If you're thinking about growing your business in Hong Kong, consider teaming up with a Hong Kong EOR. In simple terms, a Hong Kong EOR handles all the essential employment tasks, ensuring your company can expand smoothly and in line with local rules.

What does this mean for you? Well, the EOR will take care of payroll, taxes, and ensure you comply with labor laws. You, as the employer, still call the shots when it comes to managing your employees' day-to-day work. The EOR steps in as the legal employer, helping you take care of the administrative side of things so you can focus on growing your business.

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When you partner with a Hong Kong EOR/PEO, you get a local ally to help you navigate the market's complexities. 

This is because, to hire from Hong Kong, businesses have to do two things: 1) Set up a local entity 2) Ensure compliance with local labor laws.

Without the support of a Hong Kong EOR, businesses may have to spend thousands of dollars in capital fee and administration costs to set up a local entity to hire and pay employees. Secondly, Hong Kong’s labor laws can be difficult to navigate for foreign employers. Hong Kong’s labor laws have unique aspects. For example, the minimum wage rate is periodically reviewed and adjusted based on economic conditions. Unlike many other countries, Hong Kong does not have statutory limits on the number of working hours per week. However, it is common for employment contracts and industry standards to define working hours.

A partnership with an EOR unlocks growth potential and eradicates compliance risks, making it easier for your company to succeed in Hong Kong's business-friendly environment.

The cost of Hong Kong EOR/PEO services in Hong Kong may differ based on various factors, such as the number of employees, the extent of services needed, and the intricacy of the project. The pricing structure for Hong Kong EOR/PEO services usually involves a monthly fee per employee or a percentage of the employee's salary. Extra charges may apply for additional services or customization.

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Key Metrics For Foreign Employers 

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Foreign employers may consider hiring employees from Hong Kong for several reasons:

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Highly Skilled Workforce: Hong Kong has a well-educated and highly skilled workforce. Many Hong Kong residents are fluent in English and Chinese, making them valuable assets for businesses looking to expand or operate in the Asia-Pacific region.

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International Business Hub: Hong Kong is a global financial and business hub, attracting professionals with diverse international experiences and expertise. Hiring from Hong Kong can provide access to individuals familiar with international business practices.

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Bilingual and Multicultural Talent: Hong Kong's bilingual culture (English and Chinese) often results in individuals who are culturally sensitive and capable of bridging communication gaps between East and West. This is particularly advantageous for businesses with cross-cultural operations.

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Strong Work Ethic: Hong Kong employees are known for their strong work ethic, dedication, and commitment to their jobs. They often work long hours and are results-driven, which can benefit employers seeking dedicated staff.

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Legal and Financial Expertise: Hong Kong has a robust legal and financial sector. Employers in these industries may find it advantageous to hire professionals with experience in Hong Kong's well-established legal and financial systems.

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Ease of Doing Business: Hong Kong is consistently ranked as one of the easiest places to do business globally. Hiring employees from Hong Kong may streamline the process of establishing and running a business in the region.

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Tax Benefits: Hong Kong offers a favorable tax regime with relatively low corporate and personal income tax rates, making it an attractive location for both employees and employers.

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The term "misclassification of employees" refers to the incorrect categorization of workers by their employers. Misclassification happens when an employer labels a worker as an independent contractor or exempts them from specific employment regulations and benefits, even when the worker should be recognized as an employee entitled to legal safeguards, benefits, and rights.

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Engaging a PEO/EOR in Hong Kong helps mitigate the risks linked to misclassification by ensuring adherence to labor laws, accurate employee categorization, precise payroll management, and access to comprehensive benefits. This allows businesses to concentrate on their core activities while entrusting employment-related duties to seasoned experts.

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All labor regulations, including those of Hong Kong, establish basic standards for safeguarding employees and workplace governance, along with recommended practices for hiring and monitoring employees in the workplace.

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Employment contract

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Employment contracts are the cornerstone of employer-employee relationships, allowing for negotiations on crucial aspects like working conditions, salary structures, and additional benefits.

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In Hong Kong, employers have the flexibility to craft employment contracts in any language or even establish verbal agreements. When employing staff in Hong Kong, employers can choose between two primary types of employment contracts:

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Standard Employment Contract: Also referred to as a continuous employment contract, this applies to employees engaged for four weeks or more, working at least 18 hours per week. Employers must clearly outline the conditions of applicability and negotiate entitlements to statutory benefits as mandated by the Employment Ordinance and other essential labor regulations in Hong Kong.

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Fixed-Term Employment Contract: Employers can utilize this contract type to engage individuals for one month, with the option to renew. It's important to note that even with fixed-term contracts, employers are obliged to provide basic protections in accordance with Hong Kong's labor laws.

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This might sound overwhelming—but it doesn’t have to be. A solution like Gloroots eliminates the barriers for you. With Gloroots’ Employer of Record offering, hiring and managing employees globally is a piece of cake.

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Get an overview of what you need to know when hiring in Hong Kong.

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Working time

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Usual working hours in Hong Kong fall between 9 am and 6 pm, Monday through Friday. Importantly, there are generally no legal mandates or restrictions on the maximum number of working hours for most employees. However, it's noteworthy that young individuals aged 15 to 18 working in industrial settings are constrained to an 8-hour workday, specifically from 7 am to 7 pm, with a maximum weekly limit of 48 hours.

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Overtime

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There are no specific overtime regulations outlined in legal statutes; typically, the company's overtime policy is detailed either in the employment contract or within a Collective Bargaining Agreement.

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Public Holidays

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If a public holiday occurs on a Sunday, it is typically shifted to a weekday for a compensatory day off. However, public holidays that fall on a Saturday are typically not observed.

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The number of statutory holidays mandated by the employment ordinance is set to increase from 12 to 17 days by the year 2030, with the addition of one new statutory holiday every two years.

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The four upcoming statutory holidays are as follows:

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1. The first weekday after Christmas Day (effective from January 1, 2024).

2. Easter Monday (effective from January 1, 2026).

3. Good Friday (effective from January 1, 2028).

4. The day immediately following Good Friday (effective from January 1, 2030).

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Minimum Wage

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Hong Kong's labor regulations require employers to adjust the minimum wage to a rate higher than the national government's statutory minimum wage every two years.

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The minimum monthly wage in Hong Kong will stay at HKD 37.50 (approximately USD 4.78) per hour at least until April 30, 2023.

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Annual Leave

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Employees with a minimum of 12 months of employment are eligible for 7 days of paid annual leave, and this entitlement grows by one additional day for each subsequent year of employment until it reaches a total of 14 days by the 9th year of employment.

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Paid Sick Leaves

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In the initial 12 months of employment, employees accumulate 2 paid sick days per month, and this increases to 4 paid sick days per month once they complete one year of service, with a maximum cap of 120 paid sick days.

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Sick pay is computed at 80% of the average daily earnings earned in the preceding 12-month period before the first day of sickness. For employees with less than 12 months of service, the calculation is based on the average earnings received since their employment start date.

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To validate any claimed sick day, employees must provide a medical certificate issued by a medical practitioner or registered dentist as proof of their illness.

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Maternity leaves

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A pregnant employee who has held a continuous contract for a minimum of 40 weeks leading up to the scheduled maternity leave is entitled to 14 weeks of paid maternity leave. In cases of complicated or multiple births, an additional 14 weeks of leave may be available. Maternity leave should commence between two to four weeks before the due date.

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Employers provide maternity leave pay calculated as four-fifths of the employee's average daily wages earned during the 12-month period before the start of maternity leave (for those with less than 12 months of service, a shorter calculation period is used). The maternity leave pay for the 11 to 14 weeks is capped at 80,000 HKD, and employers can seek reimbursement from the Government for these 4 weeks.

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Paternity leaves

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Male employees who have maintained continuous employment for at least 40 weeks before their first day of paternity leave are entitled to 5 days of paternity leave. This leave can be taken either consecutively or as separate days, within a period starting four weeks before the expected date of delivery and extending up to 10 weeks after the actual birth of the child.

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Paternity pay is calculated at a rate of four-fifths of the average daily wages earned in the 12-month period before the commencement of paternity leave. For those with less than 12 months of service, a shorter calculation period is used.

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To take paternity leave, employees must provide advance notice. If the father gives at least 3 months' notice before the expected delivery date, he can take paternity leave immediately after informing his employer of the leave dates. However, if 3 months' notice is not provided, the employee must notify the employer of the paternity leave dates at least 5 days in advance of taking leave.

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Tax and Social Security contribution:

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Employee Income tax

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Termination 

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The Employment Ordinance outlines several acceptable grounds for termination, such as the employee's behavior, their ability or qualifications for the job, redundancy, and any other substantial reason that, in the view of the court or the Labour Tribunal, justifies the dismissal of the employee or a change in the terms of their employment contract.

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Severance Pay

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Statutory severance payments are provided to employees who have worked continuously for 2 years or more and are calculated based on either a set amount for each year of service or 2/3 of the employee's last full month's wages. The latter is determined by averaging the monthly wages earned over the previous 12 months (or a shorter period for those employed less than 12 months) or 2/3 of HKD22,500, whichever is lower. The total severance payment is capped at HKD 390,000.

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Employers have the right to offset their liability for severance payment against any gratuity or retirement scheme payment made to the employee for the years of service in which severance payment is due.

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For severance payment purposes, there is a legal presumption that termination occurred due to redundancy. This presumption can only be challenged by an employer who can demonstrate that the termination was entirely unrelated to redundancy.

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Starting from May 2025, the Employment & Retirement Schemes Legislation (Offsetting Arrangement) will be enacted to eliminate the practice that allows employers to offset Severance Payment/Long Service Payment against mandatory Mandatory Provident Fund (MPF) contributions. Employers will still be permitted to offset these payments against voluntary MPF contributions and gratuities. These arrangements will also extend to other occupational retirement schemes.

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Notice Period

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In Hong Kong, standard notice periods are typically set at 30 days, although employers have the option to define longer notice periods in the employment contract.

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However, during the probationary period, neither the employer nor the employee is required to provide advance notice to terminate the employment.

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Probation period

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In Hong Kong, the probationary period for permanent employees is typically established within a range of 1 week to 1 month, and the specific duration must be specified in the Employment Contract.

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When expanding your workforce globally, ensuring compliance can be a complex challenge. Employers must navigate various intricacies, from adhering to local employment laws and payroll procedures to maintaining diversity, equity, and inclusion (DE&I) standards and complying with data protection regulations like GDPR. Setting up local entities and managing these evolving compliance requirements can be daunting.

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Gloroots simplifies this process by offering a centralized platform to handle these tasks. Our in-house experts provide a protective shield against cross-border employment and payroll compliance risks. We assist with creating employment contracts, ensuring timely payments, and delivering compliant benefits, allowing you to focus on talent acquisition.

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Our commitment is to deliver a hassle-free global employment experience for both you and your employees. Connect with our experts today to launch your global hiring initiatives in Hong Kong.

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Expanding your team means bringing in the right people at the right time, and it's crucial for business growth. However, in Hong Kong, managing compliance, payroll, tax, and benefits requires a local entity and can be complex due to strict employment regulations.

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But here's the good news: With Gloroots's global Employer of Record (EoR) service, you can offload the burdens of payroll, tax, benefits, and compliance. This way, you can focus your energy where it counts most – nurturing your employees and driving your company's growth. It's the smart choice for a hassle-free expansion in Hong Kong.

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