Much is written about Hong Kong’s business-friendly environment, strategic proximity to Mainland China and Southeast Asia, and strong legal frameworks. However, what truly sets Hong Kong apart is its appeal to the world’s best talent. This attractiveness is, of course, closely tied to its aforementioned legislation, ensuring a fair and competitive workplace for every employee.

While finding the world’s best minds for your business in Hong Kong should be straightforward, compliance with local regulations should always be top of mind during your hiring process. This guide will walk you through everything you need to know about hiring employees in Hong Kong, from understanding legal requirements to crafting comprehensive employment contracts and even how to outsource the entire process to a trusted partner.

Legal Requirements of Hiring Employees in Hong Kong

Employers must comply with Hong Kong’s legal framework to abide by its famously competitive but fair working environment. Here are the key legal requirements you need to be aware of when hiring in Hong Kong:

Employment Ordinance 

The Employment Ordinance is the basis of labour law in Hong Kong, with blanket coverage of the rights and responsibilities of both employers and employees. Key provisions include regulations on employment contracts, wages, working hours, and termination of employment. We encourage our clients not to think of the Employee Ordinance as a hindrance to performance but rather as a crucial framework for maintaining a lawful and harmonious workplace, which in turn will foster operational excellence.

Mandatory Provident Fund (MPF) 

Social Security is a fundamental part of Hong Kong culture, and it is embedded into employment agreements. Therefore, employers in Hong Kong are required to contribute to the MPF to help their employees save for retirement. Both employers and employees must make regular contributions to the fund, and understanding the specific contribution rates and compliance requirements is absolutely essential. We will cover specific rates later in this article.

Visa and Immigration Requirements 

Hiring foreign talent involves understanding Hong Kong’s visa and immigration regulations, so employers must ensure that their foreign employees have the appropriate work visas. The application process includes several straightforward but stringent steps, such as proving the necessity of hiring a foreign worker and meeting specific eligibility criteria. Managing this process properly helps avoid legal complications and ensures a smooth hiring experience. Hiring a trusted partner like InCorp in this process will absolutely expedite your efforts in securing the world’s best talent. 

Hong Kong Employment Contracts

In Hong Kong, employment contracts can be either oral or written, but we strongly recommend written contracts to avoid potential disputes and ensure clarity. Unscrupulous employers who include clauses contradicting the Employment Ordinance will only find their contracts to be unenforceable, and potentially open to a fine of HK$100,000 (US$12,800) and a one-year prison sentence. 

Hong Kong employment contracts fall into two main categories: non-continuous and continuous.

Non-Continuous Employment Contracts

• Provide basic protections under the Employment Ordinance.
• Typically valid for one month and renewable on a monthly basis.
• Can be used for both part-time and full-time employment arrangements.

Continuous Employment Contracts:

• Offer comprehensive statutory benefits.
• Established when an employee has been employed for four weeks or longer (part-time or full-time), with at least 18 hours worked each week.
• Benefits include rest days, paid annual leave, sickness allowance, severance payments, and more.

Essential Elements of Employment Contracts

By law, an effective employment contract in Hong Kong should clearly outline several critical components to ensure both parties understand their obligations and rights. These components include:

• Wages: This should cover the wage rate, overtime compensation rate, and any other allowances. Employers are allowed to calculate salaries using various methods such as hours, days, weeks, piecework, specific tasks, or other relevant measures.
• Wage Components: Include details on commissions and allowances, wage rates, payment conditions, and relevant contracts. 
• Wage Period: The contract should specify the designated timeframe for paying wages, ensuring timely payment.
• Benefits: Outline the structure for annual leave compensation, holiday pay, sickness allowance, and maternity/paternity leave earnings. These should be calculated based on the agreed wage structure.
• Notice Period: Clearly define the length of notice that the employer or employee must give to the other party if they wish to terminate the employment agreement. 
• End-of-Year Payment: If applicable, the contract must detail the specific terms for the end-of-year payment, including the proportional amount and the payment period. 

Hong Kong Working Hours and Leave Entitlements

Working Hours

Given Hong Kong’s strong cultural work ethic, there is no specific legislation governing standard working hours for adults, allowing employers and employees the flexibility to negotiate terms that suit both parties. However, with an increasing focus on work-life balance, we encourage employers to set reasonable working hours in employment contracts to maintain productivity and employee satisfaction. 

Rest Days and Statutory Holidays

Employees are entitled to rest days and statutory holidays under the Employment Ordinance:

Rest Days

Employees are entitled to at least one rest day in every period of seven days, for a continuous period of  24 hours during which an employee can be free from work responsibilities.

Statutory Holidays

There are 14 statutory holidays each year. Employees who have been employed under a continuous contract for at least three months are entitled to these paid holidays. If a statutory holiday falls on a rest day, an alternative holiday must be arranged within 60 days before or after the statutory holiday. The 14 statutory holidays for 2024 are:

Paid Annual Leave

Paid annual leave entitlements increase with the length of service:

• First Year: Seven days of paid annual leave after completing one year of service on a continuous contract.
• Subsequent Years: An additional day for each year of service, up to a maximum of 14 days.

Sickness Allowance

Employees are entitled to sickness allowance if they meet specific criteria:

• Accumulation: Employees accumulate two paid sick days for each completed month of employment during the first 12 months and four paid sick days for each completed month thereafter, up to a maximum of 120 days.
• Eligibility: To qualify for sickness allowance, an employee must be on sick leave for at least four consecutive days and provide a medical certificate. There are exclusions here for women during pregnancy. In most cases, the sickness allowance is calculated at a rate equivalent to 80% of the employee’s average daily wages.

Employee Benefits in Hong Kong

Employers in Hong Kong are responsible for providing several mandatory and supplemental benefits to their employees. These benefits ensure a balanced work environment and compliance with local labour laws.

Mandatory Benefits

MPF

As mentioned earlier, employers are required to contribute to the MPF to help their employees save for retirement. The specific contribution rates are as follows:

Employees’ Compensation Ordinance

The Employees’ Compensation Ordinance sets a no-fault, compensation system for work injuries regardless of contributions. Employers must compensate employees for injuries sustained due to an accident arising out of and during employment or for occupational diseases specified in the Ordinance.

• Coverage: Applies to employees under a contract of service or apprenticeship, including those working outside Hong Kong if employed by local employers.
• Compensation for Fatalities:
  • Under 40: Whichever is higher — 84 months’ earnings or the minimum compensation amount.
  • 40 to 56: Whichever is higher — 60 months’ earnings or the minimum compensation amount.
  • 56 or above: Whichever is higher — 36 months’ earnings or the minimum compensation amount.
  • Minimum compensation amount is HK$486,300 (approx US$62,000), with a monthly earnings cap of HK$36,550 (approx US$4,670).
  • Funeral and medical expenses are reimbursable up to HK$94,690 (approx US$12,100).
• Compensation for Permanent Incapacity:
  • Under 40: Whichever is higher —  96 months’ earnings or the minimum compensation amount.
  • 40 to 56: Whichever is higher — 72 months’ earnings or the minimum compensation amount.
  • 56 or above: Whichever is higher — 48 months’ earnings or the minimum compensation amount.
  • Maximum compensation amount is HK$552,190 (approx US$70,500), with a monthly earnings cap of HK$36,550 (approx US$4,700).

Occupational Safety and Health Ordinance

Provides safety and health protection to employees in various workplaces, including factories, construction sites, offices, laboratories, and educational institutions. It sets out general requirements for maintaining workplace safety and health.

Exemptions include aircraft or vessels in public places, drivers’ places in land transport vehicles in public places, domestic premises with only domestic servants, and places with only self-employed persons working.

Supplemental Benefits

Health Insurance

While the public health system in Hong Kong offers a high level of care, many employers provide additional health benefits and life insurance to entice the best talent.

Bonuses

While not mandatory, it is culturally common for employers to offer bonuses, including a 13th-month bonus coinciding with the Chinese New Year. These bonuses can also include commissions, performance-based awards, and other incentives, which should be detailed in employment contracts​​​​.

Outsourcing the Hiring Process in Hong Kong

Employers in Hong Kong can easily streamline their hiring processes by using Employer of Record (EOR) services. An EOR acts as the official employer for your staff, enabling companies to hire in Hong Kong without setting up a local entity. The EOR also essentially becomes your defacto HR department, handling legal compliance, payroll, and benefits, without the hassle of managing these elements internally. 

Benefits of EOR Services

• Legal Compliance: Ensures all employment practices follow Hong Kong’s labour laws, including MPF contributions.
• Payroll Management: Manages salary payments, tax withholdings, and local requirements.
• Employee Benefits: Administers health insurance, leave entitlements, and other statutory benefits.
• Risk Management: Assumes risks associated with employment compliance and disputes.

Astute business leaders commonly partner with trusted partners like InCorp for EOR services to efficiently manage their workforce, ensuring compliance and operational efficiency in order to focus on what matters — putting effort into strategic growth and core trade activities.

Where to Next With InCorp

It’s abundantly clear that Hong Kong is highly attractive for top talent due to its prime location, strong legal framework, and business-friendly climate. While bringing the world’s most skilled professionals to your business in Hong Kong is rarely going to be an issue, there are many regulations and requirements to meet.

The most competent business leaders find working with a knowledgeable partner like InCorp extremely beneficial to making this process as smooth as possible. With extensive on-the-ground experience in Hong Kong, InCorp understands the local employment landscape, not to mention crucial cultural norms that often trip foreign investors. Beyond that, our Employer of Record (EOR) services massively simplify your hiring process by handling legal compliance, payroll, and employee benefits.

Let InCorp manage your hiring needs so you can focus on your business growth. Contact InCorp for guidance and support in hiring employees in Hong Kong.