Currency of Hong Kong
Hong Kong Dollar (HKD)
香港特别行政区首都
Hong Kong
香港特别行政区时区
GMT+8
Important Facts About Hong Kong
Introduction to Hong Kong
Hong Kong, once a small trading port in the 19th century, is now Asia’s leading financial hub. Hong Kong was returned to Chinese sovereignty on July 1, 1997 as Hong Kong Special Administrative Region (HKSAR), following more than a century and a half of British rule.
Languages Spoken in Hong Kong
Chinese (Cantonese) and English are the official languages of Hong Kong. English is widely used in government affairs and by the legal, professional and business sectors. Trilingual professionals who speak English, Cantonese and Putonghua (Mandarin) play a vital role in the numerous enterprises trading in Hong Kong or doing business with mainland China and Taiwan.
Legal system in Hong Kong
The legal system of the HKSAR is based upon the rule of law as well as the independence of the judiciary. The constitutional framework for Hong Kong’s legal system is provided by the Basic Law enacted by the National People’s Congress of the People’s Republic of China. Under the principle of “one country, two systems”, Hong Kong is a part of China but retains its own systems and way of life. The legal system of the HKSAR, which is different from that of mainland China, is based on the common law and supplemented by statutes.
What to Know about Hong Kong's Economy
Hong Kong’s economy is marked by free trade, low taxation and limited government intervention. It is the world’s seventh largest trading economy, with the mainland of China as its most significant trading partner. Hong Kong focuses on tertiary production and is also a major service economy. It has strong links to mainland China and the rest of the Asia-Pacific region.
The Culture of Hong Kong
Hong Kong culture was born out of a sophisticated fusion of the East and the West. Hong Kong offers an eclectic culture rich in Chinese customs and sprinkled with influences from Southeast Asia and the West. This situation led to the diversity of its culture and the people there are open-minded to accepting variety.
Hong Kong Human Resources at a Glance
Employment Law Protections in Hong Kong
The Employment Ordinance (EO) is the key legislation that spells out the basic terms and conditions governing employment laws in Hong Kong. It guarantees certain minimum conditions, including (among other provisions):
- Paid annual leave
- Paid sick leave
- Paid maternity and paternity leave
- Minimum notice of termination (and the right to make a payment in lieu of notice)
The EO, which is subject to limited exceptions, applies to all employees working in Hong Kong – regardless of their nationality. Observing the terms of the EO is generally considered to be required, although it is not specifically expressed to serve as an overriding statute.
If the EO covers your employee, the employment contract terms must satisfy the minimum requirements of the EO.
If the EO does not cover your employee, the contractual terms will depend on mutual agreement between you and the employee.
An employee who has been employed continuously by the same employer for four weeks or more (working at least 18 hours each week) is deemed to be employed under a continuous contract. Employees engaged under a continuous contract are entitled to additional benefits including rest days, paid annual leave, sickness allowances, severance payments and long service payments, etc.
Employment Contracts in Hong Kong
The employment contract specifies the agreed-upon terms and conditions of employment between the employer and the employee. The contract includes both explicit and implicit terms. If an employee is covered under the EO, the contract terms should abide by the minimum requirements.
Employment contracts in Hong Kong can be concluded orally or in writing. According to the EO, verbal employment agreements are legal. If contracts are in written form, it is mandatory for employers to provide employees with a copy of the written employment contract. In addition, employers must obtain their employees’ consent before making any subsequent changes to the terms of the employment contract.
Employment contracts can be concluded if they contain the minimum requirements. The Labor Department offers standard templates.
Contracts for blue-collar workers are normally written in Chinese. White-collar or professional jobs are usually written in English.
The EO does not formally define part-time or contractual employees. However, in common practice, part-time employees work a lesser number of hours compared to that of full-time employees. Contract workers are generally referred to as employees on a fixed-term employment contract. Under the EO, part-timer staff and contract workers enjoy the same protections as permanent full-time employees.
Retirement age is normally 60 to 65 in Hong Kong. Minimum terms are to be included in the contract.
Hong Kong's Guidelines Regarding Probation Period
The probation period is to be defined in the contract. While they can be set for between one and six months, the most common practice is three months.
The services of an employee on probation can be terminated by the employer or the employee without notice during the first month and by at least seven days thereafter However, generally, at least 30 days is required to end a continuous month-to-month contract).
Severance Pay in Hong Kong
Employees are eligible for severance payments only if they match both of the following:
- Employed for at least 24 months
- Dismissed due to redundancy or laid-off
The amount of severance pay is two-thirds of one month’s pay for each year of employment or two-thirds of HK$ 22,500 (whichever is less). This amount is subject to a maximum payment of HK$ 390,000. The amount of contractual gratuity based on length of service is deductible from the amount of severance pay entitlement. In addition, a part of a retirement scheme payment – which is due to the employer’s contributions – can be deducted from the amount of the severance pay.
Long Service Payment
The long service payment is intended to reward employees who are dismissed in a non-redundancy situation for their long service. Employees are eligible only for a long service payment only if they are employed for at least five years. This is subject to certain conditions.
The amount of long service pay is calculated by reference to the same formula as the severance pay. The maximum entitlement must not exceed HK$ 390,000. The amount of any contractual gratuity based on length of service is deductible from the amount of long service entitlement. In addition, a part of a retirement scheme payment, which is due to the employer’s contributions, can be deducted from the amount of long service payment.
Regulations and Rules Regarding Working Hours in Hong Kong
The common practice for working hours is 40 to 50 hours per week, performed over five days. The working hours should be defined in the contract.
Hong Kong’s labor laws do not set specific requirements on overtime work, including any requirements to pay for overtime work. However, the law states if the employment contract details payment for overtime work, the employer is required to provide such wages. They will be subject to a fine for withholding wages. Overtime payment is regarded the same as regular wages and is protected from defaults. Additionally, when determining entitlements, any overtime pay offered should be included in the calculation.
Before the contract begins, employers and employees must negotiate working hours and overtime conditions of the position. These should be written clearly into the contract. Employers are obligated to obey the terms of the contract or they will be subject to a fine issued by the Labor Department.
Hong Kong's Requirements Regarding Notice Periods
The required notice period in Hong is 30 days notice, although this can be longer for higher level positions.
Termination
Termination notice period is determined in the contract. However, it must be at least seven days.
Common Practice: one month
In the absence of a contract: one month.
Employees Entitlements on Termination:
- Accrued wages and unused annual leave:
Employees are entitled to all outstanding wages and payments in respect of accrued but unused annual leave up to the time of termination. This includes only statutory leave, unless the contract specifies otherwise.
- End of year payments:
If an employee is contractually entitled to an annual bonus, they will be entitled to a proportional payment thereof in respect of the year in which they are dismissed unless the bonus is payable solely at the discretion of the company or they have not been employed for a continuous period of three months or more in the payment period. If an end of year payment is not specified in the employment contract, a sum equaling the monthly average wage of the employee will be awarded.
- Severance pay: Any employee who has been employed under a continuous contract for at least 24 months is entitled to a severance payment if dismissed by reason of redundancy or layoff.
- Long service pay: Any employee with at least five years of service (excluding an employee who retires) will be entitled to a long service payment if he or she is dismissed and the employer is not liable to pay them a severance payment. “Dismissal” has the same meaning as that under the provisions relating to severance payments described above.
The EO enables any employee to make a claim for “unreasonable dismissal” to the Labor Tribunal, so long as they have been employed under a continuous contract for a period of at least 24 months and they have been dismissed. This also applies to employees whose contracts are varied without his or her consent. Once this type of claim is made, the employer is required to produce a valid reason for the dismissal or modification. Valid reasons include:
- The conduct of the employee
- The capability or qualifications of the employee to perform the kind of work he or she was employed for by the employer
- Redundancy of the employee or other genuine operational requirements.
Rules Regarding Bonus and 13th Month Pay in Hong Kong
Many employers in Hong Kong pay a 13th month bonus before Chinese New Year. However, the recent trend is to replace this with a performance related bonus. MNCs will normally pay discretionary bonuses as well.
When a bonus is an annual payment or annual bonus and is not discretionary in nature, the bonus will be subjected to the end-of-year payment regime set out in the EO. Whether a bonus is truly “discretionary” will not only depend on the terms used in the bonus provision, but on how the bonus scheme operates in practice. If, in fact, bonuses are granted each year automatically by reference to a predetermined formula and no discretion is exercised, a court may take the view that the bonus is subjected to the end-of-year payment regime in the EO.
The main consequence of a bonus being classified as an end-of-year payment is that, on termination of employment, an employee will be entitled to:
- A bonus for the previous bonus year, if that bonus has not been paid at the date of termination.
- A proportion of the bonus for the year in which his or her employment ended, provided that the employee meets all the following requirements:
-
- was employed for at least three months of that bonus year
- did not resign
- was not dismissed summarily
Allowance
Housing allowance for top executives is common in Hong Kong. This is similar to the legal rent scheme in Japan.
Tax and Social Security Information for Employers in Hong Kong
Tax Rules
Employers are required to prepare tax forms for employees to report their remuneration every year under the Income Tax Ordinance. Employers are also required to keep payroll records for at least seven years.
The tax calculation will be done by the Inland Revenue Department (IRD). Employers only need to report the annual salary.
More information about the tax calculation can be found here:
https://www.gov.hk/en/residents/taxes/etax/services/tax_computation.htm
The taxes imposed on salaries in Hong Kong are not taken at the source. It is the employee’s responsibility to complete their own tax declaration and remit the appropriate taxes at the completion of the fiscal year.
The Hong Kong fiscal year usually ends March 31. The declaration is provided by the employer but the filing of it is the responsibility of the employee. The employer is required to provide the IRD with details of new employees within three months after recruitment. This will enable the IRD to distribute the tax returns. However, it is the responsibility of the employee to send a notification if he or she does not receive a tax return.
Employment Insurance
Employers are required to maintain insurance coverage pursuant to the Employees Compensation Ordinance (ECO) in respect of work-related injuries. Besides that, there is no statutory requirement to provide medical benefits. The ECO requires every employer to obtain a policy of insurance for a specified minimum amount in respect to its liability. This is intended to compensate employees for injury by accident or death arising as a result of or in the course of employment.
The amount of the liability which must be insured is determined by the total number of employees the employer has:
- If less than 200 employees, the employer must take out a policy of insurance which provides a minimum coverage of HK$100 million per event.
- If more than 200 employees, the minimum coverage required is HK$200 million per event.
Once insured, the employer will be able to file a claim with its insurer in respect to any liability on its part to compensate employees for work-related injuries.
Health insurance
The employer may provide health insurance or the employee can arrange independently.
Supplemental insurances: accident/medical/dental/life insurance
Common additional benefits depend on the company.
Mandatory Provident Fund (MPF) Scheme (Pension Fund)
Provident fund contributions are mandatory for employees (including full-time, part-time and casual or temporary staff) aged 18-65 years. Foreigners who visit Hong Kong for employment for less than 13 months or are covered by retirement schemes overseas are exempt from this requirement.
Employers and employees are each required to contribute 5% of the employee’s monthly cash income to a retirement scheme registered as an MPF scheme. The maximum level of monthly income for contribution purposes is HK$30,000.
Mandatory contributions are capped at HK$1,500 for employees earning more than HK$30,000/month.
Employee contributions are not required if an employee’s monthly income is less than HK$7,000. However, the employer contribution is required.
A separate scale of contribution applies to casual employees who are remunerated daily.
Employers are required to provide monthly pay-records to each employee within seven working days of the mandatory contributions being made. Information on the pay-record should include the employee’s relevant income, the amount of the contributions and the date the contributions were paid into the scheme.
The fundamental structure of an MPF scheme is that it is constituted under a Hong Kong trust and provides defined contribution benefits.
The vast majority of MPF schemes offer a choice of investment products, and employees are given the option to select how their money is invested. Thai is similar to 401K plans in the US. A very conservative “capital preservation fund” must be one of the investment options offered.
Assets invested in a “capital preservation fund” must be invested in a particular manner set out in section 37(2) of the General Regulation. This is basically just bank deposits and government backed debt securities. Administrative expenses can only be taken from the capital preservation fund if the returns on such a fund in any month exceed the returns that would have been earned and the assets in the fund have been placed on deposit in a Hong Kong savings account at the prescribed savings rate, as identified by the MPF Authority. This requirement is somewhat softened by the ability to roll over outstanding administrative expenses for a period of up to 12 months.
| Social Security System | Monthly Salary Cap (HKD) | Employer Contribution | Employee Contribution |
|---|---|---|---|
| Mandatory Provident Fund (MPF) | 30,000 | 5.00% | 5.00% |
| Employment Insurance | Depends on industry Up to 2.00% compensation | 0.00% |
*The above rates serve as a broad guideline. Actual rates charged by GoGlobal will differ.
Important Information for Hong Kong Employees
Salary Payment
- Salaries in Hong Kong are paid by the end of every month through bank transfer.
- Salaries are paid for the current month.
Payslip
Payslips are expected to be made available monthly to employees on website, PDF or hardcopy.
Timesheets
As per Hong Kong’s Minimum Wage Ordinance, employers must keep records of the total number of working hours by any employee with a monthly salary of less than HK$ 16,300/month.
Annual Leave
The entitlement to annual leave for the first year is seven days. This is accumulated at the rate of one day for each completed year, up to a maximum of 14 days:
- First year: seven days
- Second year: eight days
- Third year: nine days
This continues up to a maximum of 14 days.
Employers are entitled to determine when annual leave is to be taken and must give a 14-day notice in writing to the employee of the time that they have selected. Annual leave must, however, be granted within 12 months of the end of the leave year. In practice, most employers will allow annual leave to be taken by employees as it accrues. A leave year may either be the anniversary of the employee’s commencement of employment or a date the employer selects in order to have a common leave year for all employees. This is commonly the calendar year.
The EO also permits employees to carry forward all untaken annual leave for 12 months after the preceding leave year.
The payment received by employees by way of holiday pay is equal to the employee’s average wage over the preceding 12-month period.
Employees have a right to take a payment in lieu of any accrued and untaken statutory annual leave from the preceding leave year. They are also entitled to payment in respect of any outstanding annual leave due upon cessation of employment.
Sick Leave
Employees are entitled to paid sick leave at the rate of four-fifths of the employee’s average wage over the preceding 12-month period. An employee who has been employed under a continuous contract for a period of at least one month immediately preceding a sickness day is entitled to paid sickness allowance in accordance with the EO.
Entitlement to sick leave may be accumulated at the rate of two paid sickness days for each completed month of employment during the first 12 months of employment. This accumulates at the rate of four paid sickness days for each month thereafter, up to a maximum of 120 paid sickness days. The entitlement to sickness pay only applies, however, to periods of absence due to sickness of no less than four consecutive days. This is separate from annual leave.
An employee must produce a medical certificate issued by a medical practitioner or registered dentist in respect to any sickness day for which he or she is claiming statutory sickness allowance for. If the employee fails to do so, the employer is not liable to make any payment for that particular day.
In light of the rather restrictive entitlement to statutory sickness allowance, it is not unusual for employers to provide a contractual sickness benefit which is more beneficial than statutory sick allowance (e.g. by providing that sick leave is compensated at full pay or by offering employees an upfront entitlement to a certain number of days instead of accruing sick leave days on a month-to-month basis).
Maternity Leave
- A female employee employed under a continuous contract of employment (e.g. she has been employed for four or more weeks and has worked at least 18 hours in each week) immediately before the expected date of her commencement of maternity leave (ML), is entitled to take maternity leave in accordance with the EO or as provided by the terms agreed with by the employer – whichever is more favorable.
- The statutory maternity leave for employees under the EO is 14 weeks. Employers, after payment of 14 weeks’ ML Pay on the normal payday, may apply for reimbursement of the 11th to 14th weeks’ ML Pay payable and paid under EO, subject to a cap of $80,000 per employee.
- To qualify for paid ML, the employee must fulfill all of the following:
- be employed for a period of at least 40 weeks immediately before the expected date of commencement of ML.
- give the required notice
- comply with the requirements for the provision of medical certificates referred to above.
- Maternity leave pay is paid at the rate of four-fifths of the employee’s average wage over the preceding 12-month period. The additional four weeks’ statutory ML pay is subject to a cap of $80,000 per employee.
Paternity Leave
Male government employees employed under a continuous employment contract are eligible to take a five day paternity leave on full pay upon the birth of each child.
Male employees in the private sector who are employed under a continuous contract are entitled to a three-day paternity leave in connection with the birth of a child. Leave can be taken at any time (on single or consecutive days) during the period commencing four weeks before the expected date of birth and ending ten weeks after the actual date of birth.
If the employee has more than 40 weeks of service at the time of taking paternity leave, he will be entitled to a payment for each day of paternity leave. This is calculated at 80% of the employee’s average daily wages over the previous 12 months.
Other Leave
Leave is often granted for marriage, death of a relative, family care, etc. There are no standard rules outlined in the EO. This leave should be decided by the company.
Trade Union
Trade union participation in Hong Kong depends on the industry.
There are a number of labor organizations and trade unions in Hong Kong but no closed shops. These are principally established on a trade-by-trade basis, although some of the larger corporations with substantial numbers of employees have labor unions particular to that corporation. Membership of trade unions in Hong Kong is relatively low compared to European and American counterparts.
Rules Regarding Visas and Foreign Workers in Hong Kong
General Information
For new companies, it will take longer to apply for foreign employees’ work visas.
The Hong Kong government strongly advocates that employers must give first preference to the local workforce for job vacancies. Foreigners who possess special skills, knowledge or experience of value to and not readily available in Hong Kong can enter and stay in Hong Kong for employment as professionals.
Common work visa type
A foreigner must hold 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 he or she can commence employment with you.
The foreign workforce can be categorized in two main groups:
- Skilled professionals, such as software engineers, doctors and R&D specialists, who are issued an employment visa.
- Semi-skilled professionals, such as technicians, who are issued a special visa through the Supplementary Labor Scheme.
Visas are usually issued for one year initially. Employment visas are renewable and eligible for dependents. Supplementary Labor Scheme Visas are not.
The general process takes about six to 10 weeks.
Public Holidays Recognized by Hong Kong in 2024
| Occasion | Date | |
|---|---|---|
| 1 | First Day of January | January 1 |
| 2 | Lunar New Year’s Day | February 10 |
| 3 | Third Day of Lunar New Year | February 12 |
| 4 | Fourth Day of Lunar New Year* | February 13 |
| 5 | Good Friday | March 29 |
| 6 | Day Following Good Friday | March 30 |
| 7 | Easter Monday | April 1 |
| 8 | Ching Ming Festival | April 4 |
| 9 | Labour Day | May 1 |
| 10 | Birthday of the Buddha | May 15 |
| 11 | Tuen Ng Festival | June 10 |
| 12 | Hong Kong Special Administrative Region Establishment Day | July 1 |
| 13 | Day Following Chinese Mid-Autumn Festival | September 18 |
| 14 | National Day | October 1 |
| 15 | Chung Yeung Festival | October 11 |
| 16 | Christmas Day | December 25 |
| 17 | First Weekday After Christmas Day | December 26 |
* As the second day of the Lunar New Year falls on a Sunday, the fourth day of the Lunar New Year will be designated as a general holiday in substitution.