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Employing in Hong Kong
Famous for being one of the most bustling, cosmopolitan cities in the world, Hong Kong is the place where skyscrapers meet centuries-old temples and where both eastern and western cultures co-exist in a global melting pot. Originally a sparsely populated area of farming and fishing villages, the territory is now technologically advanced and has become one of the world’s most significant financial centres and commercial ports — yet still manages to preserve its rich history.
Home to over 7.5 million people, Hong Kong has long been a gateway to China. As a special administrative region of that nation, Hong Kong offers many economic and compliance-related advantages for engaging in cross-border business transactions with the world’s second-largest economy. However, thanks to its location in the heart of the Asia Pacific (APAC) region and good connections to other key economic markets such as Singapore, Taipei and Seoul, Hong Kong is also the ideal global expansion destination for companies looking to gain a foothold in other major Asian markets.
The majority of the working population also speaks fluent English, and Hong Kong offers a visa waiver entrance for visitors from more than 170 countries — ideal for facilitating international business and overseas visits to the region.
Country Guidelines
An overview of employing in Hong Kong
Employment regulations in Hong Kong are outlined in the Employment Ordinance (EO) which is the primary labour legislation. The EO applies to all employees working in Hong Kong regardless of their nationality.
It should be noted that the EO refers to ‘continuous’ and ‘non-continuous’ employment, and legislations should be adhered to in line with these terms. Employees in continuous employment will be entitled to additional benefits. Continuous employment is defined as working for the same employer for 18 hours or more per week for at least four consecutive weeks.
Salary currency
Hong Kong Dollar — HK$
Salary pay date
Wages are due on the last day of the wage period and should be paid no later than the 7th of the month following.
Salary
The Minimum Wage Ordinance (MWO) states the minimum wage for employees in Hong Kong.
Bonus
Bonus payments are not mandatory; however, it’s often customary to provide a 13th-month salary payment to employees between Christmas and Chinese New Year. Bonuses paid as an annual payment are considered an ‘end-of-year payment’ under the Employment Ordinance and must comply with relevant legislations. It’s important that this is clearly stipulated in the contract to avoid confusion with discretionary bonuses.
Social security system
There are no social security taxes in Hong Kong. There’s a social security scheme in place (CSSA), which supports all residents who are unable to support themselves financially.
Healthcare
Hong Kong has a well-established, low-cost public healthcare system which is accessible to both permanent and non-permanent residents upon presentation of a valid visa and ID card.
It’s not uncommon for non-national employees to take out private medical insurance in order to benefit from Hong Kong’s private healthcare system.
Employer costs
Tax withholding
Taxes are not deductible by the employer and are the responsibility of the employee. Employees must file an annual tax return with the Inland Revenue Department (IND).
An overview of the main statutory benefits
Pension
Employers and employees don’t generally make pension contributions to the government. Instead, mandatory contributions to the Mandatory Provident Fund (MPF) should be made by both employers and employees to an MPF scheme, controlled by the Mandatory Provident Fund Schemes Authority (MPFA). Contributions are mandatory for all employees, unless the employee is on a contract of 13 months or less, in which case an exemption is made. As of March 2019, employees may now opt to make additional contributions as part of the Mandatory Provident Fund’s voluntary contributions scheme.
| Employer Contribution | Monthly Threshold | |
|---|---|---|
| Employer | 5% | HKD 1,500 |
| Employee | 5% | HKD 1,500 |
| Total | 10% | HKD 3,000 |
The contribution should be taken as a percentage of the employee’s relevant income. This includes all additional payments including bonuses, commissions and leave pay, with the exception of severance pay and long-service payments.
Retirement age in Hong Kong is between 60 and 65 and should be stipulated in the contract of employment.
Sickness
All employees in Hong Kong that are employed continuously will accrue sick leave in the form of a sickness allowance. This is equal to two paid sick days per month in the first year of employment and four days per month thereafter.
The maximum sickness allowance that can be accrued is 120 days.
Sick pay is calculated at a daily rate equivalent to four-fifths of the average daily wage earnt in the 12-month period worked prior to taking sick leave. It’s not permitted for an employer to dismiss an employee who is absent from work during sick leave, except in the case of gross misconduct.
Employees are required to provide a medical certificate for days in which they request sickness pay.
Maternity & paternity
An employee is entitled to 10 weeks of maternity leave pay, provided that she has worked for the employer under a continuous contract for no less than 40 weeks immediately before taking scheduled maternity leave. Maternity leave should be paid on the regular pay day of the employee.
Employees are entitled to five days’ paternity leave provided they’ve been employed continuously by the same employer for four weeks or more and have been working for at least 18 hours each week.
The daily rate of maternity and paternity leave pay is a sum equivalent to four-fifths of the average daily wages earnt in the 12-month period prior to maternity leave (or since the date of hire, if less than 12 months).
Contractual provisions
Contract of employment
If an employee is covered by the EO, the terms of the contract must meet the minimum regulations
Probationary period
A probationary period isn’t mandatory, but if instated, it shouldn’t exceed 12 weeks. The probation clause in the contract of employment should state if there are any exemptions to other terms in the contract including salary, notice period prior to termination and access to other benefits. During the first month of probation, an employee is entitled to terminate the contract without notice.
Working hours
There’s no statutory working hour legislation in place in Hong Kong; however, the Employment Ordinance stipulates that all employees must receive at least one rest day per week. Common practice is for employees to work between 40 to 50 hours per week.
Termination
The regulations for termination in Hong Kong are stipulated by the Employment Ordinance. The minimum notice period that may be stipulated in a contract is seven days. If, however, there’s no notice period specified in the contract of employment, a notice period of one month is required.
Severance pay
Any employee who has been made redundant after being in continuous employment for a minimum of two years is entitled to a severance payment.
This is equivalent to two-thirds of the employee’s monthly wage multiplied by the period of service in years. The maximum severance pay that can be given to an employee is HK$390,000 or $15,000 per year of service.
Statutory insurances
Employees’ Compensation Insurance (ECI)
The Employment Ordinance states that no employer shall employ employees unless a policy of insurance to cover liabilities and workplace injuries is in force. This insurance is irrespective of employment length, contract type and working hours. The insurance is solely the responsibility of the employer and no deduction can be made from an employee’s salary to cover the premium.
The minimum insurance cover is dependent on the number of employees:
| Number of employees | Amount of insurance cover per event |
|---|---|
| Less than 200 | No less than HKD 100 million |
| More than 200 | No less than HKD 200 million |
Additional labour insurance
The additional labour insurance premium applies to all employees working in specialist industries where the risk of workplace injuries is higher. This includes workers in a laboratory, factory, engineers and employees required to use machinery. In these instances, the employer will need to pay an additional premium, which will vary dependent on the level of risk. Please note, this is approximately HKD 2000+ per annum.
Holiday Entitlement
Employees in Hong Kong are entitled to 12 statutory public holidays irrespective of their length of service. Once an employee has worked for a period of three months, they’ll be entitled to paid leave on public holidays. If an employer requires an employee to work on a public holiday, the employer should arrange an alternative holiday within 60 days (before or after the statutory holiday). If the statutory holiday falls on a rest day, the employee should be granted paid holiday on the following day.
In addition to paid statutory holidays, employees are entitled to seven days of paid annual leave after twelve months of employment under a continuous contract. Annual leave entitlement increases progressively up to a maximum of 14 paid days per year. (In practice, many executives are granted 14 days annual leave per year.) Any paid annual leave should be taken within the following period of 12 months. Any rest day or statutory holiday falling within a period of annual leave will be counted as annual leave and another rest day or holiday must be appointed.
| Years of service | Annual leave entitlement |
|---|---|
| One | Seven days |
| Two | Seven days |
| Three | Eight days |
| Four | Nine days |
| Five | 10 days |
| Six | 11 days |
| Seven | 12 days |
| Eight | 13 days |
| More than nine | 14 days |
| Public holidays 2021 | ||
|---|---|---|
| The first day of January | Friday 1 January | |
| Lunar New Year’s Day | Friday 12 February | |
| The Second Day of Lunar New Year | Saturday 13 February | |
| The Third Day of Lunar New Year | Sunday 14 February | *Substituted on Monday 15 February |
| Ching Ming Festival | Sunday 4 April | *Substituted on Monday 5 April |
| Labour Day | Saturday 1 May | |
| Tuen Ng Festival | Monday 14 June | |
| HK Special Administrative Region Establishment Day | Thursday 1 July | |
| Chinese Mid-Autumn Festival | Wednesday 22 September | |
| National Day | Friday 1 October | |
| Chung Yeung Festival | Thursday 14 October | |
| Chinese Winter Solstice or Christmas Day | *Saturday 25 December | *At the discretion of the employer |
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