Hong Kong’s employment laws are complex and especially confusing to foreign businesses. Expanding your business to Hong Kong can feel daunting when confronting multiple bureaucracies, a different culture, and hefty expenses. Sky Executive provides employer of record services for companies that want to hire employees and run payroll without the need to establish a branch office or separate legal entity in Hong Kong. Your staff is hired via Sky Executive’s Hong Kong PEO in accordance with local labor laws quickly and efficiently.  We can have your team up and running within only a few days, helping you avoid the expense and frustration of establishing a separate legal entity. Your staff is assigned to work on your team while we take on all official employer duties.

Benefits of Using an Employer of Record in Hong Kong

Using an EOR allows you to deploy your staff faster, easier and more affordably. You do not have to establish a separate legal entity to get your company up and running. At Sky Executive, we can often get staff on the ground in a matter of only a few days. Our fully outsourced employment solution allows you to expand to a promising market in Hong Kong. We assume the legal responsibility for employees who report to you for daily management. 

As the Employer of Record, we can sponsor employees on work permits, handle your monthly payroll and ensure compliance with all local employment laws. We also assist with the onboarding process and use best practices to place qualified candidates in key positions. You can take advantage of our compliant employment agreements. Our payroll solutions will ensure that all withholding requirements for pensions and benefits are upheld. We also handle complex employee transactions, including handling all termination procedures, providing severance packages, establishing probationary periods and responding to leave requests. 

Using an EOR is advisable, given the complexity of Hong Kong employment regulations. Sky Executive can provide solutions to your business with clearly stated costs and timeframes. For a cost-effective solution to fulfill the objectives of your business, contact Sky Executive.

Full Business Support Service

Our EOR service allows you to hire staff locally and run payroll. We also take on your HR functions, tax and compliance responsibilities so that you can focus on your business while we handle the administrative duties.  As a global PEO expert, we use best practices to draft compliant employment contracts and handle all tax and compliance matters. We can also keep you aware of the latest changes in local employment laws in Hong Kong.

In order to understand the full scope of our Employer of Record services, it is important to have an understanding of fundamental employment laws in Hong Kong. Here is a brief explanation of key employment laws in the region.

Employment Laws in Hong Kong

Hong Kong Employment Contracts

Hong Kong is one of the most densely populated locations in the world with 7.2 million people. Hong Kong candidates take extra time to carefully analyze employment contracts before agreeing to them. Employment contracts are typically in written Chinese or English. The offer letter should explicitly state the terms of compensation in Hong Kong dollars. Sky Executive can provide foreign companies with a compliant template to draft a customized employment agreement in Hong Kong.

Hiring Foreign Workers

Foreign workers must have the proper visas and work permits for Hong Kong based on immigration laws. Some nationalities are allowed to enter Hong Kong without a visa, but they may not be able to process a work visa while in Hong Kong. An employer is required to provide sponsorship for an employee in order for the employee to obtain a work permit. This requires local registration and licensing, which can involve a lengthy process, depending on the business structure type. 

Hong Kong’s Work Week

Unlike many other areas, there is no law that governs the number of working hours per week. However, employees must be provided with at least one rest day per seven working days.

Hong Kong’s Holiday Policy

Hong Kong has a number of statutory holidays. If an employer makes an employee work on one of these days, the employer must offer an alternative holiday to the employee within two months before or after the statutory holiday. If the holiday occurs on a weekend, the employee should be allowed to serve the next working day in place of the holiday. 

The recognized statutory holidays in Hong Kong include:

  • New Year’s Day
  • Lunar New Year’s Day
  • The day after and the third day after Lunar New Year
  • Ching Ming Festival
  • Labor Day
  • Tuen Ng Festival
  • Hong Kong Special Administrative Region Establishment Day
  • The day after the Chinese Mid-Autumn Festival
  • Chung Yeung Festival
  • National Day
  • Chinese Winter Solstice Festival or Christmas Day, at the employer’s option

Some employers offer five additional holidays: Good Friday, the day after Good Friday, Easter Monday, Buddha’s Birthday, the day after Christmas Day. They are not required to offer these days but some do in order to stay competitive.

Vacation Leave

In Hong Kong, employees are entitled to seven vacation days after they have worked for an employer for one year. The number of days increases up to 14 days as the employer works longer for the employer. Maximum benefits for vacation leave are provided by statutory law once an employee works for an employer for nine years.

Most Hong Kong employers give professional employees 14 vacation days. Senior executives may be given three or four weeks of vacation time. 

Hong Kong law allows an employee to receive compensation rather than taking the accrued vacation time for any days after the first 10 days of vacation time. “Use it or lose it” policies on vacation time are not permitted under Hong Kong law. The law also prohibits employers from capping how many days can be carried over. However, employers can mandate employees to use their vacation if they provide two weeks’ notice.

Sick Leave Laws in Hong Kong

Paid sick days can be accumulated at two days per month of employment for the first year of work, followed by four days per month for each following year. However, employees cannot accumulate more than 120 paid sick days. 

An employee in Hong Kong can typically use sick leave if the following conditions apply:

  • The employee has accumulated enough sick days
  • The employee has missed work for four days in a row
  • The employee has a medical certificate

Sick leave is paid at a rate of 4/5 of the average daily pay the worker received in the last year. Employers are not allowed to terminate employees while they are on sick leave unless the employee has committed gross misconduct.

Maternity Leave

Mothers are entitled to 10 weeks of paid maternity leave if they meet the following conditions:

  • They have worked for an employer for at least 40 weeks before the date of scheduled leave
  • They provide proper notice of their plan to take leave
  • They have provided a medical certificate that states the expected date of when they will be hospitalized

Unpaid maternity leave of 10 weeks is provided to mothers who have worked for less than 40 weeks as long as they provide notice to their employer. Maternity leave can be taken from four weeks before the expected date of hospitalization if the employer agrees. If hospitalization occurs before the scheduled beginning date of maternity leave, the date of confinement becomes the date when maternity leave commences.  

Fathers who have been employed for at least 40 weeks and who provide proper notice to their employer can receive three days of paid paternity leave that can be taken anywhere from four weeks before the expected delivery date to ten weeks after birth. The employee must provide notice to the employer at least three months before the expected delivery date. The employer can request that the employee provide the name of the mother, the expected delivery date and a statement that the employee is the father.

Maternity and paternity leave is paid at a rate of 4/5 of the employee’s average daily wage earned in the year before taking leave. 

Termination and Severance Policies in Hong Kong

The amount of time that must be provided for notice to terminate an employment contract depends on the length of the contract. A month of notice is typical in most cases after the probationary period has been served, but the employment contract can include a different notice period. After the first month of employment after the probationary period, a week’s notice is required. 

If the employee worked for between two and five years and the termination is due to redundancy or layoff, the employee is eligible for severance pay. 

A long service payment is required if the employee worked for more than five years and the termination is due to:

  • Non-renewal of a fixed-term contract
  • Employee’s death 
  • Dismissal not due to serious employee misconduct or redundancy
  • Retirement of an employee who is age 65 or older
  • Health reasons

Severance pay is equal to 2/3 of the employee’s monthly wage for every year of service, up to HK 390,000. Severance payments can be offset with employer contributions to the pension fund. 

Health Benefits 

Hong Kong has a public/private health care system in place. All residents in Hong Kong have access to this system and insurance is not required and is not part of payroll deductions.

Other Employee Benefits

Many employers give employees in Hong Kong an end-of-year bonus. This bonus is not mandatory, but it is customary. Some employers pay a bonus equal to two or three months’ salary. Some employers offer supplementary benefits such as health insurance and life insurance. Alternatively, employers may provide an allowance instead of insurance. 

Hong Kong Employment Taxes

Hong Kong utilizes the Mandatory Provident Fund (MPF), which is a saving scheme that is required for eventual retirement benefits. Most employers and employees must contribute to this fund on a monthly basis and to pay a particular amount of tax from earnings. The minimum amount of tax is typically 5%, with a maximum contribution of HKD 1,500 per month, but the amount may be made higher as part of employment contract negotiations. 

Other tax concerns include the corporate income tax, which is 16.5% for profits earned in Hong Kong, individual income tax, payroll tax, sales tax and other taxes. An EOR can take over tax compliance issues.

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Benefits of Using an Employer of Record in Hong Kong

Using an EOR allows you to deploy your staff faster, easier and more affordably. You do not have to establish a separate legal entity to get your company up and running. At Sky Executive, we can often get staff on the ground in a matter of only a few days. Our fully outsourced employment solution allows you to expand to the promising market in Hong Kong. We assume the legal responsibility for employees who report to you for daily management. 

As the Employer of Record, we can sponsor employees on work permits, handle your monthly payroll and ensure compliance with all local employment laws. We also assist with the onboarding process and use best practices to place qualified candidates in key positions. You can take advantage of our compliant employment agreements. Our payroll solutions will ensure that all withholding requirements for pensions and benefits are upheld. We also handle complex employee transactions, including handling all termination procedures, providing severance packages, establishing probationary periods and responding to leave requests. 

Using an EOR is advisable, given the complexity of Hong Kong employment regulations. Sky Executive can provide solutions to your business with clearly stated costs and timeframes. For a cost-effective solution to fulfill the objectives of your business, contact Sky Executive.

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