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An important step after setting up your Hong Kong company is hiring employees. It is important to be aware of the legal formalities involved in the hiring process and to have a clear understanding of the employment legislation in Hong Kong. You must consider the following key issues while hiring employees in Hong Kong:
Are you planning to hire employees in Hong Kong? Not sure about the employment law and employment Ordinance? This guide provides an introduction to Hong Kong’s key labor legislations, hiring guidelines for local and foreign employees and employee benefits, and common recruitment practices in Hong Kong.
The Employment Ordinance is the key legislation that spells out the basic terms and conditions that govern employment laws in Hong Kong.
The Employment Ordinance covers all employees, whether temporary or part-time, except the following:
Furthermore, the Employment Act distinguishes between employees, categorizing them as:
Employees employed under an employment contract are entitled to basic protection under the Ordinance including payment of wages, restrictions on wage deductions and the granting of statutory holidays, etc.
Employees employed under a continuous contract, whether temporary or part-time, are entitled to all the statutory benefits under the Employment Ordinance including rest days, paid annual leave, sickness allowance, severance payment and long service payment etc. A continuous contract of employment is an employment contract under which an employee works continuously for the same employer for 4 weeks or more, with at least 18 hours in each week.
Features | Employment Contract Employees | Continuous Employment Contract Employees |
---|---|---|
Maximum Hours of Work/Week | As per contract. Common Practice: 40 – 50 Hours. |
As per contract. Common Practice: 40 – 50 Hours. |
Maximum Number of Work Days/Week | As per contract. Common Practice: 5 days. |
As per contract. Common Practice: 5 days. |
Overtime | As per contract. | As per contract. |
Paid Public Holidays | 12 days. | 12 days. |
Paid Annual Leave | Not Eligible. | 1st Year: 7 days.
2nd Year: 8 days.
3rd Year: 9 days and so on, up to a maximum of 14 days
|
Paid Annual Sick Leave | Not Eligible. | 1st Year: 24 days 2nd Year: 48 days |
Paid Maternity Leave | Not Eligible. | 10 weeks, subject to certain conditions. |
End of Year Payment (Annual Bonus + Double Pay) | Not Eligible. | As per contract. |
Probation Period | As per contract. Common Practice: 1-6 months. |
As per contract. Common Practice: 1-6 months. |
Termination Notice Period | As per contract, but not < 7 days. Common Practice: 1 month.
In the absence of a contract: 1 month. |
As per contract, but not < 7 days. Common Practice: 1 month.
In the absence of a contract: 1 month. |
Severance Payment | Not Eligible. | Eligible only if:
|
Long Service Payment | Not Eligible. | Eligible only if employed for at least 5 years and subject to certain other conditions. |
Medical Insurance | As per contract. | As per contract. |
Mandatory Provident Fund Contribution | Required. | Required. |
Hong Kong employment contract specifies the agreed upon terms and conditions of employment between the employer and employee. The contract includes both explicit and implied terms. Please note that if your employee is covered under the Employment Ordinance, the contract terms should abide by the minimum requirements under the Ordinance. Employment contracts can be oral or written. If contracts are in the written form, it is mandatory for all employers to provide employees with a copy of the written employment contract. In addition, employers must obtain their employee’s consent before making any subsequent changes to the terms of the employment contract. Some of the key points to be included in the contract are:
As an employer, you are required to prepare tax forms for all your employees to report their remuneration every year under the Income Tax Ordinance. You are also required to keep payroll records for at least seven years.
Tax clearance is required for employees leaving Hong Kong for good or for a substantially long period exceeding one month. Tax clearance ensures that the departing employees have paid all taxes. Note that this does not apply to employees who travel frequently in the course of their employment. As an employer, you must notify the tax authority (Inland Revenue Department of Hong Kong) of the employee’s expected date of departure, at least one month prior to the departure date. You must also withhold all payment due to your employee from the date on which the notification was given, for a period of one month or until the IRD does an assessment and confirms that all taxes have been paid by issuing a letter of release , whichever is earlier.
Hong Kong’s workforce is a cosmopolitan one, comprising of diverse individuals in terms of ethnicity, gender, and age. As a result, employers are encouraged to eliminate any discriminatory practices in employment. In this regard, the Labor Department has issued certain guidelines on how to prevent discrimination on the grounds of sex, disability, family status, and race in the workplace. A summary of the guidelines is as follows:
Talk to Hawksford about your payroll, employee benefit package and visas and let us recommend a solution that saves you time and effort.
The legal age to work in Hong Kong is 18 years and above. However, you are permitted to employ children and young persons aged 13 years – 17 years. Please note that there are restrictions on the type of work that children and young persons can perform. There is currently no mandatory retirement age in Hong Kong. However, in practice the retirement age is usually 60-65 years.
For students who are Hong Kong citizens or Hong Kong Permanent Residents: Students who are citizens or PRs of Hong Kong can be hired on a full time or part time basis, without any restrictions. Students, including interns, are entitled to MPF contributions. The common practice is to pay interns only a monthly allowance.
For students who are foreigners: Foreign students of full-time, locally accredited programs at degree level or above and whose study period is not less than one academic year can be hired as interns subject to the following conditions:
There is no restriction on the nature of work, level of salary, location, number of working hours and employers.
Moreover, these students (excluding exchange students) may take up:
The Hong Kong Employment Ordinance does not formally define part-time or contractual employees. However, in common practice part-time staff work for lesser number of hours than full-time employees. Contract workers generally refer to employees on a fixed-term employment contract. Under Hong Kong’s Employment Ordinance, part-timers and contract workers enjoy the same protection as permanent full-time employees.
The Hong Kong government strongly advocates that employers must give first preference to the local workforce for filling job vacancies. Foreigners who possess special skills, knowledge or experience of value to and not readily available in Hong Kong are allowed to enter and stay in Hong Kong for employment as professionals.
A foreigner must have a valid work visa to be able to work in Hong Kong. If you wish to hire a foreigner, you will have to apply for a valid work visa on your employee’s behalf before (s)he can commence employment with you.
The foreign work force can be categorized in two main groups:
Tabulated below is an overview of Hong Kong work visas. For further details, please refer to Hong Kong Visa Schemes.
Visa Type | Employment Visa | Supplementary Labor Scheme Visa |
---|---|---|
Suitable For | – Foreign professional staff who have graduated from an academic institute in Hong Kong, and
– Foreign professional staff and Chinese residents of the Mainland who have not graduated from Hong Kong but possess special skills, knowledge or experience of value to and not readily available in the Hong Kong. |
Semi-skilled professionals at technician level or below. |
Validity | Issued for 1 year initially.
Renewable |
Issued for 1 year initially.
Non-renewable |
Quota System | No | No |
Eligibility for Dependants Pass | Yes | No |
Restrictions on Nationality | Yes | Yes |
Levies | No | No |
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We provide employee salary statutory deductions calculation, payment arrangements to employees and statutory authorities, expense reimbursement arrangements, employee benefits computation, determination of final payment upon termination of an employee, preparation of year-end tax forms for employees, and preparation of personal tax returns for filing with Inland Revenue Department of Hong Kong.
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Talk to Hawksford about your payroll, employee benefit package and visas and let us recommend a solution that saves you time and effort.
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