G-P’s employer of record (EOR) model allows your company to start hiring talent in minutes via our global entity infrastructure. Unlike a Professional Employer Organization (PEO), G-P allows your company to expand your global footprint without the hassle of entity setup and management.
Our global employment products are backed by the largest team of HR and legal experts in the industry. We handle the growing complexities of compliant global expansion — so you can focus on opportunities ahead.
As a global EOR expert, we manage payroll, employment contract best practices, statutory and market norm benefits, employee expenses, as well as severance and termination. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. G-P allows you to harness the talent of the brightest people in 180+ countries around the world, quickly and easily.
Hiring in Hong Kong
When negotiating with employees, remember that while business in Hong Kong is generally fast-paced, negotiations can often be slow. Typically, negotiations entail a lot of attention to detail, and time should be invested to forge relationships and get deals done.
In Hong Kong, it is important to address people in the proper manner. While many people may adopt an English first name or nickname, it is polite to ask your contact what they prefer to be called. Additionally, be sure to use the person’s title when addressing them as a sign of respect for their position.
Employment contracts in Hong Kong
In Hong Kong, employment contracts can be oral or written, but it’s best practice to put a strong, written contract in place, in English or Chinese. The employment contract should stipulate the essential terms and conditions of employment, such as the employee’s compensation and benefits, termination requirements, and whether the employee is entitled to an end-of-year payment. An offer letter and employment contract in Hong Kong should always state the salary and any compensation amounts in Hong Kong dollars (HKD).
Working hours in Hong Kong
While there are limited regulations governing the number of working hours per week, it is common for employment contracts to stipulate an employee’s expected working hours. Additionally, there is limited regulation governing daily rest or meal breaks. However, the Hong Kong government has issued guidance to businesses, recommending that employees be permitted a 1-hour lunch break each day.
Employees that work at least 18 hours a week for a period of at least 4 weeks (“continuous contracts”) are entitled to no less than 1 full rest day every 7 days.
Holidays in Hong Kong
There are 11 statutory holidays in Hong Kong:
- New Year’s Day
- Lunar New Year’s Day and the following 3 days
- Ching Ming Festival
- Labour Day
- Buddha’s birthday
- Tuen Ng Festival
- Hong Kong Special Administrative Region Establishment Day
- The day following the Chinese Mid-Autumn Festival
- Chung Yeung Festival
- National Day
- Chinese Winter Solstice Festival or Christmas Day (at the option of the employer)
The number of statutory holidays is set to increase progressively, with 1 statutory holiday being added to the calendar every 2 years until 2030. Statutory holidays will be added as follows:
- The first weekday after Christmas Day
- Easter Monday
- Good Friday
- The day following Good Friday
Some employers already offer these new holidays.
If the employer requires the employee to work on a statutory holiday, the employer should arrange an alternative holiday within 60 days before or after the statutory holiday and should notify the employee no less than 48 hours before the alternative holiday. If the holiday falls on a weekend, the employer should provide the next working day as a holiday. An employer cannot provide compensation in lieu of a national holiday.
Vacation days in Hong Kong
An employee in Hong Kong is entitled to paid annual leave after serving a period of 12 months under a continuous contract. An employee’s entitlement to paid annual leave increases progressively from 7 days to a maximum of 14 days according to their length of service:
- 1 year of service – 7 days of paid annual leave
- 2 years of service – 7 days of paid annual leave
- 3 years of service – 8 days of paid annual leave
- 4 years of service – 9 days of paid annual leave
- 5 years of service – 10 days of paid annual leave
- 6 years of service – 11 days of paid annual leave
- 7 years of service – 12 days of paid annual leave
- 8 years of service – 13 days of paid annual leave
- 9 or more years of service – 14 days of paid annual leave
Most employers provide at least 14 vacation days to white-collar professionals, and senior executives may receive 3-4 weeks.
The law does allow an employee to choose payment in lieu for the part of the vacation entitlement which exceeds 10 days. For example, an employee who is entitled to 12 days’ annual vacation can take 10 days’ vacation and accept payment of the equivalent wages for the 2 remaining days. Employers cannot put a cap on the number of days carried over which is to be used within the next 12 months, and there is no statutory limit. An employer can also require an employee to take vacation if they provide 14 days’ notice.
Hong Kong sick leave
In Hong Kong, employees in a continuous contract are generally entitled to a sick leave allowance if they have taken at least 4 consecutive days, have a medical certificate, and have accumulated a sufficient number of paid sick days.
Paid sick days may be accumulated at a rate of 2 days for each month of employment for the first year, and 4 days per month for each year thereafter. No more than 120 paid sick days can be accumulated.
Sick pay is granted at a rate equivalent to 4/5 of the average daily wages earned by the employee in the prior 12 months, or time since hire if the employee has been with the company for less than 12 months.
Employees cannot be terminated while on sick leave, except in cases of gross misconduct.
Maternity and paternity leave in Hong Kong
Pregnant employees, working in a continuous contract, are eligible for 14 weeks’ paid maternity leave, if:
- They have worked for the employer for at least 40 weeks prior to the date of the scheduled leave.
- They have given notice of their intention to take leave.
- They have presented a medical certificate with the expected date of confinement if required to do so by the employer.
Employees who have worked for fewer than 40 weeks are eligible for 14 weeks of maternity leave without pay as long as they give proper notice.
Maternity pay is given at a rate of 4/5 of the average daily wages earned by the employee in the prior 12 months, or time since hire if the employee has been with the company for less than 12 months.
Maternity leave can be taken as early as 4 weeks before the expected date of confinement, with the employer’s agreement. If the employee does not choose a date or does not reach an agreement with their employer, the maternity leave begins 4 weeks before the expected date of confinement. If the date of confinement occurs before the scheduled maternity leave, that becomes the date on which maternity leave begins.
Male employees that have been employed in a continuous contract for no less than 40 weeks and provided notice to the employer are eligible for paternity leave. Employees must notify the employer at least 3 months before the expected delivery date. At the employer’s request, the employee must provide a signed written statement with the pregnant parent’s name and the expected date of delivery, clarifying that the employee is the other parent. The employee is guaranteed 5 days of paternity leave, which they may take from 4 weeks before the expected due date until 14 weeks after the birth. Employees are generally entitled to paternity leave pay at a rate of 4/5 of their average wages.
Health insurance in Hong Kong
Hong Kong has a public and private healthcare system. All Hong Kong residents have access to the public healthcare system, and insurance is not required nor is it a part of any payroll deductions. The public system provides excellent coverage at a low cost. However, there are often long waits.
Hong Kong supplementary benefits
Health and life insurance are commonly provided to employees as supplementary benefits. Most executives request supplementary health and life insurance; smaller companies may provide an allowance in lieu of arranging insurance. Generally, it is recommended to budget 20% on top of the gross salary to account for benefits in Hong Kong, including the Mandatory Provident Fund (MPF) allocation.
Bonuses
In Hong Kong, a 13th-month or ”end-of-year bonus” is not required but is often granted to employees in a continuous contract. If this bonus is granted, there are strict regulations around the payment. A commission plan may be seen as replacing this for a sales employee.
During favorable economic conditions, it would be customary for an annual bonus or commission may be equal to 2 to 3 months’ salary.
Termination and severance in Hong Kong
The required notice of employment termination varies depending on the length of the service of the employee.
There is no notice period required within the first month of probation, but after the first month, a 7-day notice period is required for the remainder of the probation period.
Once the probation period is successfully completed, or if no probation period was required, the employment contract may stipulate a notice period of no fewer than 7 days. However, if no notice period is stipulated in the employment contract, then a minimum notice period of 1 month shall apply.
An employee is eligible for Severance Payment if they have worked more than 24 months in a continuous contract and the termination reason was due to:
- Redundancy
- Lay off
- A fixed-term contract was completed and not renewed due to redundancy
An employee is eligible for a long service payment (LSP) if they have worked for more than 5 years in a continuous contract, and the termination reason was for one of the following reasons:
- The employee is dismissed but not due to serious employee misconduct or redundancy;
- A fixed-term contract was completed and not renewed
- Retirement of an employee who is 65 or older
- Employee resignation due to ill health
The formula for the severance payment is 2/3 of the employee’s last full monthly wage for every year of service, with a maximum payment of HKD 390,000. The amount of long service payment is calculated by reference to the same formula as for severance pay. The maximum entitlement shall not exceed HKD 390,000.
*The Legislative Council passed the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Bill 2022 on June 9, 2022 to abolish the use of the accrued benefits of employers’ mandatory contributions under the MPF system and offset severance payment and long service payment. The Government has announced that the abolition of MPF offsetting arrangement will take effect on May 1, 2025.
Paying taxes in Hong Kong
The MPF is a compulsory saving scheme that is required to prepare the residents of Hong Kong for retirement. Most employees and their employers are required to contribute monthly to MPF schemes provided by approved private organizations, according to their salaries and the period of employment. The government requires minimum contributions of about 5%. However, employers often negotiate an amount over and above the statutory minimum as a supplementary benefit. We suggest budgeting 5% on top of salary for the MPF fund in Hong Kong. G-P has a Hong Kong MPF fund in place so you can ensure you comply with the statutory regulations from day one.
Why G-P?
At G-P, we help companies unlock the power of the everywhere workforce through our industry-leading Global Growth Platform™. Let us handle the complex and costly tasks involved in finding, hiring, onboarding, and paying your team members, anywhere in the world, with the speed and guaranteed global compliance your business needs.
Contact us today to learn more.
