How to hire employees in HongKong

Hong Kong shines as a bustling hub of free-market dynamics, celebrated for its robust trade freedoms, minimal tax policies, and an advanced international financial scene. Standing as a pivotal global business epicenter, it beautifully marries Eastern traditions with Western modernity, ensuring a lively cultural and economic atmosphere. Home to more than 7.4 million residents, it ranks among Southeast Asia's most populous urban areas. With a GDP of about 340 billion USD in 2017, Hong Kong's economic prowess is undeniably remarkable, marking it as a powerhouse in the global arena.

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What you need to know before hiring employees in Hong Kong

1. Job market in Hong Kong 

When exploring how to hire employees in Hong Kong, the following trends can help you hire cost-effectively and pay talent correctly. 

• Despite a challenging economic landscape in 2022, Hong Kong's job market demonstrates resilience and resilience, showing promising signs of growth. Projections suggest an anticipated rebound in 2024, highlighting the city's ability to adapt and thrive amidst evolving conditions.
•  Over 90% of the city's GDP comes from the service sector, underpinning the majority of job opportunities in financial services, trading and logistics, professional services, and tourism.
• Accounting for more than 20% of the GDP, the financial services industry leads sectoral growth, indicating robust job opportunities in finance, banking, and investment.
• Besides financial services, trading and logistics, and professional services provide significant employment, highlighting Hong Kong's role in global trade.
•  The pandemic affected tourism and travel-related industries, but financial and professional services, health, and exports remained resilient.
•  E-commerce, advertising, and software industries are on the rise, presenting new job opportunities and driving innovation and digital expertise.
•  With market capitalization over 4 trillion USD and anticipated economic growth of 3.5 to 5.5%, the job market is set for expansion.
•  The shift towards digital innovation opens avenues for job creation in emerging sectors, offering diverse career paths in a leading financial and commercial hub.

The steady climb in economic indicators and resilience in key sectors underline Hong Kong's robust economic framework, positioning it as a premier destination for global talent and remote employment. Businesses looking to expand or establish operations in Hong Kong will discover a competitive and adept workforce, well-equipped to navigate the complexities of the international job market. This dynamic environment, bolstered by a strong service sector and strategic trade connections, ensures that Hong Kong remains at the forefront of innovation and economic development, offering valuable opportunities for both employers and professionals alike.

2. Hong Kongs Hiring Trends

• In a significant shift, 60.4% of the workforce in Hong Kong now ranks work-life balance above salary and benefits, which is valued at 60.2%. This marks a change in hiring trends, showing a greater emphasis on quality of life alongside financial incentives. The data also shows a disparity in gender expectations, with 65% of women prioritizing work-life balance over 55% of men, indicating diverse needs in the workplace.

• Proactively addressing work-life balance, at least 80% of employees have taken steps to improve their situation, including 32% working fewer overtime hours and 29% opting for flexible hours. This reflects an active pursuit of better quality of life among the workforce. Despite a decrease in remote work from 62% in 2021 to 32% in 2022, and with 41% now working exclusively on the employer's premises, a strong preference remains for hybrid models, blending home and office work to offer more flexibility.

• Fair compensation emerges as a key factor for maintaining a good work-life balance for 41% of respondents, with healthcare benefits close behind at 37%. These findings suggest that while flexible arrangements are valued, fair pay and health benefits remain essential for overall employee satisfaction.

• Career growth and development also play a crucial role, with 58% of respondents emphasizing the importance of personal career progression, particularly among the younger demographic, with 78% of those aged 18 to 34 years seeking upskilling and reskilling opportunities. 

These trends underscore the evolving dynamics in Hong Kong's hiring landscape, where priorities such as work-life balance, flexible working arrangements, fair compensation, and opportunities for career development are increasingly central to attracting and retaining talent, urging employers to adapt and prioritize the comprehensive well-being of their workforce.

How to hire employees from Hong Kongs 

1. Set up an entity in the country

Setting up a legal entity in Hong Kong is a strategic move for companies seeking substantial growth or a sustained business presence. It facilitates direct control over employee management and offers long-term financial advantages.

The establishment process requires choosing an appropriate business structure, such as a Private Limited Company or Public Limited Company, followed by registration with the Companies Registry, and securing a Business Registration Certificate for tax purposes.

Nonetheless, navigating this route in Hong Kong can be intricate and expensive, necessitating a comprehensive grasp of local employment laws, along with proficient handling of human resources and payroll. This underscores the need for meticulous planning or the assistance of specialists well-versed in Hong Kong's business regulations.

2. Hire independent contractors

Hiring talent as contractors in Hong Kong involves forming agreements with individuals or entities for designated tasks or projects, providing significant adaptability suitable for short-term engagements or particular project requirements. This model is particularly advantageous for businesses looking for flexibility without the long-term commitments associated with full-time employees. Yet, it's critical to ensure correct classification of workers to sidestep legal pitfalls and potential penalties under Hong Kong's employment regulations. Another aspect to bear in mind is that contractors may not share the same level of commitment or loyalty as permanent, in-house staff, which is a vital consideration for companies relying on this hiring strategy.

3. Partner with an EOR in the country

Leveraging an Employer of Record service, such as Gloroots, provides a simplified entry into Hong Kong's market, eliminating the need to navigate the complexities of establishing a legal entity. This strategy significantly reduces liabilities and offers a cost-effective solution. Collaborating with an EOR ensures full compliance with Hong Kong's employment laws, taxation norms, and regulatory mandates, greatly reducing legal risks and securing a compliant business framework. This approach not only facilitates a smoother market entry but also streamlines the management of payroll and human resources, allowing businesses to focus on their core operations while expanding in Hong Kong.

Employment Laws You Must Know Before Hiring in Hong Kong

Compliance risk while hiring in Hong Kong

Hiring in Hong Kong without adherence to strict employment laws, tax regulations, and worker classification can lead to significant legal risks, financial penalties, and reputational damage for businesses.

Key Aspects of Hong Kong Labor Law:

1. Employment Contract: Before starting employment, it is mandatory for a prospective employee to receive specific details, such as salary, payment intervals, any year-end bonuses, and notice period length. While there's no legal requirement for employment contracts to be in writing, it is a widespread practice to draft a written agreement that both parties sign.

2. Working Hours: In India, the typical work hours are from 9 am to 6 pm, Monday through Friday. However, there is no specific legislative mandate governing the maximum hours for general workers. Only young individuals aged 15 to 18 in industrial jobs are subject to a restricted workday of 8 hours, which must occur between 7 am and 7 pm, with a weekly limit of 48 hours.

3. Overtime: In India, overtime compensation is not mandated by law; instead, it is typically specified in the employment contract or a Collective Bargaining Agreement.

4. Minimum Wage: The minimum hourly wage is 40.00 HKD.

Payroll laws in HongKong

In Hong Kong, payroll laws mandate monthly wage payments, include statutory holidays, and enforce regulations on wage deductions, mandatory provident fund contributions, and termination payments.

Employment benefits in HongKong

Leave Policies in HongKong

Paid Time Off:

Employees with at least 12 months of service are eligible for 7 days of paid annual leave. For each additional year worked, the leave increases by one day, reaching a maximum of 14 days by the 9th year of employment.

Public Holidays:

When public holidays in Hong Kong fall on a Sunday, they are compensated with a weekday off. However, public holidays on Saturdays are generally not compensated. The number of statutory holidays will rise from 13 to 17 by 2030, with a new holiday added every two years starting in 2026 with Easter Monday, followed by Good Friday in 2028, and the day following Good Friday in 2030.

Sick Days:

During the initial year of employment, employees accumulate two paid sick days each month. After the first year, this rate increases to four paid sick days per month, up to a total of 120 days. Sick pay is set at 80% of the average daily wages earned in the 12 months preceding the onset of illness. For employees with less than a year of service, sick pay is calculated based on the average earnings since they started working.

Employees must provide a medical certificate from a healthcare professional or registered dentist to validate any claimed sick days.

Maternity Leave:

An employee under a continuous contract for at least 40 weeks before the start of maternity leave is eligible for 14 weeks of paid maternity leave. In cases of complicated or multiple births, an additional 14 weeks may be granted. Maternity leave typically begins 2 to 4 weeks before the expected delivery date.

Maternity pay is calculated at 80% of the average daily wages over the 12 months prior to the start of maternity leave, or a shorter period if employed for less than 12 months. The total maternity pay for the 11 to 14 weeks is limited to 80,000 HKD, with employers able to seek reimbursement from the Government for the additional four weeks.

Paternity Leave:

Male employees qualify for 5 days of paternity leave if they have been employed under a continuous contract for at least 40 weeks prior to the start of the paternity leave. This leave can be taken either consecutively or in separate instances, within a timeframe that extends from four weeks before to ten weeks after the child's birth.

Paternity pay is calculated at 80% of the average daily wages over the 12 months before the paternity leave starts, or over a shorter period if the employment has been less than 12 months.

Employees must provide advance notice for paternity leave. If notice is given at least three months before the expected birth, the employee can commence leave immediately after notifying the employer of the actual leave dates. If three months’ notice isn't given, the employee must inform the employer of the leave dates at least five days before beginning the leave.

Public Health Insurance 

Hong Kong's public health insurance is primarily funded by general taxation and offers comprehensive, highly subsidized healthcare services to all residents. Managed by the Hospital Authority, the system includes a network of public hospitals and clinics providing a range of medical services. Residents can access healthcare at minimal cost, although dental care is not covered unless it's an emergency. The public healthcare system is renowned for its high standards and accessibility, ensuring that all residents, including non-permanent ones, receive quality medical care.

Filing tax in HongKong

Income Tax:

In Hong Kong, the income tax rates are structured in progressive tiers, starting at 2% for lower income levels and increasing for higher income brackets, reaching up to 17% for the highest earners. This tiered approach ensures that taxation aligns with the ability to pay. For a detailed explanation of Hong Kong’s income tax rates and brackets without specific figures, you can check out our comprehensive guide.

Other Tax and Social Security Contributions:

In Hong Kong, employer and employee payroll contributions vary by category. Employers contribute a total of 14% towards payroll costs. This includes a 5% Mandatory Provident Fund (MPF) on salaries up to HK$30,000 monthly, and up to 2% for Employment Insurance, depending on the industry, totaling a 7% additional cost in employment. 

Employees contribute 5% towards the Provident Fund (MPF) for salaries ranging from HK$7,000 to HK$30,000 monthly. The total employee contribution stands at 5%. For a detailed explanation of Hong Kong's payroll contribution structure, including specific rates and categories, refer to our comprehensive guide.

Business culture in HongKong

• Business culture in Hong Kong values formality and respect, particularly towards individuals in positions of authority. Exchanging business cards respectfully with both hands is a common practice during initial meetings.
• Punctuality is highly valued, and arriving on time or slightly early for meetings is considered essential to show respect and seriousness.
• Building trust and relationships, known as "Guanxi," is crucial in the business community. Establishing strong personal connections is seen as an investment in future business success.
• The communication style tends to be direct yet harmonious. Non-confrontational language and indirect approaches are often used to avoid conflict and maintain a pleasant atmosphere.
• A conservative approach to attire and office behavior is standard. Business attire is typically formal, and a calm, controlled demeanor is expected in professional settings.
• Decision-making processes are generally hierarchical, with senior management making final decisions after group discussions and consensus-building, reflecting a preference for collective agreement.

Top sectors to hire from in HongKong

1. Financial Services

Financial services contribute significantly to Hong Kong's GDP, with around 20% to 25% of the city's GDP attributed to this sector.

The sector has experienced robust growth over the past decade, with an average annual growth rate of around 3% to 5%.

As of recent data, the financial services sector employs over 250,000 people in various roles including banking, insurance, investment, and financial technology.

2. Trading and Logistics

Hong Kong is a major trading hub, with its port consistently ranked among the busiest in the world.

The logistics sector directly employs over 700,000 people and accounts for around 23% of the city's GDP.

With the continued expansion of e-commerce and cross-border trade, the demand for logistics and supply chain professionals is expected to rise.

3. Professional Services

Hong Kong is home to numerous international and local firms providing legal, accounting, consulting, and market research services.

Professional services contribute around 12% to 15% of the city's GDP.

This sector employs a diverse range of skilled professionals, with over 200,000 individuals working in legal and accounting alone.

4. Technology

While still developing, the technology sector in Hong Kong has been growing rapidly, with initiatives like the Hong Kong Smart City Blueprint driving innovation.

The sector contributes around 5% to 7% of the city's GDP and employs over 100,000 people.

Fintech, in particular, has seen significant growth, with Hong Kong emerging as a leading fintech hub in Asia.

5. Tourism and Hospitality

Pre-pandemic, tourism and hospitality contributed around 5% to 6% of Hong Kong's GDP and employed over 280,000 people.

While the sector faced challenges due to travel restrictions, it is expected to rebound as restrictions ease and international travel resumes.

6. Healthcare Services

The healthcare sector in Hong Kong has been growing steadily, with an aging population and increased demand for healthcare services.

Healthcare contributes around 3% to 4% of the city's GDP and employs over 160,000 people.

The pandemic has highlighted the importance of healthcare, leading to further investments and expansion in the sector.

Top cities to hire from  HongKong

1. Victoria City

serves as the capital of Hong Kong, housing the headquarters of various government bureaus. It stands out as one of the most developed cities in the region, presenting employment opportunities in software and networking engineering, as well as human resources.

2. Kowloon

A prominent urban area in Hong Kong, boasts a vibrant job market, particularly in financial services, education, advertising, and IT services. With its diverse array of industries, Kowloon provides ample opportunities for professionals seeking career advancement and growth.

Hire in HongKong  compliantly with Gloroots

Gloroots, as an Employer of Record (EOR) in Hong Kong, offers a streamlined solution for these challenges. Our EOR platform accelerates candidate onboarding, ensuring swift operational initiation while adhering to local and global compliance standards. Designed for companies of all sizes, it simplifies payroll management, benefits administration, and tax handling, thus bypassing the need for a local entity. This allows companies to focus on building a remote team in Hong Kongefficiently. For more information on how Gloroots can facilitate your Hong Kong hiring needs, please contact us.

Frequently Asked Questions 

What are the typical hiring procedures and timelines in Hong Kong?

Hiring procedures in Hong Kong usually involve advertising job openings, reviewing applications, conducting interviews, and making job offers. The timeline can vary depending on factors such as the urgency of the position, the number of candidates, and any visa or work permit requirements. Generally, the process can take several weeks to a couple of months from posting the job to finalizing the hire.

What legal and regulatory considerations should employers be aware of when hiring in Hong Kong?

Employers in Hong Kong must adhere to various legal and regulatory requirements when hiring, including those related to employment contracts, wages, working hours, and employee rights. It's essential to comply with the Employment Ordinance, immigration laws, and any industry-specific regulations. Additionally, employers should be aware of anti-discrimination laws and ensure fair and equal treatment of all applicants.

Are there specific cultural or language considerations to keep in mind when hiring in Hong Kong?

While English is widely spoken and often the language of business in Hong Kong, Cantonese is the predominant language in many workplaces. Employers should consider the language proficiency requirements for the positions they're hiring for and assess whether bilingual skills are necessary. Additionally, understanding Hong Kong's unique cultural dynamics, such as business etiquette and communication styles, can contribute to successful hiring and employee integration.