Although human resources procedures in Hong Kong are fairly straightforward, it is important to understand the legal formalities and employment legislation in Hong Kong to avoid unnecessary headache. Variations exist in the regulations for hiring local and foreign employees in Hong Kong, and Hong Kong’s labour laws legally bind employers and employees. Take caution and understand all variables before entering into a contractual agreement as either an employer or employee.
The Hong Kong Employment Ordinance
The Hong Kong Employment Ordinance clearly states the main terms and conditions of Hong Kong employment laws. The Employment Ordinance covers all employees, regardless of whether they are full-time, part-time or temporarily employed, excluding the following:
1. A family member who lives in the same dwelling as the employer;
2. An employee as defined in the Contracts for Employment Outside Hong Kong Ordinance;
3. A person serving under a crew agreement under the Merchant Shipping (Seafarers) Ordinance, or on board a ship which is not registered in Hong Kong; and
4. An apprentice whose contract of apprenticeship has been registered under the Apprenticeship Ordinance, other than certain provisions of the Employment Ordinance.
All employees under the Ordinance are entitled to the rights and protection mentioned therein. Basic terms and conditions of employment are defined which must be met as a minimum standard. If an employee is not covered by the Employment Ordinance, a mutual contractual agreement with dictate the terms and conditions between employer and employee.
Employees under the Employment Ordinance are further divided between employees under contract and employees under a continuous employment contract. Employees under an employment contract are entitled to basic protection under the Ordinance including payment of wages, restrictions on wage deductions, the granting of statutory holiday, and other conditions.
An employee under a continuous employment contract is defined by an employee working for the same employer 18 hours a week for a span of 4 weeks or more. This period of time entitles an employee on a continuous contract all the statutory benefits under the Employment Ordinance. These benefits include rest days, paid annual leave, sick allowance, severance pay and long service pay.
Employers are required to ensure that an employee’s contract meets the minimum requirements of the Employment Ordinance. Employment contracts may be oral or written, and can include both explicit and implied terms and conditions. If a contract is written, an employer must provide employees with a copy. Furthermore, employers must consult and receive permission from an employee before making alterations or additions to the contract.
Tax Requirements for Employers
Employers are also required to prepare tax forms for all employees and report their wages under the Income Tax Ordinance. A back log of payroll records must be kept for at least seven years.
Tax clearance is required for employees living in Hong Kong for a period of a month or more. Employers must notify Hong Kong Inland Revenue Department if an employee is expected to leave Hong Kong with at least one month’s notice. This is intended to ensure that departing employees leave Hong Kong in good standing and have paid all taxes. Employers must withhold wages from the employee once notice of leaving Hong Kong has been given until Hong Kong IRD does a tax assessment and confirms all taxes have been paid by issuing a letter of release. Please take note that this applies only to employees who intend to live abroad or quit their Hong Kong position. Employees who travel frequently for work need not be declared.
Requirements for the Mandatory Provident Fund (MPF) Scheme
All employees aged 18-65 are required to contribute to the MPF, regardless of whether they are full-time, part time, casual or temporary staff. The only exceptions to this regulation are as followed:
- Domestic employees
- Self-employed hawkers
- People covered by statutory pension or provident fund schemes, such as civil servants and subsidized or grant school teachers
- Members of occupational retirement schemes that are granted MPF exemption certificates
- Foreigners who enter Hong Kong for employment for less than 13 months, or who are covered by overseas retirement schemes
- Employees of the European Union Office of the European Commission in Hong Kong
Employers and employees are required to contribute 5% of the employee’s monthly cash income each into a registered MPF Scheme, with mandatory contributions capped at HKD $1,000 for employees earning more than HKD $20,000 a month. If an employee’s salary is below HKD $5,000, only the employer is required to contribute 5% towards the MPF leaving the employee exempt from this regulation. Casual employees who are paid daily and their employers must contribute on a separate scale.
Recruitment Regulations and Procedures
Hong Kong is an equal opportunity work environment that encourages employers to fairly recruit based on skill, experience, and ability to perform the job. The Labour Department actively assists employers in avoiding discrimination by gender, age, race, religion, marital status or disability.
The legal age to work in Hong Kong is 18 years, although in some cases young persons aged from 13-17 are able to work. Please note that there are restrictions to the type of position and number of hours a week that a young person can work. At the moment, there is no mandatory retirement age in Hong Kong but the average person retires around 60-65 years of age.
Students too are capable of working under certain circumstances. Students who are Hong Kong citizens or Permanent Residents are capable of being hired on a full time or part time basis without restrictions. Students are entitled to MPF contributions, while interns typically are only paid a monthly salary.
International students of a full-time, locally accredited university or degree level program whose study period is not less than one academic year can be hired as interns under certain conditions. The internships must be related to the topic of study and arranged or endorsed by the educational host institution. Furthermore, the internship cannot exceed one academic year, or one third of the normal duration of the full time academic program, whichever is shorter.
Students, international or otherwise, are able to take up to 20 hours per week of on-campus employment and employment during the summer holiday months.
Hiring Foreign Employees
Hong Kong requires that employers must give preference to local hires before considering foreign applicants. Foreign applicants who possess special skills, experience and knowledge not readily available in Hong Kong are allowed to take employment in Hong Kong.
To work in Hong Kong, a foreigner must have a valid work visa. Employers are required to apply for a work visa on behalf of your employee. Once approved, the employee may commence work legally.