Using an employer of record in Hong Kong

As a business owner, based in the US or any other region, you may be looking to hire talent in Hong Kong owing to the sophisticated business environment and a high concentration of skilled professionals. 

But onboarding these workers could prove complex and time-consuming if you aren’t familiar with local labor and employment laws. Luckily, a Hong Kong Employer of Record (EOR), like Payoneer Workforce Management, can help keep things simple.

Find out more about how Payoneer Workforce Management can help your business, or keep reading to learn how an EOR in Hong Kong operates.

How to hire employees in Hong Kong

There are three main ways to hire remote employees in Hong Kong.

1. Setting up a local entity allows you to operate smoothly in Hong Kong, but this can be expensive and time-consuming.
2. Using independent contractors offers a great deal of flexibility, but you need to be careful not to misclassify workers as contractors.
3. Working with an employer of record in Hong Kong offers a streamlined way to hire Hong Kong professionals. An EOR helps handle employment tasks like onboarding, payroll, and benefits, while helping you stay compliant with local labor and employment laws.

Partnering with an employer of record in Hong Kong

An EOR acts as a legal employer on your behalf, so your U.S.-based business can onboard local workers. Hong Kong EOR services help you onboard, pay, and manage the team, from onboarding local hires quickly and compliance support to managing taxes, benefits, and more.

Payoneer Workforce Management provides EOR services in Hong Kong. Find out more about how we can help your business here.

How to onboard employees in Hong Kong

Here are some key steps to consider when onboarding a new employee in Hong Kong.

• Enrolling in benefits and payroll: Make sure the employee is enrolled with payroll and any benefits schemes they are legally entitled to. This includes the Mandatory Provident Fund (MPF) scheme.
• Configure devices: Set up their digital devices, including any logins or online applications they need for their role.
• Orientation: Arrange an orientation session during the local hire’s first week to explain company procedures, the onboarding process, and their responsibilities in their new role.
• Introduction to team and colleagues: Schedule time for the local employee to get to know the team and wider business colleagues.

Pay employees in Hong Kong

The fiscal year in Hong Kong runs from April 1st to March 31st. Employers usually pay their employees at the end of each working month. However, the only legal rule is that you must pay your employee within 7 days of the end of the wage period.

The minimum wage in Hong Kong is currently HKD 40 per hour. Hong Kong employers are not legally required to pay end-of-year bonuses, but these must be paid if stated in the employment contract.

Mandatory tax deductions in Hong Kong include:

• Income tax: Employers are not responsible for withholding income tax in Hong Kong. Employees must instead complete a tax return each year.
• Mandatory Provident Fund (MPF): The employer and employee are both responsible for contributing 5% of the employee’s income into their MPF account. This amount is subject to minimum and maximum income levels.

Employment laws in Hong Kong

The Employment Ordinance is the main legislation for employment law in Hong Kong. When hiring here, you must comply with the following:

• Working hours: There is currently no limit to the maximum number of hours an employee can work in a week in Hong Kong.
• Rest days: Any employee employed on a continuous contract in Hong Kong is entitled to 1 rest day in every 7 days.
• Remuneration frequency: An employer in Hong Kong must pay their employees’ wages within 7 days of the end of the wage period.

Minimum wage in Hong Kong

The minimum wage in Hong Kong is currently set at HKD 40 per hour.

Any Hong Kong employer who is hiring someone on minimum wage may be legally required to keep a detailed record of all hours worked by the employee. 

For a business to stay compliant, it’s important to stay updated on current minimum wage regulations. An EOR in Hong Kong may offer guidance on navigating local payroll compliance.

Employment contracts in Hong Kong

In Hong Kong, employment contracts can be written or oral. However, you legally have to provide the contract in writing at a new hire’s request.

You must include the following information in any employment contract offered in Hong Kong:

• Wage information, including overtime rate
• Wage period
• Notice period required in the event of employment termination
• End-of-year payment and the payment period (if the employee is entitled to one)

Importantly, Hong Kong employment laws distinguish between “continuous” and “non-continuous” employment. 

If an employee has worked for you for 18 hours or more per week for 4 or more weeks, they are a “continuous” employee.

Leave policy in Hong Kong

Employees in Hong Kong are entitled to the following leave:

Leave type	Entitlement
Public holidays	There are 14 statutory public holidays in Hong Kong, including Ching Ming Festival and Lunar New Year’s Day.
Vacation leave	An employee is entitled to 7 days of vacation once they have worked for 12 months under a continuous contract. This allowance increases up to a maximum of 14 days once the employee has worked in the role for 9+ years.
Sick leave	Employees under a continuous contract are entitled to paid sick leave, paid at 80% of their normal salary.  An employee is entitled to 2 paid sickness days for every month they have worked, up to a maximum of 12 months. The employee gains 4 paid sickness days for every additional month of employment completed after this, with a maximum accumulation of 120 days.
Maternity leave	A female employee is entitled to 14 weeks of maternity leave, paid at 80% with a HKD 80,000 cap, only if she has been employed in Hong Kong on a continuous contract for 40 weeks or more.
Paternity leave	A male employee is entitled to 5 days of paternity leave paid at 80% of average wages with an advanced notice, if he has been employed in Hong Kong under a continuous contract for 40 weeks or more.

To stay compliant with these policies, you may find it useful to work with an employer of record. 

Background check in Hong Kong

Employers may not have to perform employee background checks in Hong Kong, but they are typically beneficial and recommended. 

Here are some of the most common background checks in Hong Kong:

Background check	Description
Employment history	Employers should confirm that the employee’s employment history matches the information on their resume.
Education history	Checking a new hire’s educational history is essential in industries that require specific qualifications.
Criminal Record Check	Employers in Hong Kong may ask new hires to provide a Certificate of No Criminal Conviction (CNCC). This check is common in industries such as education and finance.
Global watchlist screening	This background check involves checking international databases to confirm the employee is not on any watchlists.

You must carry out all background checks in line with the Personal Data Privacy Ordinance (PDPO). This includes gaining the employee’s explicit and written consent before conducting any checks.

Employment termination in Hong Kong

An employer can legally terminate employment in Hong Kong in one of two ways:

1. Immediate termination: An employee may be dismissed without notice or pay in the case of gross misconduct or fraud.
2. Termination by notice: If the employer needs to make an employee redundant, and that employee has already passed their probation, they must give at least 7 days’ notice after the first month; post-probation, typically 1 month unless otherwise specified in the contract. 
3. Severance pay: Employees who have been employed under a continuous contract for at least 24 months and are dismissed due to redundancy are entitled to severance pay under Hong Kong law.
   1. The severance amount is calculated as: Two-thirds of the employee’s last month’s wages × number of years of service (or HKD 22,500 per year of service, whichever is less).
   2. This entitlement applies only when the termination is for redundancy and not for misconduct or voluntary resignation.

Company registration in Hong Kong

Registering a company in Hong Kong is a big undertaking, but it may be the right choice for your organization if you want to develop a significant presence there.

To register a business in Hong Kong, you need to:

• Choose your company name and type
• Deliver the application to the Companies Registry
• Collect certificates from the Companies Registry once the application has been approved
• Obtain other permits or licenses relevant to your industry

Full information can be found on the Trade and Industry Department’s website. However, using a Hong Kong EOR is a simpler and easier option for most U.S.-based companies.

PEO in Hong Kong

A PEO (Professional Employer Organization) and an EOR (Employer of Record) both help you manage HR and payroll responsibilities when building a global workforce. However, there are a few key differences.

While PEOs are a useful way to outsource HR responsibilities, they can’t act as a legal employer on your behalf. You therefore still need to have a registered legal entity in Hong Kong if you wish to hire within the country.

On the other hand, working with an EOR helps companies hire in Hong Kong without having a registered entity. The EOR acts as the legal employer for workers based in Hong Kong and helps you stay compliant with local legislation.

Payoneer Workforce Management’s employer of record services in Hong Kong

From onboarding local hires quickly and compliantly without a local entity to running global payroll securely, working with an EOR is a streamlined way to get compliant support when engaging employees living and working abroad.

Payoneer Workforce Management offers support when onboarding local employees in Hong Kong. 

Book a demo today to find out how we can help your business.

FAQs 

1) Is an employer of record legal in Hong Kong?

It is legal to use an EOR in Hong Kong. An Employer of Record in Hong Kong helps you employ Hong Kong nationals and offers support to adhere to local labor laws without setting up a legal entity in the country.

2) What are the benefits of using an EOR in Hong Kong?

EOR Hong Kong services help quickly enter the market, while your business gets compliance support with local labor and employment laws in Hong Kong. An EOR helps manage recruitment, compliance, employment contracts, payroll, and more.

3) How much does an EOR cost in Hong Kong?

The cost of an EOR in Hong Kong varies based on the provider. Overall, the cost of working with an EOR is lower than the cost of setting up a local legal entity.