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Employer of Record in Hong Kong

Employer of Record in Hong Kong

Skuad's Hong Kong EOR (Employer of Record) solution helps your business expand into Hong Kong without the need for an entity setup. Our unified and automated global HR platform enables you to expedite the onboarding of your remote team, manage their payroll, benefits, etc. compliantly. We help you streamline the global expansion process with the able assistance of our international network.

Employment in Hong Kong

What You Must Know Before Employing In Hong Kong

Labor laws in Hong Kong are rather liberal and provide many benefits to people working here. From maternity benefits to gratuity and other different provisions, Hong Kong labor laws are favorable for workers.

Hong Kong labor and employment laws are so detailed that they may even be considered exhaustive, with little grey or uncovered aspects of employment. This allows both employers and employees to refer to the required government statute for any dispute or confusion.

You must understand and adhere to the employment laws of the geography that you are operating. Non-compliance with the local laws is taken seriously in Hong Kong. It will not be a cakewalk if you are willing to carry out employment activities all by yourself. A better option might be to partner with an EOR like Skuad, which has experience in hiring and other employment-related activities in Hong Kong and can aid you in understanding and complying with all government statutes. Book a Demo with Skuad experts to know about tailor-made solutions for your business needs.

Some of the provisions of Employment Laws to note before hiring in Hong Kong are as follows.

Title Explanation
Employment Ordinance The Employment Ordinance contains a major portion of information regarding the labor laws of Hong Kong. It contains all information about the regulations that apply to employees and employers in the country, including rest days, maternity leaves, holidays, wage protection, severance, termination, and protection against discrimination.
Employment Agency Regulations Employment agencies are among the most significant ports of connection between employers and employees in Hong Kong. These agencies are typically granted licenses for 12 months at a time. The Employment Agency Regulations lay out the rules not just for the applicant and grant of such a license, but also the maximum commission that an agency can charge.
Employment of Children Regulations These regulations lay out the rules, if any, for the employment of children. The minimum age of employment in Hong Kong is 13. Children aged 13 and 14 may be employed in non-industrial establishments. For industrial establishments, the minimum age of employment has been set at 15.
Employment of Young Persons (Industry) Regulations These regulations lay out the rules under which children over the age of 15 but under the age of 18 may be employed in the industry. They talk about the working conditions at these industrial facilities, as well as the number of daily hours and rest time they need to be provided.

Timings, Holidays, And Leave Policies In Hong Kong

Entitlements Explanations
Statutory Working Hours There is no statutory standard working hour system, as well as no statutory maximum number of hours. However, the law governs working hours for minors.

Children between 15 and 18 years of age are allowed to work only between 7 am and 7 pm. Their period of employment (work plus breaks) may not exceed 8 hours in a day. They are not allowed to work more than 48 hours a week and may not work for more than 5 hours continuously without a break of 1 hour.
Rest Period No rest period is defined for those above 18 years of age.
Public Holidays There are several general holidays defined by the Government of Hong Kong every year. These holidays are as follows.
  • New Year’s Day
  • Lunar New Year’s Day
  • Second Day of the Lunar Year
  • Thrid Fourth Day of the Lunar Year
  • Ching Ming Festival
  • Good Friday
  • Day after Good Friday
  • Day after Ching Ming Festival
  • Labor Day
  • Eighth day of the fourth month (Lunar calendar)
  • Birthday of the Buddha
  • Tuen Ng Festival
  • Hong Kong Special Administrative Region Establishment Day
  • The day after the Chinese Mid-Autumn Festival
  • National Day
  • Chung Yeung Festival
  • Christmas Day
  • First Weekday after Christmas Day
Maternity Leave, Paternity Leave, and other leaves

The mother is entitled to maternity leave as long as she is employed under a continuous contract. The duration of the maternity leave is 14 weeks.

Paternity leave is five days, which may be taken between four weeks before birth to fourteen weeks after.

Sick leave for the first year of employment is two days for every completed month, and after the first year is four days for every completed month.

Overtime entitlement There are no specific laws in Hong Kong concerning overtime payment.
Annual Leave Entitlement A worker is entitled to 7 days of annual paid leave after every 12 months of working.

Contractors Vs. Full-time Employees

The labor and employment laws in Hong Kong are peculiar in that they seldom make a direct distinction between contractual employees and full-time employees. The provisions and benefits extended to both contractual employees and full-time employees are the same.

In disputes between the employer and the employee, the courts determine the type of employment based on the factual evidence provided by both parties. There is a set of subjective criteria that Hong Kong courts often use to determine the distinction between full-time employment and contractual employment. The courts look at various factors such as the relative control that the employer and the employee have over the procedure, time, and the method of work. They also look at the provision of working tools, equipment, material, and their ownership involved in executing the work. Contractual employees will have comparatively less freedom and limited supply. They look at whether the employee in question is considered a part of the organization or completely external to it, and the extent to which the collaboration between the employer and the employee takes place. Furthermore, they investigate whether the employee is free to hire new workers or needs sanction and permission from the organization.

Scope of Negotiating Terms

Salary negotiation in Hong Kong differs from most other Asian countries including mainland China. While in other Asian countries, employment compensations and benefits are fixed, especially in the lower levels of employment, salary negotiation is often an integral part of the hiring and recruitment process in Hong Kong. Candidates at all levels can communicate their preferred compensation for a job.

Senior-level candidates have higher leverage to negotiate since the talent pool available for these roles is more constricted. However, employees at most levels in Hong Kong have a scope to negotiate the terms of employment and compensation.

Call Skuad experts to know more about the specifics of employment types in Hong Kong.

Hiring in Hong Kong

Hiring in Hong Kong is similar to hiring in Europe and North America. Complete and high-speed internet access has made remote work and remote hiring convenient and popular in Hong Kong. Hiring teams use several online portals and websites such as LinkedIn to carry out their recruitment process seamlessly and in less time.

Once you have enough candidates who fulfill the minimum requirements for the advertised position, you can invite these candidates to a series of technical rounds as well as interviews with both your technical and HR teams.

While hiring, it is essential to conduct a thorough background check of each candidate that reaches far enough into the recruitment process to warrant hiring. It can go as far back as previous employers, schools, and other places of association.

There is no doubt as to the various advantages of hiring through apps and websites. Without having to step out to conduct the hiring process, you get access to several candidates based in different parts of the country. However, you might also need to browse through hundreds of applications before reaching an appropriate candidate. Moreover, the websites and portals mentioned above cannot claim access to the vast majority of employable candidates in the market.

When expanding your business to a new location, recruitment decisions often need to be made fast. Additionally, you might want to hire a large number of workers within a limited time. Skuad takes care of legal and compliance considerations so that your hiring process speeds up and you can focus on other aspects of your business at once. It also allows for the signing of documents remotely to help speed up the onboarding process considerably. Learn more about Skuad’s Hong Kong EOR solutions.

Probation & Termination

There are certain reasonable restrictions to the termination of employment after the probationary period. Within the first month of the probationary period, the employer does not need to provide the employee with any notice before termination of employment. After the first month, a seven-day notice must be provided for the termination in the probationary period. The typical period of probation in Hong Kong is between one and three months.

After the probation period, several clauses associated with severance and a long notice period are also applicable. However, if the termination of an employee is due to gross misconduct or misdemeanor, the company can terminate the contract either by providing severance pay or notice.

The importance of these clauses in the employment contract cannot be understated as all dealings between the employer and the employee after the probation period is based on the negotiated contract. Book a demo with Skuad today.

EOR Solution

Given the range of regulations in Hong Kong relating to both the hiring of personnel and the setting up of a company, it is important to have a partner to simplify legal and compliance-related matters for you. Players such as Skuad have a significant grasp over Hong Kong’s local laws and regulations and are, hence, experts that can ensure the smooth expansion of your business in Hong Kong. Connect with Skuad experts to know more.

Outsourcing Employment Through An EOR in Hong Kong

Choosing to work with an Employee of Record can save you valuable time that would otherwise go into setting up the entire hiring process, payroll management, tax management, and other such services.

Tailor-made contracts for your needs, establishing all processes in compliance with local laws, easy amendment of existing contracts, and convenient e-signing of documents are some additional benefits of working with an EOR of repute such as Skuad.

Types of Visas in Hong Kong

Visa Category Explanation Duration
Employment as Professionals There are several different subdivisions to this type of visa, depending on whether the applicant belongs to mainland China or not, and whether the applicant studied in Hong Kong or not. This is the most common employment visa issued for Hong Kong. Up to 12 months
Training This visa is issued to individuals who wish to gain some sort of professional training in Hong Kong. The applicants will typically not be based in mainland China. International applicants are welcome for this short-term training visa. Up to 12 months
Working Holiday Scheme This is a special type of visa that is restricted to only certain nationalities. Even for each nationality, there is a quota of applications that will be approved under this scheme. There are different rules that each worker must adhere to, based on nationality. The workers must be between 18 and 30 years of age. Up to 12 months
Supplementary Labor Scheme This scheme is only meant for workers at the technician level and below. The company is supposed to apply for the visa on behalf of the worker. A levy is also to be paid by the company based on the duration of employment. Up to 24 months

Work Permits

Foreign nationals who wish to work in Hong Kong do not need a separate work permit to work in the region. Rather, the work visa issued by the Hong Kong administration works as a permit to gain employment in Hong Kong. To know more about work permits in Hong Kong and how Skuad can secure them for you, speak to Skuad experts today and kick-start your expansion journey.

Payroll & Taxes in Hong Kong

The establishment of payrolls in Hong Kong must be done within the limits of the laws and regulations of the regions. The compensation offered to candidates as well as benefits and any other provisions is bound to form a part of the payroll.

When setting up payroll or determining taxes in Hong Kong, you must partner with an EOR such as Skuad, that has deep insight into local laws and regulations and experience in working on the ground in your new geographical domain.

Payroll Details

Process Details
Tax Identification Number Hong Kong does not have a special Tax Identification Number like several other countries. Hong Kong Identification Card serves as the Tax Identification Number for all individuals in Hong Kong.
Choosing a Payroll System

Several factors need to be taken into consideration when setting up payroll in Hong Kong. The most essential among these factors is the laws and regulations of Hong Kong and the benefits and provisions that it is mandatory to provide to each employee.

Other benefits such as gratuity and social security will also be a part of the payroll.

Note Down All Employee Information You must have all employee information on file. This is essential not just to provide information to the government, but also to streamline your internal processes in the organization.

Taxation in Hong Kong

Employer Taxation

Tax Explanation
Corporate tax Between 7.5% and 16.5%
Employer Contribution Towards Social Security 5%

Employee Taxation

To understand how payroll and taxes are managed in Hong Kong and expedite your expansion, talk to Skuad experts and book a demo.

Tax Explanation
Income Tax The annual taxable income and the marginal tax brackets that each group belongs to are as follows.
Up to 50000 HKD 2%
50000 HKD - 100000 HKD 6%
100000 HKD - 150000 HKD 10%
150000 HKD - 200000 HKD 14%
Greater than 200000 HKD 17%
Financial Year End date 31 March
Sales Tax 0%
Employees’ Contribution Towards Social Security 5%

Bonuses

Bonuses are frequent in Hong Kong, and they must be paid by December 24, or the end of the contract, whichever comes first. Unless otherwise stipulated in the employment contract, the bonus is equivalent to the employee's average monthly wages for the previous 12 months.

Incorporation: How to Set Up a Subsidiary in Hong Kong

You will require a host of documents to establish your subsidiary in Hong Kong. Your incorporation documents as well as your parent company’s memorandum are essential requirements for the company registration. You will also require the articles of association of your parent company and its incorporation certificate. Additionally, you will need bank letters of your company’s officers and identification documents.

To register your company, you will be required to pay a capital fee as well as a registration fee. Furthermore, you need to register with the inland revenue department of the Hong Kong authorities.

To set up a subsidiary in Hong Kong, you will need to mention at least one director in your company documents, as well as a company secretary. You must also have an auditor appointed.

This auditor must have a practicing certificate or membership of the Hong Kong Society of Accountants. Also, you must mention your shareholders, of which there must be at least one but no more than fifty.

You will need to choose the type of company that you wish to incorporate, and then file the articles of incorporation for your company. The filing process can be completed entirely online. Next, you will need to apply for a certificate to register your business with the authorities. Finally, you will have to open a corporate bank account in Hong Kong. To make use of Skuad’s EOR services for setting up a subsidiary in Hong Kong and finding a bespoke solution for your expansion, get in touch with Skuad experts.

Professional Employer Organization (PEO)

A professional employer organization, or PEO, is very similar to an employer of record. It can conduct hiring and other employment-related activities for you, and make your expansion into a new geographic domain much more streamlined. However, the main difference between a PEO and an EOR is that with a PEO, your employees will be on your rolls and not that of the PEO. On the other hand, EOR acts as the legal employer of your employees and carries out all essential HR activities on your behalf. Skuad provides both PEO and EOR solutions for companies. You can trust Skuad’s EOR solution to take care of all the compliance and HR-related tasks, from onboarding to termination. Talk to Skuad experts to learn more.

Conclusion: What Gives Skuad’s Hong Kong Solutions an Edge?

You can avoid navigating through the vast literature on employment in Hong Kong and outsource the arduous process to a trusted employer of record. Having an EOR partner with diverse experience and expertise can turn around things at a lightning speed. Skuad understands the essence of time and the value of human resources in today’s highly competitive day and age, and therefore, provides you with tailor-made solutions that will ensure improved efficiency. Call Skuad to know more.

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