Payroll & Employment Guide: Hong Kong

Employment Contract

Employment in Hong Kong may be full-time or part-time, and contracts may be fixed-term or open-ended. All employment contracts should be in writing and must include:

• Working hours
• Compensation and payment terms
• Paid leave entitlements
• Notice periods
• Termination conditions
• Mandatory MPF participation

Notice Periods

Employees are entitled to a notice period typically ranging from 7 days to 1 month, depending on contract terms and length of service.

Termination of Employment

Employment may be terminated due to:

• Contract expiry
• Redundancy
• Mutual agreement
• Serious misconduct
• Other valid grounds under Hong Kong law

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Employee Benefits

Hong Kong employers must offer statutory benefits under the Employment Ordinance, while many offer additional perks to remain competitive.

Mandatory Benefits

• Statutory paid leave
• Rest days
• Paid public holidays
• Maternity & paternity leave
• Mandatory Provident Fund (MPF) contributions
• Severance & long service payments (applicable conditions)

Leave Policies

Annual Leave:

7 days minimum, increasing up to 14 days based on years of service.

Sick Leave:

Paid sick leave accrues monthly; employees receive eligible sick pay based on statutory rules.

Parental Leave:

• Maternity leave: 14 weeks
• Paternity leave: 5 days

Healthcare

• No mandatory employer-paid health insurance
• Public healthcare system available to residents
• Many employers provide private medical insurance as a competitive benefit

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Taxes in Hong Kong

Hong Kong uses a simple territorial tax system:

• No tax on global income
• Salaries Tax is applied only to income earned in Hong Kong
• Progressive tax rates from 2% to 17%, capped by a standard rate applied to net income

Employers must withhold tax where required and file annual forms.

Personal Income Tax Rates:

Progressive 2%–17% (subject to allowances and deductions)

Tax Allowances & Reliefs:

• Basic allowance
• Dependent parent/child allowances
• Housing benefit tax rules

Payroll in Hong Kong

Employers must pay salaries as stated in the employment contract while ensuring compliance with MPF and statutory wage rules.

Base Salary

Employees must be paid at least the statutory minimum wage for each hour worked.

Payment Schedule

• Usually monthly, often within 7 days after the end of the wage period

Additional Payments

• 13th-month salary (optional)
• Bonuses (performance-based, common in finance & services)

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Taxes and Social Security

Hong Kong does not have traditional social security. Instead, mandatory contributions include:

MPF (Mandatory Provident Fund)

• Employer: 5%
• Employee: 5%
  (Capped at statutory maximum relevant income levels.)

No unemployment insurance or heavy payroll taxes.

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Payroll Reporting

Monthly:

• MPF contributions

Annual:

• Employer tax filing (Form IR56B)
• Employee tax certificates

Key Deadlines:

• MPF: Monthly
• Annual payroll filings: As per Inland Revenue deadlines

Payroll Currency: HKD

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Legal Regulations

Hong Kong labour rules are governed by the Employment Ordinance, covering contracts, leave, MPF participation, working hours, and severance entitlements.

Total Employment Cost:

Typically 5–10% above gross salary (largely MPF + benefits)

Minimum Wage:

HKD 40/hour

Probation Period:

1–3 months

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Work Permits & Visas for China

Non-residents require a valid work authorization.

Types of Permits:

• Employment Visa
• General Employment Policy (GEP)
• Admission Scheme for Mainland Talents
• Dependent visa (with work rights for eligible holders)

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Employer of Record in Hong Kong

EOR services in Hong Kong allow companies to hire and manage employees legally without setting up a local entity. This helps businesses expand quickly, reduce setup costs, and stay fully compliant with Hong Kong’s employment regulations.

Your EOR manages:

• Employment contracts drafted according to Hong Kong labor laws
• Payroll processing & MPF (Mandatory Provident Fund) contributions
• Monthly tax calculations & statutory filings
• Compliance with Hong Kong employment ordinances and regulations
• Employee onboarding and offboarding procedures
• Leave management, documentation, and HR administration
• Local guidance on labor requirements, holidays, and employee rights

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PEO Services in Hong Kong

PEO services in Hong Kong support companies that already have a local legal entity but want to simplify HR operations, reduce administrative workload, and ensure ongoing compliance with local labor regulations.

A PEO in Hong Kong manages:

• End-to-end HR support, including employee records, documentation, and day-to-day HR queries
• Payroll processing & employee benefits management, including MPF contributions and statutory leave
• Compliance with Hong Kong labor laws, tax rules, and regulatory requirements
• Contract drafting, updates, and administrative support to maintain accurate and compliant documentation
• Ongoing employee lifecycle management, from onboarding to exit processes

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