Hotel and Catering Workers Protest Against the 4-18 Rule

New Year's Eve: HKCTU organisers resist attempts by security guards to break up a protest for the rights of casual and part-time workers at the Mandarin Oriental Hotel

April 12, 2001 - Casual and part-time workers demand recognition of their rights at the Conrad International Hotel

May 18, 2001 - HKCTU's Catering and Hotel Industry Employees' General Union presents a petition to the government demanding the abolition of the 4-18 rule


Standing By: Casual and part-time workers in Hong Kong
According to the Census and Statistics Department's General Household Survey released at the end of May, 2001, the number of casual and part-time workers in the Hong Kong SAR is steadily increasing. Last year there were an estimated 123,000 casual workers, of which 99,000 or 80.5% were employed on a day-to-day basis. The remaining 24,000 workers were employed for a fixed period of less than 60 days. The average daily earnings of casual workers is HK$400 (US$51), with 25% earning less than HK$300 (US$38) per day. The survey also shows that there were 122,000 part-time workers, an increase of 5% over the previous year. Part-time workers have an average monthly income of HK$4,000 (US$513); yet nearly half (48%) earn less than HK$4,000 per month. According to these surveys, 25% of all part-time workers fall outside the 4-18 rule in the Employment Ordinance.

On May 18 the HKCTU's Catering and Hotel Industry Employees General Union organised a protest rally calling on the government and employers to recognise the rights of casual and part-time workers. In particular the union called for the abolition of the '4-18' rule in the Employment Ordinance - a rule which effectively excludes casual and part-time workers from the right to sick leave, statutory holidays and paid annual leave.

Under the Employment Ordinance of the Hong Kong SAR, only those employed under a continuous contract are entitled to paid sick leave, statutory holidays, paid annual leave and other benefits. An employee under continuous contract is defined as anyone working no less than 18 hours per week for at least four consecutive weeks. To avoid paying workers these entitlements, employers deliberately schedule working hours at just under 18 hours per week, or break the continuity of the minimum four-week period. In this way the '4-18' rule is used by employers to manipulate working hours and prevent casual and part-time workers from gaining regular employment status.

The protest action at the Central Government Offices on May 18 demanded the removal of the 4-18 rule from the Employment Ordinance. The union also singled out the informal '3-18' system used by employers in the hotel, restaurant and catering industry and took its protest to the office of the Federation of Hong Kong Hotel Owners. Under the '3-18' practice casual and part-time workers work in excess of 18 hours per week, even working double shifts, but are denied work assignments every fourth week so that they cannot accumulate four consecutive weeks of employment. In this way, regardless of the hours worked in three consecutive weeks, without working during the fourth week workers are not entitled to the employment benefits stipulated in the Employment Ordinance.

This '3-18' system is used extensively in Hong Kong's luxury hotels, including the Conrad International, Mandarin Oriental, Regent Hong Kong, Furama Hotel, and Shangri-La. The protest on May 18 formed part of part of an ongoing campaign for the rights of hospitality industry workers, which included protest rallies at the Mandarin Hotel on December 31, 2000 and the Conrad International Hotel on April 12 of this year.

In response to the campaign, employers in the hospitality industry admitted to using the 4-18 rule in the Employment Ordinance to limit the number of permanent employees and minimise costs. Michael Li Hon-shing, head of the Federation of Hong Kong Hotel Owners was quoted in the Hong Kong press as saying that the '3-18' strategy is used to ensure the number of permanent workers is kept down. He justified the use of this casualisation strategy on the basis of the industry's poor economic performance in the aftermath of the Asian financial crisis, claiming that: "Hotels are unable to afford so many permanent staff because our income isn't stable throughout the year and because the economic environment has flagged during the past few years." He added that if trade unions continued to push for the regularisation of casual workers then, "we might consider cutting part-timers' wages to the market price of about HK$30 (US$3.85) an hour to control our operating costs." (SCMP, May 14, 2001)
In sharp contrast to the Federation of Hong Kong Hotel Owners' claims that they face hard times, both government and industry sources show that in the last two years there has been a dramatic recovery in the tourism industry, especially in the hospitality sector. Last year tourist arrivals in the Hong Kong SAR grew by 15%, with tourism earnings rising 9.5% to HK$61.5 billion (US$7.9 billion). According to the Government Census and Statistics Department, occupancy rates in Hong Kong's 90 hotels have returned to pre-crisis levels, and now average 83%. The Conrad International, for example, saw occupancy rates rise above 80% in 2000, allowing its parent company, Sino Hotel, to regain profitability by the end of that year. At the Mandarin Oriental sales rose by 27% in 2000, reaching HK$1.77 billion (US$226.82 million). This was equivalent to HK$295,000 (US$37,820) per employee. Aided by the recovery in Hong Kong, Shangri-La Asia's regional profits rose by 15% in the 2000-01 financial year, reaching some HK$600.6 million (US$77 million).

Industry leaders themselves have highlighted the new boom in Hong Kong's hotel industry. When the HK$2.7 billion (US$346.2 million) acquisition of the Regent Hong Kong Hotel by the UK-based Bass PLC was announced on May 21, the executive director of Bass was quoted as saying that: "Hotel revenue has increased in the double digits in the past few years. The supply of hotels did not grow, but demand did." (Hong Kong iMail, May 22, 2001).

This growth in demand also led to what the Hong Kong Hotel Association claimed to be a 'labour shortage', prompting its announcement on April 27 of this year that the hotel industry would require the import of 6,000 workers from the mainland and the Asian region. Yet this 'labour shortage' coexists with more than 10,000 casual and part-time workers in Hong Kong's hotel industry who employers refuse to grant full, regular employment.

So while it is clear that Hong Kong's hotel industry has experienced a dramatic recovery in the past year, this recovery in sales and profits is not reflected in workers' wages and working conditions.