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Hong Kong – More About E-Signatures And Paperless Contracts.

5 November, 2014 

 

Legal News & Analysis – Asia Pacific – Hong Kong – Labour & Employment

 

Technological advances often bring about changes in the wider regulatory framework. In Hong Kong, employers are increasingly turning to the use of electronic signatures (“e-signatures“) as a more efficient means of entering into binding employment contracts, particularly as they think about ways to improve and streamline their recruitment processes.

 
Background

 
E-signatures take the form of either: (a) a typed name or digitalized image of a handwritten signature; or (b) a unique digital “fingerprint” created using bespoke software. Employers are increasingly learning to unlock the efficiencies that come with moving away from a recruitment process that is entirely paper-based to one which is entirely electronic. This is, of course, particularly important for international financial centres such as Hong Kong.

 
Hong Kong And Across The Region

 
E-signatures are valid and enforceable in Hong Kong provided they comply with the requirements set out in the Electronic Transactions Ordinance. In particular:

 

  • the e-signature must be attached to, or logically associated with, the electronic message;
  • the e-signature process must be reliable as is appropriate given the purpose for which the signature is required; and
  • the recipient must consent to the signatory using an e-signature.

 
There are no express requirements for the e-signature to be in a certain form or format. For example, employers may invite the candidate to simply type their name into a Word document. Alternatively, they can subscribe to a bespoke e-signature online tool which assigns the parties’ secure login details and gives them access to a document upload / review platform.

 
If the employment contract involves any government entity, the e-signature must also be supported by a recognised digital certificate.

 
The position is broadly the same across much of South and Southeast Asia. Malaysia, Korea, Singapore and Thailand all recognise that contracts concluded by e-signature are generally binding and enforceable. Although the position is less clear in Indonesia, which does not have specific legislation governing the use of e-signatures, it is likely that its provisions on written employment contracts are wide enough to apply to contracts concluded by electronic means.

 
Risks And Practical Considerations

 

However, the use of e-signatures is not without risk. There are several issues employers should consider before they decide to move to a completely paperless recruitment process.

 
Evidentiary Weight In Litigation

 
Although a contract concluded by e-signature may be recognised as being valid and enforceable, in some jurisdictions in South and Southeast Asia, that fact may mean that it carries less evidentiary weight in a court of law than a traditional hard copy. For example, in Indonesia, the submission of any document concluded by electronic means may need to be supported by additional witness and/or expert evidence. Further, in Bangladesh, an agreement will not be considered as admissible evidence unless the parties have paid the necessary stamp duties. Before entering into an employment contract by e-signature, employers should therefore consider whether they are likely to need to rely on its terms in subsequent litigation and/or whether they are operating in a jurisdiction which affords less evidentiary credibility to electronic documents.

 

Authentication Of Identity And Agreement To Terms

 
In some jurisdictions, including Hong Kong, the e-signature must be attached to, or logically associated with, the electronic message. More generally, the employer should be able to satisfy itself that the signature adequately identifies the signatory and gives sufficient indication of the signatory’s approval of the information to which it relates. Employers should therefore consider using a system which asks employees to undergo a secure verification process – for example, by requiring them to check a box which says they have understood the information that forms the subject of the agreement and that he or she verifies that they are the person stated as accepting the offer.

 
Security

 
Employers should ensure that their e-signature systems are sufficiently reliable and secure. Where possible, they should use a system that employs public key / private key technology, which effectively turns a paper-based signature into an electronic “fingerprint”. The “fingerprint” or coded message cannot be copied, tampered with or altered, thereby ensuring the authenticity of the signatory. Alternatively, the employer may ask the employee to answer a number of security questions such that the offer letter can only be accessed by the employee after he or she correctly answers the question.

 

herbert smith Freehills

 

For further information, please contact:

 

Helen Beech, Herbert Smith Freehills

helen.beech@hsf.com

 

David Smail, Herbert Smith Freehills
David.smail@hsf.com

 

Homegrown Labour & Employment Law Firms in Hong Kong 

 

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