If you’re looking to hire remote talent in Hong Kong but your business is based elsewhere, you may be planning to set up a Hong Kong payroll system for the first time.

Hong Kong local labor laws can be complex to understand, but complying with this legislation, especially when organizing payroll, is essential to attracting and retaining local talent in Hong Kong.

An Employer of Record (EOR) like Payoneer Workforce Management can offer assistance to handle payroll when your company hires in Hong Kong. Their payroll services in Hong Kong help you stay compliant while your employees are paid in a timely and reliable fashion.

Payroll in Hong Kong: Wages and other payments

When you set up a payroll in Hong Kong, you must have a comprehensive understanding of the standard payment cycle, minimum wage laws, and bonus entitlements. 

Hong Kong’s payroll cycle

Most employers in Hong Kong choose to pay their employees at the end of each working month. However, while the date of pay is flexible, you must always pay your employee within 7 days of the end of the wage period, so you should account for this when setting up your payroll system in Hong Kong.

Hong Kong’s payroll law also states that you must include the following information on your employee’s payslip:

• Employee’s name
• Employer’s name
• Employment period
• Total wages
• Details of deductions

Minimum wage

A legal minimum wage first came into effect in Hong Kong in 2011. It has increased progressively since then. In 2025, the minimum wage in Hong Kong is HKD 40 per hour.

Any employer who is hiring someone in Hong Kong on minimum wage is legally required to keep a detailed record of all hours worked by the employee to ensure they are paid adequately.

There is currently no legislation on maximum working hours or overtime pay in Hong Kong. Research has been carried out, and a report released, but at the moment, no policy has been written.

Sick pay

Any employee who is employed under a continuous contract in Hong Kong is entitled to paid sick leave, which is paid at 80% of their normal salary. The employee must be able to produce a medical certificate, especially for absences of 4 days or more.

Employees are entitled to 2 paid sickness days for every month they’ve worked for their employer, up to a maximum of 12 months of employment. After this, the employee accumulates 4 paid sickness days for every additional month of employment, with a maximum accumulation of 120 days.

Maternity pay

Female employees in Hong Kong are entitled to 14 weeks of paid maternity leave if they have been employed under a continuous contract for 40 weeks or more.

Employers are responsible for paying an employee’s wages during their maternity leave, though they can request a reimbursement from the Hong Kong government for weeks 11 through 14 (subject to a cap of HKD 80,000). Maternity pay is equal to 80% of the mother’s average daily wages from the preceding year.

Vacation pay

Employees do not receive their usual wages during vacation days. Instead, the daily pay for vacation leave is based on the employee’s average daily wages over the past 12 months before the leave starts (or before the 1st day of leave if it’s more than 1 day in a row).

When calculating the average daily wages, the employer must leave out all days where the employee wasn’t paid (or paid in full), including rest days, public holidays, vacation days, sick leave, maternity or paternity leave, injury leave, or other agreed leave.

Vacation pay should be paid to the employee on the pay day immediately following the PTO.

Severance packages

In Hong Kong, severance and long-service payments are governed by the Employment Ordinance:

• Employees who have worked under a continuous contract for at least 24 months and are made redundant are entitled to a severance package. 
• Employees who have worked under a continuous contract for 5 years or more, and are terminated for reasons other than redundancy or serious misconduct, are eligible for a long-service payment.
  • Severance pay is calculated as two-thirds of the employee’s last month’s wages multiplied by the number of years of service, capped at HKD 22,500 per year of service. This entitlement is strictly for redundancy dismissals and does not apply in cases of employee misconduct or voluntary resignation.

13th-month salary

In Hong Kong, it is common for employers to pay their employees an additional salary payment once a year. This is often referred to as a 13th-month salary.

The 13th-month salary is not a legal requirement, but employers must make sure it is paid if specified in an employee’s contract.

Hong Kong payroll: Contributions and deductions

When calculating your Hong Kong payroll costs, you’ll need to account for several mandatory contributions and deductions.

Income tax

Income tax in Hong Kong is charged at either a standard rate of 15% on net income of first HKD 5 million and 16% on the remainder, or at progressive rates ranging from 2% to 17%, depending on income level, whichever is a lower liability.

Mandatory Provident Fund (MPF)

The Mandatory Provident Fund is a mandatory retirement savings scheme in Hong Kong.

Employers and employees must both contribute 5% of the employee’s income into their MPF account.

Employee Compensation Insurance

Employers in Hong Kong must take out Employee Compensation Insurance. 

This is designed to cover their liability if an employee experiences an injury or illness while working. The employer must pay the full cost of this insurance, so they will need to account for this when setting up their payroll system in Hong Kong.

Hong Kong payroll management best practices

There are several practices that businesses should follow to help them stay compliant with local employment laws in Hong Kong. These include:

• Monitoring tax law changes, labor laws, and statutory requirements
• Performing occasional payroll audits to identify any errors
• Providing ongoing payroll training to staff

Alternatively, you may choose to work with an EOR when setting up your payroll. Hong Kong EOR services like Payoneer Workforce Management can help manage the payroll cycle for you, helping you to streamline and simplify paying employees in Hong Kong, with compliance support.

Your options for payroll services in Hong Kong

There are three ways to pay employees in Hong Kong:

1. Set up an entity: This allows you to establish a legal business presence in Hong Kong, but it can be a complicated and time-consuming process.
2. Hire a local contractor: You may choose to work with independent contractors instead of hiring employees. You’ll need to be careful that they don’t begin to work in the same way as an employee, though, as you may risk misclassification fines.
3. Pay through an EOR: An EOR offers a seamless and flexible option for international payroll management. Hong Kong labor laws may seem complex, but an EOR service like Payoneer Workforce Management can help your business stay compliant.

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FAQs

1) How does Hong Kong’s payroll system work?

Most employers pay their employees at the end of each working month. When calculating payroll, you’ll need to account for MPF contributions; income tax is handled by employees via self-assessment.

2) What is the pay period in Hong Kong?

In Hong Kong, it is mandatory that you pay your employees within 7 days of the end of the wage period.

3) What is on a Hong Kong salary payslip?

A Hong Kong salary payslip must contain mandatory information, including the employee’s name, the employer’s name, the employment period, total wages, and any deductions made.