Hiring Talent And Managing Payroll In Hong Kong?

Agreements

• The contract of employment may be written or oral. However, the employer is required to provide the employee with a written copy of the contract even if the agreement is oral.
• The contract must include the following - wage details, wage period, notice period, end of-year payment details.
• Every continuous contract is assumed to be of one month if the contract period is not mentioned in the agreement. The contract can be renewed on a month-to-month basis.
• The employer is required to maintain wage and employment records; failing which the employer is liable to heavy fines. These records include details such as the name and identity card number of the employee, commencement, and termination of employment, wages paid, leaves, etc.
• If the norms in the Employment Ordinance are violated, the employer is liable to heavy fines or even imprisonment in severe cases.
• Some jobs don't fall under the Employee Ordinance of Hong Kong. The exceptions should be noted while making agreements.
• Agreements should be in English or Chinese. If a contract is in another language, then it should be translated into these languages.

Onboarding Process

• In case the employer hires a new employee, a notification should be sent to the Inland Revenue Department no later than three months after the employment begins. This is a mandatory process and refuting it would result in fines.
• The details of the employee should be registered with the relevant departments.
• The employer is required to share a written copy of the contract with the new employee.

Minimum Wage

Payroll Cycle

Annual Bonus

Health Benefits

• Hong Kong has various healthcare services. The Health Bureau ensures Hong Kong citizens have adequate health care and no one is denied treatment due to lack of means. Certain other public departments ensure subsidized healthcare for the citizens of Hong Kong.
• All private healthcare providers are required to be registered with the Medical Council of Hong Kong and are regulated by the same body.

Working Hours and Overtime

• Work hours:The number of working hours per week in Hong Kong is 40 hours and 8 hours per day. A typical work week consists of 5 days starting from Monday to Friday.
• Break:A break of at least half an hour should be provided within a maximum of 5 hours of continuous work.
• Overtime: Hong Kong does not make overtime a mandatory procedure. If required, overtime rates are decided in the agreement.

Social Security

• Hong Kong has a compulsory savings (pension) fund called the Mandatory Provident Fund (MPF). The MPF provider has to be chosen by the employer and the MPF assets of the employee can be shifted to the MPF provider of another employer when the employee changes jobs.
• Both employers and employees must contribute 5% of the employee's salary (each) to the Mandatory Provident Fund every month. The salary amount should be at least 7,100 HKD and a maximum of 30,000 HKD per month for this to be applicable.

Taxes for Employees

Termination

• Employee or employer is required to give notice to the other party in case of termination of the contract. If there is no stipulated notice period in the contract, the notice period is at least one month.
• For employees in probation period, notice is not required within the first month of probation. After the first month of probation, at least a 7-day notice is required or as per the notice period agreed upon in the contract.
• The employer must inform the Inland Revenue Department (IRD) at least one month before an employee is dismissed. For employees leaving Hong Kong, the IRD must issue a “letter of release” until which the employer has to withhold all payments to the employee.

Social Security

• Employees who have worked for at least 24 months are eligible for severance pay. This is in case the employee is laid off or dismissed for redundancy.
• In Hong Kong, employees dismissed after working for more than 5 years are eligible for long service payment. This is calculated in the same way as severance pay. However, the reason for dismissals in this case include -

  • expiry of the contract,
  • ill health,
  • resignation of employees above 65,
  • death of the employee,
  • dismissal not due to redundancy or misconduct.
• Employees receive two-thirds of their monthly wage (up to 15,000 HKD) multiplied by the number of years they have worked.

Employees or Contractors

• Employees and contractors have almost the same benefits since the minimum contractual period in Hong Kong is one month. Also, the taxes have to be handled by the individuals themselves.
• Contractors, full-time employees, and self-employed individuals are treated differently in Hong Kong. Misclassifying them can lead to fines and penalties.

Final Words