Contracts (Rights of Third Parties) Ordinance Employment Contract

Contracts (Rights of Third Parties) Ordinance and Employment Contracts

Contracts are legally binding agreements that set out the terms between two or more parties. In many cases, employment contracts are created to regulate the terms of engagement between an employer and an employee. These contracts can include provisions that govern issues such as remuneration, working hours, and termination of employment.

However, in some cases, third parties may have an interest in the employment contract. A third party in this context is someone who is not a party to the contract but is affected by it in some way. For example, a company that provides services to the employer may have an interest in the employment contract.

The Contracts (Rights of Third Parties) Ordinance (Cap. 623) (the “Ordinance”) is a piece of legislation in Hong Kong that allows third parties to enforce certain terms of a contract. This can be particularly important in the context of employment contracts, where third parties may have an interest in the terms of the contract.

What is the Contracts (Rights of Third Parties) Ordinance?

The Contracts (Rights of Third Parties) Ordinance was introduced in Hong Kong in 2016. It is based on the UK`s Contracts (Rights of Third Parties) Act 1999 and provides that a third party can enforce certain terms of a contract if it is expressly stated in the contract that they may do so.

Under the Ordinance, a contract can create a right for a third party to enforce a term of the contract if:

– The contract expressly provides for the third party to have a right to enforce the term.

– The term purports to confer a benefit on the third party.

– The term is not contrary to the contract.

If these conditions are met, the third party can enforce the term of the contract, even if they are not a party to the contract.

How does the Ordinance apply to employment contracts?

In the context of employment contracts, third parties may have an interest in the contract. For example, a company that provides services to the employer may have an interest in the terms of the employment contract. If the contract provides for a term that benefits the third party, the third party may be able to enforce that term under the Ordinance.

For example, suppose an employer enters into an employment contract with an employee that includes a provision that requires the employee to maintain a certain level of productivity. The employer engages a company to provide training services to the employee to help improve their productivity. The contract between the employer and the training company includes a provision that allows the training company to enforce the productivity requirement against the employee. If the conditions under the Ordinance are met, the training company can enforce that term against the employee.

Conclusion

The Contracts (Rights of Third Parties) Ordinance is an important piece of legislation in Hong Kong that allows third parties to enforce certain terms of a contract. This can be particularly important in the context of employment contracts, where third parties may have an interest in the terms of the contract. Employers should be aware of the potential impact of the Ordinance on their employment contracts and should consider including provisions that expressly state whether or not third parties have a right to enforce any terms of the contract.