Employing in Hong Kong
Hiring employees in Hong Kong involves navigating a complex legal and cultural landscape. The Hong Kong Employment Ordinance is the primary legislation governing employment relations, ensuring fair contracts, minimum wages, and statutory benefits like the Mandatory Provident Fund (MPF) and Employee’s Compensation Insurance. The city’s dynamic job market, with a highly educated workforce, offers various recruitment channels, including local agencies, online job portals, and government services. Employers must comply with regulations such as obtaining work visas for foreign hires and prioritizing local talent.
Onboarding time
Minimum Wage
Employer costs
Employee costs
Onboarding time
Team APAC can onboard your talents within an average of 48 hours.
Minimum Wage
As of May 1, 2023, the hourly minimum wage is HK$40.00.
Employer costs
- estimated at 5% of the employee salary
Employee costs
Mandatory Provident Fund (MPF) –
- HK$ 7,100 to HK$ 30,000 – amount of income x 5%
- more than HK$ 30,000 – $1,500
Employees automatically join a company’s MPF scheme after working for 60 days.
Payroll
The payroll process in Hong Kong is a structured system that ensures compliance with local labor laws and tax regulations. Key components include gross salary, allowances, deductions (such as MPF contributions), and compliance with the statutory minimum wage of HKD 40 per hour. Employers are also responsible for filing annual tax returns (e.g., BIR56A) and providing employees with tax statements. While income tax is not deducted at source, employers must maintain accurate records to support employee tax filings.
Payroll cycle
Payroll is typically processed monthly, with salaries disbursed on the last working day of the month. Salaries must be paid no later than seven days after the end of a wage period.
Payroll calculations
Calculating payroll involves determining gross pay, allowances, deductions (such as MPF contributions), and compliance with the statutory minimum wage of HKD 40 per hour.
Compliance requirements
Employers must first register their business with the Inland Revenue Department (IRD) and the Mandatory Provident Fund (MPF) scheme, which is mandatory for employee retirement contributions.
Additional payments
13th Salary
13th month salary is commonly offered as a year-end bonus, though not mandatory.
Bonuses
Although not required by law, many employers in Hong Kong give employees a bonus at the end of the year. The employment contract may provide, either orally or in writing, for payment of a year-end bonus. If no bonus amount is set forth in the contract, the bonus consists of one month’s pay, equal to the employee’s average monthly pay over the 12-month period prior to payment of the bonus.
Commissions
Commissions are a typical part of remuneration packages in Hong Kong, especially in sales and service industries. They are also legally recognized as part of taxable employment income.
Other allowances
Some companies provide supplemental benefits like tuition reimbursements and transportation stipends.
Taxes
Hong Kong’s income tax system is simple and territorial, taxing only income sourced within the region. Salaries tax is levied on income from employment, pensions, or offices in Hong Kong at progressive rates ranging from 2% to 17%, or a standard rate of 15% on net income, whichever is lower.
Employee Income Tax
The individual income tax ranges from 2% to 17%. Income tax is calculated according to progressive rates. Multiple additional factors may impact overall rates such as the household status and the number of children.
Income Tax
Net Chargeable Income Tax Rate
- 2% 0 HK$– 50,000 HK$
- 10% 100,001 HK$– 150,000 HK$
- 14% 150,001 HK$– 200,000 HK$
- 17% 200,001 HK$ and over
Employment eligibility
In Hong Kong, employment eligibility for non-local individuals typically involves obtaining an Employment Visa under the General Employment Policy (GEP). To qualify, applicants must possess special skills, knowledge, or experience that are valuable and not readily available in Hong Kong. They usually need a good educational background, such as a graduate degree, though exceptional technical qualifications or professional achievements may also be considered. There must be a genuine job vacancy, and the applicant must have a confirmed employment offer relevant to their qualifications. The remuneration package should be comparable to local standards. Employers must demonstrate that they have exerted efforts to recruit locally and provide detailed documentation, including proof of financial standing and efforts to hire locally. Failure to comply with these regulations can result in significant penalties for both employers and employees.
Visa
Various work visas allow individuals to work in Hong Kong under specific conditions.
- General Employment Policy (GEP) Visa – Job offer from a Hong Kong employer, relevant qualifications, and a remuneration package matching market standards.
- Admission Scheme for Mainland Talents and Professionals (ASMTP) – Job offer and expertise not readily available locally.
- Quality Migrant Admission Scheme (QMAS) – Meet specific prerequisites, such as language proficiency and academic qualifications.
- Technology Talent Admission Scheme (TechTAS) – Quota application by the company, job offer in a specific position.
- Top Talent Pass Scheme (TTPS) – Graduates from top global universities or high-income earners with notable achievements.
Background check
Hong Kong has expanded its criminal record check requirements for various visa schemes. As of March 2023, applicants for several talent admission schemes, including the general work visa, tech industry visa, and the admission scheme for mainland Chinese professionals, must declare any prior criminal convictions. However, it is important to note that while criminal background checks are permissible, employers must be careful not to discriminate against candidates based on spent convictions. Additionally, employers are required to comply with Hong Kong’s data privacy regulations and obtain explicit consent from candidates before conducting any background checks.
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Benefits
Hong Kong mandates a comprehensive range of employee benefits under its Employment Ordinance to ensure workers’ welfare and legal compliance. Employers must also provide minimum termination notice and compensation options. Beyond mandatory benefits, companies often offer additional perks like holiday bonuses, dental insurance, tuition reimbursements, and flexible work arrangements to attract talent and remain competitive. Compliance with laws such as the Minimum Wage Ordinance and Employees’ Compensation Ordinance is essential for employers operating in Hong Kong.
Private health insurance
Employers offer private medical insurance coverage or a monthly medical allowance to offset the long wait times for care at all public institutions in the country.
Team APAC providers
- SafetyWings
- Henner
- IMG/ ALC Global
Mandatory benefits
Key statutory benefits include paid annual leave, sick leave, maternity and paternity leave, and contributions to the Mandatory Provident Fund (MPF) for retirement savings. Employees are entitled to public healthcare access without deductions from their income. Vacation entitlements start at seven days annually after one year of service, increasing progressively to 14 days after nine years.
Mandatory benefits in Hong Kong
- Public Healthcare Access
- Mandatory Provident Fund (MPF)
Working hours
The standard workweek is 40 hours, the standard workday 8 hours.
Working hours per day
Standard working hours are 8 hours per day. The standard workweek is from Monday to Friday.
Working hours per week
The standard workweek is 40 hours.
Overtime pay
Overtime payment is not mandatory. Overtime can be agreed upon between an employer and employee in an employment agreement.
Leave
Many guaranteed benefits apply to employees that work at least 18 hours a week for a period of at least 4 weeks (“continuous contract”) The guaranteed benefits described in the employment laws include: paid annual leave, sick days, and holidays, provident fund contributions, and paid maternity and paternity leave.
Annual leave
An employee’s entitlement to paid annual leave increases progressively with their length of service. Initially, they receive 7 days of paid leave for the first two years. This increases to 8 days after three years, 9 days after four years, 10 days after five years, 11 days after six years, 12 days after seven years, and 13 days after eight years. Once an employee has completed nine or more years of service, they are entitled to a maximum of 14 days of paid annual leave.
Sick leave
Entitlement to sick leave is accrued at the rate of 2 paid days for each month of service during the first year of employment and at the rate of 4 paid sickness days for each month thereafter, up to a maximum of 120 paid sickness days. For the first four days, there is no pay, as this period is considered a qualifying phase. Once this period is completed, employees receive 80% of their base salary for the remainder of their sick leave, up to 120 days, with the employer serving as the payer.
Maternity leave
Maternity leave in Hong Kong involves several key components. Eligible pregnant employees, who have worked continuously for at least 40 weeks (not necessarily 12 consecutive months), are entitled to 14 weeks of paid maternity leave. Typically, this leave starts two to four weeks before the expected birth date, with at least two weeks taken before childbirth. During this period, employees receive 80% of their average daily wages over the past 12 months, which is the responsibility of the employer to pay.
Parental leave
In Hong Kong, parental leave is not mandatory. However, employees may be entitled to maternity leave and paternity leave.
Paternity leave
Employees who have worked for 40 consecutive weeks are entitled to 5 days of paid paternity leave. The leave can be divided however the employee sees fit.
The employee will receive 80% of their average monthly salary from the last 12 months and the employer will be responsible for this pay.
Other types of leave
Compassionate leave
All employees, including casuals, are entitled to compassionate leave of up to two days per occasion. However, only full-time and part-time employees receive paid compassionate leave, while casual employees receive unpaid leave. This leave may be availed in case of demise of an immediate family member, which includes spouses, de facto partners, children, parents, grandparents, grandchildren, siblings, and their equivalents for spouses or de facto partners.
Family & domestic violence leave
All employees covered by the national industrial relations system, including full-time, part-time, and casual are entitled to Family and Domestic Violence Leave of 10 days per year. It is a leave designed to support employees experiencing family and domestic violence. This leave allows them to take time off work without losing income or their job, enabling them to address the impacts of violence safely. This leave does not accrue and resets annually on the employee’s work anniversary.
Family & domestic violence leave
The Employee will be entitled to up to 10 days’ paid “family and domestic violence” leave in a 12 month period.
Termination
Termination of employment in Hong Kong can occur through various means. Both employers and employees have the right to terminate an employment contract by giving notice or making a payment in lieu of notice, with a standard statutory notice period of one month if not specified in the contract. Employers must adhere to statutory restrictions, such as not terminating employees during maternity leave or paid sick leave. Upon termination, employers must settle outstanding payments within seven days and notify relevant authorities like the Immigration Department if applicable.
Termination process
In Hong Kong, the termination process for employment contracts can occur with or without notice. Termination with notice does not require specific reasons and typically follows the notice period outlined in the employment contract, which must be at least seven days for continuous contracts and one month for certain renewable contracts. Termination without notice, known as summary dismissal, requires serious grounds or infractions. Both employers and employees can terminate contracts by providing notice or paying wages in lieu of notice. Employers must also adhere to statutory timelines for making terminal payments, such as severance and wages in lieu of notice.
Termination reasons
In Hong Kong, summary dismissal allows an employer to terminate an employee without notice or payment in lieu of notice under specific conditions outlined in the Employment Ordinance and common law. These include willful disobedience of lawful and reasonable orders, misconduct, fraud or dishonesty, or habitual neglect of duties. Additionally, dismissal may be justified on any other common law grounds that permit termination without notice. However, participating in a strike is not a valid reason for summary dismissal under the Employment Ordinance. Employers must exercise caution and ensure strong evidence supports such actions, as summary dismissal is a serious disciplinary measure reserved for exceptional cases of severe misconduct.
Notice period
The minimum notice period is 7 days for employees with more than a month of service and those still in their probation period. However, once the probation period ends, the notice period increases to 30 days. The notice period generally increases with the length of employment.
Severance Pay
In Hong Kong, employees who are terminated due to redundancy are entitled to severance pay if they have completed at least two years of continuous service. The severance payment is calculated as two-thirds of the employee’s monthly wage, or two-thirds of HK$22,500, whichever is less, for each year of service. The total statutory severance payment is capped at HK$390,000.
Probation period
Probation periods in Hong Kong may last from one to three months and should be clearly defined in the employment contract.
Probation Period days
- 30 days Minimum probation period
- 90 days Maximum probation period
