Hong Kong has a unique flavor regarding the working culture environment by being the bridge and gateway between China and the West. Nevertheless, the regulations of employment are different in many aspects between Mainland China and Hong Kong.
To successfully establish a working team, cultural factors, and perceptions must be taken into consideration, apart from only focusing on the local regulations and minimum requirements of a work contract.
Hiring employees in Hong Kong is not a complicated process, but learning about the regulations will reduce unpleasant surprises. More details will be explored in the following section.
The Employment Ordinance is the law that regulates and encompasses the rights and protections that an employee receives in Hong Kong. The authority that governs the enforcement of the law and the minimum requirements covered in a working relationship is the Hong Kong Labour Department.
The Labour Department of Hong Kong keeps in check that the employers and owners of Hong Kong companies are correctly following the Employment Ordinance.
The employee's protection includes the right to maternity or paternity leave, wage payment, right to holidays, year-end payment, sickness allowance, and proper termination of the working contract and others. In this sense, all Hong Kong employees, either full-time or part-time, are covered by this legislation.
Employment contracts in Hong Kong—minimum requirements
Generally speaking, the contract terms in Hong Kong are very flexible; the employee and the employer can agree to the terms they negotiate.
However, the contract must not violate or exclude the requirements of the Employment Ordinance. Some of the basic elements that a contract must possess to be valid in Hong Kong are:
- Name of the employee: the name of the employee with their identity document (Hong Kong identity card or passport).
- Name of the employer: the name of the entity hiring the individual.
- Date of commencement: the date when the employee will start the task.
- Job title: the position that the individual will fill.
- Wage amount: it must reflect an equal amount from the minimum wage in Hong Kong. A defined hourly rate or period must be specified for the salary to be paid on a time basis.
- Working schedule: the rate of hours to be worked by the individual, either by day or week.
- Overtime: it must be specified how overtime will be counted and calculated.
- Leaves: the days that the employee is entitled to have as mandatory annual leave, sick leave, maternity, etc.
- End-of-the-year payment: employees have the right to receive an extra month of salary at the end of each year of continuous work. This must be defined in the contract.
- Termination: period to cover the notice of termination from both the employee and the employer.
It is suggested to finalize the negotiation of a contract in writing instead of an oral agreement to have the supporting documents with all the details mentioned in the talks.
Failing to provide proof to the Labour Department can be liable for a penalty fee and, in extreme cases, jail time.
As we have seen, a company's employment contract offers flexibility when negotiating working conditions in Hong Kong. The same approach is translated into the employer's obligations that are kept to a minimum.
It is expected that an employer must pay the amount of salary that was agreed upon and respect the dates for the payment without breaking any of the conditions of the contract, including the days off for their employees.
Additionally, an employer must keep a record and report the number of employees that receive salaries to the Hong Kong Inland Revenue Department. The minimum entitlements for employees in Hong Kong include the following:
- 12 paid public holidays
- A minimum of sevens days' notice for termination of the contract
- Mandatory Provident Fund (MPF) contribution
Let's go more in-depth in the following sections.
Your Payroll System—The keeping of records
Keeping a record of the payment of salaries can be useful proof to solve any dispute arising between you and your employees. As it may be requested or needed in the future, it is mandatory to have these records for at least seven years for accounting purposes and to make the latest audited financial report of your company as well.
Thanks to the advance of technology, doing the calculations and keeping these records has never been easier. Using payroll software to manage the payment of salaries in your company can save time and resources from your HR Department and reduce mistakes in the calculations.
Although there are many services provided for payroll services in Hong Kong, it is important to choose the one that best adapts to your company's needs. You don't need to spend a fortune to have a system that improves the efficiency and security of the record-keeping of your employee's salaries.
It could become an essential tool for the correct operation of your company. For more information about this topic, please read our article about payroll in Hong Kong.
Reporting Employee Remuneration in the Tax Returns
Besides receiving the Profit Tax Return, Hong Kong companies may also receive the Employer's Return, in which employers report to the Inland Revenue Department the salaries and remunerations employees and directors receive within a fiscal year. This form is usually received around March or April every year.
Failing to report the number of current employees working at the company or the remunerations and submit the form within the stipulated period can have consequences for both the employees and the employers since it would be considered a breach of compliance.
Penalties fees and assessments for the individuals can be requested by the Hong Kong Inland Revenue Department. Additionally, if a foreign employee is to leave Hong Kong, the employer must also notify the tax authority.
The Mandatory Provident Fund Scheme (MPF)
As employers in Hong Kong do not need to withhold taxes from their employee's salaries, they must do so with their contributions for retirement. These contributions go into a government fund known as the Mandatory Provident Fund Scheme (MPFS).
The Hong Kong Mandatory Provident Fund Authority sets this contribution at a minimum rate of 5% of the monthly salary amount. The employer contributes an extra 5% from their pocket.
Failing to pay the contributions, both the withheld amount and the one from the employer will have legal consequences that can evolve into the authority demanding, by legal action, to recover the non-paid amounts and penalties.
Statutory Annual Leave—Avoiding the burnout of your employees
In Hong Kong, employees are entitled to annual leave and public holidays by law. As we discussed, Hong Kong stands between two cultures, and its public holiday calendar reflects it. For example, celebrating both Chinese New Year and Christmas. These are the categories of days off an employee has in Hong Kong:
- Annual leave: it is the paid leave that an employee earns. By law, an employee is entitled to a minimum of 7 days after working for 12 months; it increases to 1 day per year up to a maximum of 14 days. Employees can negotiate more days of annual leave with their employers.
- Holidays: starting in 2022, there are 13 paid days counted as statutory holidays in the public calendar of Hong Kong.
- Sickness Allowance: employees who can provide supporting medical documents are entitled to take up to 4 consecutive days of paid leave. 2 days are accumulated for each month worked.
- Maternity and Paternity Leave: female employees, who are going through a pregnancy, can take up to 14 weeks of continuous paid leave. Male employees are entitled to take up to 5 days of paid leave.
Respecting the days off from your employees could be an excellent strategy to retain talent in your company to avoid having a high turnover rate and keep the operations stable for your business. For more details, you can consult the web page of the Labour Department.
The Guidelines for recruitment are obligatory for all employers in Hong Kong. These guidelines are designed to avoid discrimination during recruiting and hiring process.
These Guidelines include the Code of Practice against Discrimination in Employment on the Ground of Sexual Orientation and require that:
- Consistent selection criteria during the process of recruitment, hiring, and promotion decisions
- Employees involved in recruitment receive anti-discrimination training
- All employment advertising is non-discriminatory
- Application forms and interviews avoid questions that could lead to discrimination relating to age, gender, race, religion, language, or marital status.
The Hong Kong Immigration Policy—Attracting talent
Hong Kong has a long trajectory of attracting talent, and its immigration policies reflect that fact.
Having almost visa-free entry requirements for almost all the countries in the world, there is a broad range of programs and schemes under the Hong Kong immigration Policy to increase international business and talent.
Programs for foreigners in Hong Kong
Having a separate system from Mainland China, the Hong Kong authorities have devices and implemented the following schemes:
- Entry for Investment as Entrepreneur: individuals who have a project with the potential to benefit the development of Hong Kong can apply for this kind of program. A person with a successful application form is awarded a one-year visa that can be renewed.
- The Quality Migrants Admission Scheme (QMAS): individuals with highly demanded skills or who have plans for startups can enter into this program. However, this scheme works on a quota basis with a maximum of 1,000 accepted individuals per year.
The Work Visa—Getting employed in Hong Kong
Foreign individuals who want to take employment in Hong Kong can obtain a work or a Hong Kong employment visa. Some of the qualifications needed to apply for this type of visa are the following:
- A clean criminal record.
- Proof of education or academic qualifications, skills, or professional background is required for the applied position.
- The position cannot be occupied by a Hong Kong resident.
- The salary offer corresponds to the applicant's qualifications and the standard of the job market in Hong Kong.
For the applications for visas, the Hong Kong Immigration Department will oversee the process through an immigration officer and grant the visa to the applicant if the result is approved.
Startups and entrepreneurs who can prepare a business plan that can prove to sustain a Hong Kong company that will generate jobs and economic development in the city can obtain an Investment Visa in Hong Kong.
While there is not a set amount for the application, it must go in line with the business plan and be enough to maintain the operations of the intended business until it is profitable.
Here we will enlist some of the eligibility criteria that applicants must meet for the visa application:
- No convictions reflected on their criminal record.
- They must not represent a threat to the security of Hong Kong.
- Proof of relevant education or skills for the intended business plan.
- A well-presented and defined business plan that can substantially involve hiring locals and become beneficial for the economy of Hong Kong.
- No criminal records or security objections from the Hong Kong police background check (completed from entry to the Hong Kong SAR and further during the application process).
- Present the certificates of the established company in Hong Kong (Business Registration Certificate and Incorporation Certificate.
For more information about this topic, please read our article about Investment visas.
As foreign talents had relocated to Hong Kong through the years, the local authorities had offered a choice to relocate their families and spouses as well, offering a special visa called Dependant Visa.
Individuals who hold a valid Hong Kong visa or are Hong Kong permanent residents can become sponsors for dependants. The individuals who qualify as dependants are the following:
- Spouse: an individual who is in a civil union that is legally recognized in their country of origin.
- Children: unmarried dependent children that are under 18 years old.
- Parents: adults over 60 years old and in need of care. This is only possible for Hong Kong permanent residents.
Note: *This visa is also known as the Dependent Visa.
Please read our article here for more information about the Dependant Visa in Hong Kong.
Getting employees in Hong Kong is not an impossible task. However, the more informed and prepared a company is, the fewer troubles it will face and will better navigate the local regulations of Hong Kong.
Whether choosing to hire a local or bringing over foreigners to fill a position in your company, Hong Kong has many paths to attract the needed talent, which has been the key to its success.
Additionally, having a strategy to keep and retain talent will benefit your business operations in the long run.
Can a foreign company hire employees in Hong Kong?
What is the age requirement to work in Hong Kong?
What does it mean by 'hire to work'?
What are recruitment guidelines?