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How to Hire Employees in Hong Kong

Are you considering hiring employees in Hong Kong? Read our comprehensive Hong Kong hiring guide to find out everything you know about engaging a Hong Kong-based workforce. 

Key Takeaways

  • It’s strategic geographical location, commerce-friendly regulations and highly-talented workforce make Hong Kong a popular destination for international hiring. 
  • When hiring employees in Hong Kong, pay careful attention to the labor and commercial regulations that apply there. 
  • Due to the complexities of hiring in Hong Kong, it may be worth considering the services of a professional partner in Hong Kong to support your hiring there. 

Why hire employees in Hong Kong?

Many global companies are interested  hiring in Hong Kong is the highly skilled and multilingual workforce. Known for its robust educational system and emphasis on professional development, Hong Kong offers a rich talent pool that is well-equipped to handle the demands of international business. Many residents of Hong Kong are bilingual or even trilingual, often fluent in English, Cantonese, and Mandarin. This language versatility enhances communication and collaboration in an international business context, bridging cultural and linguistic barriers and enabling effective operations across different markets.

Furthermore, Hong Kong’s strategic location is another compelling reason for international companies to hire there. It acts as a gateway to the massive mainland Chinese market while also offering easy accessibility to other Asia-Pacific economies. Its business-friendly environment, which is characterized by a low and straightforward tax system, free flow of information and capital, and robust legal system, also positions it as a conducive place for conducting international business. This combination of factors means that employees hired in Hong Kong can help businesses navigate and capitalize on opportunities in one of the world’s fastest-growing economic regions.

What are the legal requirements for hiring employees in Hong Kong?

When hiring employees in Hong Kong, there are several legal requirements that employers must comply with. Here are the key legal requirements:

  1. Employment Contracts: Employers must provide a written employment contract to employees within the first 30 days of employment. The contract should include terms and conditions of employment, such as job duties, working hours, remuneration, benefits, leave entitlements, and termination procedures.
  2. Minimum Wage: Hong Kong has a statutory minimum wage that employers must comply with. The minimum wage is currently HKD 37.5 per hour. It’s important to stay updated on any changes to the minimum wage.
  3. Working Hours: The Employment Ordinance sets out standard working hours in Hong Kong, which should not exceed 8 hours per day or 44 hours per week. Employers must ensure compliance with these limits and provide employees with rest days, meal breaks, and rest breaks as required by law.
  4. Mandatory Provident Fund (MPF): Employers are required to enroll their employees in an MPF scheme and make monthly contributions to the scheme. The current minimum contribution is 5% of the employee’s relevant income, subject to a maximum monthly cap of HKD 1,500. Compliance with MPF regulations is essential.
  5. Leave Entitlements: The Employment Ordinance provides for various types of leave entitlements for employees in Hong Kong. These include annual leave, sick leave, maternity leave, paternity leave, and statutory holidays. Employers must comply with the minimum leave entitlements specified in the law.
  6. Tax Obligations: Employers must deduct salaries tax from their employees’ remuneration and remit it to the Inland Revenue Department. Employers are also responsible for providing employees with tax-related documents, such as IR56B and IR56E forms, as required by the tax authorities.
  7. Work Visa Requirements: If you plan to hire foreign employees, they must obtain the necessary work visas or permits to legally work in Hong Kong. Different visa categories exist, such as employment visas, dependent visas, and investment visas. Employers should ensure that their foreign employees have the appropriate visas before commencing employment.
  8. Anti-Discrimination and Equal Opportunities: Employers must comply with anti-discrimination laws in Hong Kong. It is illegal to discriminate against employees based on factors such as race, sex, disability, family status, or sexual orientation. Employers should ensure fair and equal treatment of all employees.
  9. Termination and Severance: Employers must follow proper termination procedures as outlined in the Employment Ordinance. This includes providing notice or payment in lieu of notice, severance payments for eligible employees, and handling termination disputes in accordance with the law.
  10. Occupational Safety and Health: Employers have a legal duty to ensure a safe and healthy working environment for their employees. They must comply with occupational safety and health regulations, conduct risk assessments, provide necessary safety equipment, and implement appropriate safety measures.

It’s important to note that employment laws and regulations can change over time. Therefore, it’s advisable to consult with legal professionals or employment specialists or refer to the official government sources to ensure compliance with the latest requirements in Hong Kong

How much does it cost to hire employees in Hong Kong?

The cost of hiring employees in Hong Kong includes several components. Here are some key factors to consider when calculating the costs:

  1. Salary: The salary you offer to employees will depend on various factors such as job position, industry, experience, and qualifications. It is essential to offer a competitive salary to attract and retain talented employees. You should also consider factors like annual increments, performance-based bonuses, and other variable components of compensation.
  2. Mandatory Provident Fund (MPF): As mentioned earlier, employers in Hong Kong are required to contribute to an MPF scheme for their employees. The minimum contribution is currently set at 5% of the employee’s relevant income, subject to a maximum monthly cap of HKD 1,500.
  3. Employee Benefits: Additional employee benefits such as medical insurance, annual bonuses, transportation allowances, and housing allowances, if offered, will add to the overall cost of hiring employees. The specific benefits and their costs will vary depending on your company’s policies and the level of coverage provided.
  4. Taxes and Government Contributions: Employers are responsible for deducting salaries tax from their employees’ remuneration and remitting it to the Inland Revenue Department. The tax rate is progressive, ranging from 2% to 17%, depending on the employee’s income level. In addition to taxes, employers must also make MPF contributions, as mentioned earlier.
  5. Recruitment Costs: If you use recruitment agencies or job portals to find suitable candidates, there may be associated costs. These costs can vary depending on the agency or platform you use and the level of assistance required.
  6. Training and Development: Investing in training and development programs for your employees can contribute to their professional growth and enhance their skills. Training costs will depend on the type of training programs, external trainers or resources, and the frequency of training sessions.
  7. Employee Termination Costs: In the event of terminating an employee’s contract, there may be costs involved such as severance payments or long service payments, depending on the length of service and circumstances of termination. These costs should be considered when calculating the overall cost of hiring.

It’s important to note that the costs mentioned above are general considerations, and the specific amounts can vary depending on the individual circumstances, industry, and company policies. It is advisable to consult with a professional accountant or HR specialist who can provide guidance tailored to your specific situation and ensure compliance with local laws and regulations.

What are the key ways to hire employees in Hong Kong, such as PEO and EOR solutions?

When hiring employees in Hong Kong, there are several key ways to manage the employment process. Here’s an overview of these options:

  1. Direct hire: You could set up a subsidiary of your company in Hong Kong, or register a branch of your company there. Once done, you are able to hire locals in Hong Kong just like any other company. 
  2. Professional Employer Organization (PEO): A PEO is a third-party organization that acts as the employer of record for the employees you hire. The PEO takes care of various HR responsibilities, including payroll processing, benefits administration, tax compliance, and employment contracts. Essentially, the PEO becomes the co-employer for compliance purposes, while you maintain operational control over the employees. This option allows you to outsource HR tasks and ensure compliance with local employment laws and regulations.
  3. Employer of Record (EOR) Service: An EOR service is similar to a PEO but typically offers a broader range of services (read more in our guide, PEO vs EOR). It involves partnering with a company that becomes the official employer of record for your employees. The EOR service provider handles HR functions such as payroll, benefits, tax withholding, compliance, and legal responsibilities. This solution allows you to focus on your core business while relying on the expertise of the EOR to manage the employment-related aspects.

Both PEO and EOR solutions offer several potential benefits when hiring employees in Hong Kong:

  1. Compliance: PEOs and EORs have knowledge of local employment laws and regulations, which can help ensure compliance with all legal requirements. They can handle payroll tax calculations, benefits administration, and other HR-related tasks, reducing the risk of non-compliance.
  2. Time and Cost Savings: By outsourcing HR functions to a PEO or EOR, you can save time and resources spent on managing employment-related tasks. These services handle administrative burdens, allowing you to focus on core business activities. It can also be more cost-effective than establishing and maintaining an in-house HR department.
  3. Expertise and Support: PEOs and EORs have expertise in employment regulations, payroll management, and HR practices. They can provide guidance on matters such as recruitment, employee onboarding, termination procedures, and employee benefits, offering support throughout the employment lifecycle.
  4. Flexibility: PEOs and EORs offer flexibility in scaling your workforce. They can assist with hiring and onboarding employees quickly and efficiently, making it easier to expand or downsize your team as needed.

When considering PEO or EOR services, it’s crucial to thoroughly research and select a reputable provider with a strong understanding of Hong Kong’s employment landscape and laws. Evaluate their track record, reputation, expertise, and the range of services they offer to ensure they align with your specific requirements.

Additionally, it’s advisable to consult with legal and HR professionals to understand the implications, benefits, and potential drawbacks of using PEO or EOR services in Hong Kong based on your unique business needs.

What are the steps businesses need to take to hire employees in Hong Kong?

When hiring employees in Hong Kong, businesses need to follow several steps to ensure a smooth and compliant hiring process. Here are the key steps involved:

  1. Determine Job Requirements: Clearly define the job requirements, including the roles, responsibilities, qualifications, and experience necessary for the position. This will help you identify the right candidates and draft an accurate job description.
  2. Recruitment and Candidate Screening: Advertise the job opening through various channels, such as job portals, recruitment agencies, and social media. Screen the received applications, conduct interviews, and assess candidates based on their skills, experience, and cultural fit. Select the most suitable candidates for further evaluation.
  3. Offer of Employment: Once you have identified the preferred candidate, extend a written offer of employment. The offer should include details such as salary, benefits, start date, and any other relevant terms and conditions. Ensure that the offer is clear and includes any contingencies, such as satisfactory background checks or medical examinations if required.
  4. Employment Contract: Prepare a written employment contract that clearly outlines the terms and conditions of employment. Include information about job duties, working hours, compensation, benefits, leave entitlements, and termination procedures. Both the employer and employee should sign the contract before the employee’s start date.
  5. MPF Enrollment: Enroll the new employee in a Mandatory Provident Fund (MPF) scheme and start making the required contributions. Provide the employee with the necessary MPF enrollment forms and explain the MPF scheme details, including the contribution rates and investment options.
  6. Work Visa and Immigration Requirements: If the employee is a foreign national, ensure that they have the necessary work visa or permit to legally work in Hong Kong. Guide them through the visa application process, including obtaining the appropriate visa documents and meeting any immigration requirements.
  7. Onboarding and Orientation: Plan an onboarding and orientation program for the new employee. Introduce them to the company’s policies, procedures, and culture. Provide any necessary training and familiarize them with their job responsibilities, colleagues, and workplace facilities.
  8. Payroll and Tax Obligations: Set up the employee’s payroll in compliance with Hong Kong’s taxation regulations. Register the employee with the Inland Revenue Department and deduct the applicable taxes from their salary. Ensure proper remittance of taxes and issuance of tax-related documents.
  9. Employment Benefits and Insurance: Arrange for any additional employment benefits, such as medical insurance or retirement plans, based on the company’s policies. Communicate these benefits to the employee and provide necessary enrollment forms and instructions.
  10. Performance Management and Development: Establish a performance management system to monitor and evaluate the employee’s performance. Provide regular feedback, set goals, and offer opportunities for training and career development.
  11. Employee Records and Compliance: Maintain accurate and up-to-date employee records, including personal information, employment contracts, leave records, and performance evaluations. Ensure compliance with data protection and privacy regulations.

Remember to consult with legal and HR professionals to ensure compliance with Hong Kong’s employment laws and regulations throughout the hiring process. Each step may require customization based on your specific business needs and the individual circumstances of the employee.

Hire employees in Hong Kong — the easy way

While Hong Kong is an attractive location for international companies looking at hiring a global workforce, it has its own complex labor and commercial regulations. Many companies find that, in order to ensure a smooth and compliant hiring experience, it is worth engaging a Hong Kong EOR or Hong Kong PEO service.