any such approval or visa if they are not physically working in Hong Kong, even if employed by a Hong Kong company.
For business travel, the Immigration Department has published a FAQ, which gives examples of activities that may be conducted by business travellers without an employment visa, such as, to attend an event and deliver speeches or presentations as long as certain conditions, such as the individual will not be remunerated for speaking or presenting at the event, are met; making presentations on products or services, negotiations and signing of contracts during the process of concluding contracts; and supervision of the construction of exhibition booths (but they are not allowed to construct the booths).
Update and trends
Trends and developments
What are the current trends and future prospects for the luxury fashion industry in your jurisdiction? Have there been any notable recent market, legal or regulatory developments in the sector? What changes in law, regulation, or enforcement should luxury and fashion companies be preparing for?
It remains to be seen how the luxury and fashion industry will emerge from the pandemic. It is foreseeable that at least in the short term, the number of visitors to Hong Kong will remain low, hence the luxury and fashion industry in Hong Kong may have to restructure its focus to local residents and e-commerce. On a broader level, there have been legislative movements and enforcement cases in Hong Kong which concerned national security, for example, the implementation of the National Security Law. While these legislative movements and cases do not specifically target the luxury and fashion industry, nonetheless they should keep themselves apprised of these changes and ensure compliance.
What emergency legislation, relief programmes and other initiatives specific to your practice area has your state implemented to address the pandemic? Have any existing government programmes, laws or regulations been amended to address these concerns? What best practices are advisable for clients?
There are no specific reliefs or subsidiaries tailored for the luxury and fashion industry. Among other general measures, the Hong Kong government has offered financial support via its employment support scheme to provide financial subsidy to employers (including employers in the luxury and fashion industry) to retain employees. It was also reported that some landlords have offered rent concessions to their tenants.