Employer of Record Guide in Hong Kong
Hong Kong's dynamic business environment offers incredible opportunities for global expansion, but navigating its unique employment landscape requires local expertise. Let us guide you through the essentials of compliant hiring in this strategic Asian hub.
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Hong Kong stands out as a premier talent destination with its business-friendly environment, competitive tax rates, and multilingual workforce spanning finance, technology, and innovation sectors. Understanding the market fundamentals is your first step toward successful expansion.
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Your EOR guide in Hong Kong
From payroll cycles to leave entitlements, Hong Kong's employment framework balances simplicity with specific compliance requirements that can make or break your hiring success. Here's everything you need to know to get it right from day one.
Minimum Wage
Hong Kong has a statutory minimum wage of HK$40.00 per hour, effective May 1, 2023. This applies to all employees except:
- Live-in domestic workers
- Student interns under specific programmes
- Work experience students
Payroll Cycle
- Monthly: Most common practice (12 pay periods per year)
- Bi-weekly: 26 pay periods per year
- Weekly: Less common but permissible
Wages must be paid within 7 days of the end of the wage period.
Individual Income Tax
Hong Kong operates a territorial tax system with relatively low rates:
| Income Bracket (HKD) | Tax Rate |
|---|---|
| First $50,000 | 2% |
| Next $50,000 | 6% |
| Next $50,000 | 10% |
| Next $50,000 | 14% |
| Remainder | 17% |
Standard Rate: 17% flat rate (whichever is lower applies)
Tax Residency Criteria
Individuals are considered Hong Kong tax residents if they:
- Ordinarily reside in Hong Kong, or
- Stay in Hong Kong for more than 180 days in a tax year, or
- Stay in Hong Kong for more than 300 days over two consecutive tax years
Employer Payroll Contributions
Hong Kong has a relatively simple contribution structure:
| Contribution Type | Employer Rate | Employee Rate | Notes |
|---|---|---|---|
| Mandatory Provident Fund (MPF) | 5% | 5% | Capped at HK$1,500/month each |
| Employees' Compensation Insurance | Varies by industry | N/A | Typically 0.1% - 2% of payroll |
Total Employer Cost: Approximately 5-7% above base salary
Working Hours
Hong Kong does not have statutory limits on working hours for most employees. However:
- Standard Practice: 8-9 hours per day, 44-48 hours per week
- Meal Breaks: Not legally mandated but commonly provided
- Rest Days: Minimum 1 day per 7-day period (usually not less than 24 consecutive hours)
Overtime Pay
- No Statutory Requirement: Hong Kong law does not mandate overtime pay rates
- Contractual Basis: Overtime compensation depends on employment contract terms
- Common Practice: 1.5× regular rate for overtime, but varies by agreement
Bonus Payments
- 13th Month Bonus: Common practice but not legally required
- Discretionary Bonuses: Widely used for performance incentives
- End of Year Bonus: Traditional practice, often equivalent to 1 month's salary
Full-Time vs. Part-Time
- Full-time: Typically 40+ hours per week
- Part-time: Fewer than 40 hours per week
- Continuous Contract: Employees working 4+ hours per day for 4+ weeks are entitled to statutory benefits
Annual Leave
- Minimum Entitlement: 7 days after 12 months of service
- Progressive Increase: Up to 14 days maximum after 9 years
- Accrual: Earned proportionally during the first year
- Payout: Must be paid out if unused upon termination
| Years of Service | Annual Leave Days |
|---|---|
| 1 | 7 |
| 2 | 7 |
| 3 | 8 |
| 4 | 9 |
| 5 | 10 |
| 6 | 11 |
| 7 | 12 |
| 8 | 13 |
| 9+ | 14 |
Sick Leave
- Entitlement: 2-4 days per month (depending on service length)
- Maximum Accumulation: 120 days
- Payment: 4/5 of daily wages after first 4 sick days
- Medical Certificate: Required for paid sick leave
Maternity Leave
- Duration: 14 weeks (increased from 10 weeks in 2020)
- Payment: 4/5 of average daily wages
- Eligibility: After 40 weeks of continuous employment
- Job Protection: Guaranteed return to same or similar position
Paternity Leave
- Duration: 5 days
- Payment: 4/5 of average daily wages
- Timing: Must be taken within 10 weeks of child's birth
- Eligibility: After 40 weeks of continuous employment
Statutory Holidays
Employees are entitled to pay for 12 statutory holidays per year, or alternative holidays if required to work.
Summary
| Leave Type | Duration | Payment Rate | Eligibility |
|---|---|---|---|
| Annual Leave | 7-14 days/year | Full pay | After 12 months |
| Sick Leave | 2-4 days/month | 4/5 pay (after 4 days) | Continuous contract |
| Maternity Leave | 14 weeks | 4/5 pay | After 40 weeks employment |
| Paternity Leave | 5 days | 4/5 pay | After 40 weeks employment |
Termination Types
Summary Dismissal (With Cause):
- No notice or payment required
- Must involve serious misconduct
- Examples: dishonesty, disobedience, misconduct
Termination Without Cause:
- Requires notice or payment in lieu
- Most common form of termination
Notice Period Requirements
| Length of Employment | Notice Period |
|---|---|
| Less than 1 month | 1 day |
| 1 month to 2 years | 1 month |
| 2+ years | 2 months |
Severance Pay
Severance payment is required when:
- Employee has 5+ years of continuous service
- Termination is due to redundancy
- Amount: 2/3 of monthly wages × years of service
- Cap: HK$22,500 per year of service
Long Service Payment
Alternative to severance pay when:
- Employee has 5+ years of continuous service
- Termination is not due to serious misconduct
- Amount: 2/3 of monthly wages × years of service
- Cap: HK$22,500 per year of service
Probationary Periods
- Standard Duration: 1-3 months
- Notice Requirements: Shorter notice periods apply during probation
- Termination: Either party can terminate with minimal notice
Final Pay Requirements
- Timeline: Within 7 days of termination
- Components: Outstanding wages, accrued annual leave, any contractual payments
- Deductions: Only permitted deductions allowed by law
Public Holidays (2024)
| Holiday | Date |
|---|---|
| New Year's Day | January 1 |
| Lunar New Year | February 10-13 |
| Ching Ming Festival | April 4 |
| Good Friday | March 29 |
| Easter Monday | April 1 |
| Labour Day | May 1 |
| Buddha's Birthday | May 15 |
| Dragon Boat Festival | June 10 |
| Hong Kong SAR Establishment Day | July 1 |
| Mid-Autumn Festival | September 17 |
| National Day | October 1 |
| Chung Yeung Festival | October 11 |
| Christmas Day | December 25 |
| Boxing Day | December 26 |
Holiday Pay Rules
- Statutory Holidays: 12 days per year with pay
- Alternative Holidays: Must be provided if employee works on statutory holiday
- Payment: Full day's wages for each statutory holiday
General Holidays vs. Statutory Holidays
Hong Kong distinguishes between:
- Statutory Holidays: 12 days (minimum legal requirement)
- General Holidays: 17 days (includes additional days like Christmas Eve)
Most employers provide general holidays, but only statutory holidays are legally mandated.
Required Documentation
Employment Contract:
- Job title and duties
- Salary and benefits
- Working hours
- Termination clauses
- Must be in Chinese and English if employee requests
Government Forms:
- IR56B (Notification of Commencement of Employment)
- MPF enrolment forms
- Tax file setup
Identity Verification:
- Hong Kong Identity Card
- Work visa (for non-residents)
- Bank account details for salary payment
Work Visa Requirements
For Non-Hong Kong Residents:
- General Employment Policy visa
- Investment visa (for entrepreneurs)
- Quality Migrant Admission Scheme
- Working Holiday Scheme (for eligible countries)
MPF (Mandatory Provident Fund) Setup
- Enrollment: Within 60 days of employment
- Contribution: 5% each from employer and employee
- Exemptions: Employees under 18 or over 65
Language Considerations
- Official Languages: Chinese (Cantonese) and English
- Contracts: Can be in English, Chinese, or both
- Workplace Communication: Varies by company and industry
Onboarding Timeline
| Step | Timeline |
|---|---|
| Job offer accepted | Day 0 |
| Employment contract signed | Day 1-3 |
| Work visa processing (if needed) | 4-6 weeks |
| MPF enrollment | Within 60 days |
| IR56B submission | Within 3 months |
| Payroll setup | Day 5-7 |
Worker Classification
Hong Kong employment law distinguishes between:
- Employees: Under continuous contract (4+ hours/day, 4+ weeks)
- Casual Workers: Not under continuous contract
- Independent Contractors: Self-employed individuals
Continuous Contract Benefits:
- Statutory holidays
- Annual leave
- Sick leave
- Maternity/paternity leave
- Severance/long service payments
Data Protection
Personal Data (Privacy) Ordinance:
- Employers must obtain consent for data collection
- Data must be used only for stated purposes
- Employees have right to access and correct personal data
- Cross-border data transfers require compliance
Anti-Discrimination Laws
Hong Kong prohibits discrimination based on:
- Sex
- Marital status
- Pregnancy
- Disability
- Family status
- Race
Equal Opportunities Commission enforces these protections.
Cultural Considerations
Business Culture:
- Hierarchy and respect for seniority important
- Face-saving and indirect communication valued
- Relationship-building (guanxi) crucial
- Work-life balance increasingly important
Communication Style:
- Formal business relationships initially
- Cantonese widely spoken in local businesses
- English common in international companies
- Written communication often formal
Remote Work
- Legal Framework: No specific remote work legislation
- Contractual Basis: Terms must be clearly defined in employment contract
- Tax Implications: May affect tax residency status
- Equipment: Employer responsibilities should be contractually specified
Note: This guide provides general information and should not be considered legal advice. Employment regulations in Hong Kong can change, and specific situations may require professional consultation. Always verify current requirements with local legal counsel or employment specialists.
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