Expand your business into Hong Kong - without an entity
New Horizons provides global employment solutions for businesses wanting to hire employees and distribute payroll in Hong Kong. Through our Hong Kong PEO & Employer of Record, we manage your company’s payroll, benefits, and expenses in Hong Kong. Additionally, we oversee HR duties, as well as employment and tax compliance.
New Horizons will act as your employees’ Employer of Record, meaning you can begin doing business in Hong Kong without a local entity. This not only allows your business to go to market faster, but also has the potential to save your business thousands in expansion costs.
As the only Hong Kong PEO with an in-house recruitment team, New Horizons will source, hire, and onboard your Hong Kong workforce. We hire employees in accordance with Hong Kong’s labor regulations and coordinate all expense claims and benefits payments. Although we act as your employees’ Hong Kong Employer of Record, you still maintain full autonomy and control over all employees.
Our Hong Kong PEO simplifies your expansion
New Horizons allows your business to expand its operations into Hong Kong – without setting up a legal subsidiary.
New Horizons assists companies to quickly expand into Hong Kong, without the burden of establishing their own local entities. Employees are hired through our Hong Kong PEO, which ensures compliance with relevant Hong Kong labor regulations. As the exclusive Hong Kong Employer of Record, we take on legal liabilities as the official employer. This enables you to focus on the day-to-day operations of your business, while maintaining control over your workforce.
Employment & Labor Laws in Hong Kong
Hong Kong employment contract types
Although employment contracts in Hong Kong can be oral or written, it is best practice for both employers and employees to utilize written contracts for all work arrangements. Written contracts should be drafted – either in English or Mandarin – and clearly state the terms of employment. These terms should include the employee’s job description, their responsibilities, and the compensation and benefits attached to the role.
In Hong Kong, an offer letter and employment contract should always outline compensation amounts in Hong Kong dollars (HKD). New Horizons can assist you you to draft employment contracts, either through our Hong Kong PEO or your own local entity.
When you engage our Hong Kong PEO solution, New Horizons will hire and onboard your staff in Hong Kong, and facilitate all employment contracts in compliance with Hong Kong legislation.
Working hours in Hong Kong
In Hong Kong, there is no set legislation that governs working hours per week. However, there is a requirement that employees be granted one rest day every seven days.
Hong Kong public holidays
New Year’s Day
Lunar New Year’s Day
The third day of Lunar New Year
The fourth day of Lunar New Year
Ching Ming Festival
The day following Good Friday
The Birthday of the Buddha
Dragon Boat Festival
Special Administration Region (SAR) Day
Chinese National Day
Day after mid Autumn Festival
The day following Chung Yeung Festival
The first weekday after Christmas Day
Monthly Mandatory Provident Fund (MPF)
Hong Kong labor laws
Any clause (non-disclosure clause, training fee clause, etc.) can be included in the employment agreement. However, any fixed commission structure, bonus incentives, or KPI driven-clauses need to be provided in a separate addendum.
Hong Kong employment contracts are required to state the employees’ responsibilities, compensation details, benefits, grievance procedures, and requirements for termination. All offer letters, compensation details, and documents that refer to an employee’s income should be stated in Hong Kong Dollars.
New Horizons’ Hong Kong Employer of Record will ensure that your operations are compliant with local labor laws.
Employees in Hong Kong are generally granted sick leave allowance, if they have taken at least four consecutive day’s off work. They also need to have a medical certificate and have the required number of paid sick day’s owing.
Paid sick days are normally accumulated at a rate of two days per month of employment for the first year. It is then calculated at a rate of four days per month for each subsequent year. In Hong Kong, no greater than 120 paid sick days can be accumulated.
Sick pay is distributed at a rate that is equivalent to 80% of the average daily wages that have been earned by the employee in the preceding 12 months. If the employee has been with the company for less than a year, this rate is calculated based on the average daily amount that has been earned since commencing employment.
In Hong Kong, it is unlawful for employees to be terminated while on sick leave. The only exceptions are in cases of gross misconduct.
Maternity and paternity leave in Hong Kong
Female employees in Hong Kong receive 10 weeks of paid maternity leave if they meet the following requirements:
The employee must have been with the company for more than 40 weeks before the expected date of delivery, submitted a medical certificate that confirms her pregnancy, and given appropriate notice of her timeline for taking maternity leave. Employees not meeting this criteria are allowed to take up to 10 weeks of maternity leave without pay.
The payment rate for maternity pay is equal to 80% of the employee’s average daily wages over the preceding 12 months.
Fathers are guaranteed three days of paid paternity leave, so long as they provide official documentation of their relationship to the mother and expected child.
Hong Kong work bonuses
The common practice in Hong Kong is to grant all employees with a 13th month salary or similar annual bonus. However, this bonus is not mandated by law. During times when the Hong Kong economy is performing well, it is common for the annual bonus to be in the amount of 2-3 months’ salary.
By partnering with our Hong Kong PEO, you can gain insight into the recommended practice for incentivizing workers with monthly and annual bonuses.
Termination and severance
Both employers and employees in Hong Kong are expected to provide one month’s notice for impending termination or resignation. During a probationary period, there is no required notice to be given – from either party – within the first month. In subsequent months following the initial month of probation, a 7-day notice period is mandatory.
Severance payments are dispersed to terminated employees if they have been with the company for between two and five years; and their contract was terminated due to redundancy, layoff, or a fixed-term contract not being renewed in the case of redundancy.
These payments are two-thirds of the employee’s average monthly salary, for every year they have worked for the company. Severance packages have a maximum payment limit of HK $390,000. If necessary, employers have the ability to offset these costs by contributing to the employee’s pension fund, rather than paying out money to the terminated employee.
Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. New Horizons’ Hong Kong PEO can mitigate risk for foreign companies and provide guidance through this process.
Minimum Wage Country Comparison Chart
(Per month in USD)
Hong Kong compensations & benefits
Hong Kong compensation laws
In Hong Kong, compensation laws will generally be determined by your employee’s category. Regulations do not make a distinction between full-time and part-time employees or independent contractors. However, employees that have worked with an organization for more than four weeks are classified within a ‘continuous’ employment category. As such, these employees are subject to separate laws.
In Hong Kong, employee compensation is due at the close of the final day of every wage period. Employers must pay employees either on or before that due date – or no more than seven days past this date.
While not mandatory, it is generally best practice for employers to offer a 13th-month bonus that coincides with the Chinese New Year. There is also the option for employers to include commissions, bonuses, and awards as a component of employment contracts.
Hong Kong benefits
In Hong Kong, all employees are able to access the public health care system. Employees do not need to have insurance to access this system and there are no pay deductions. While the public health system provides an excellent level of care, there are often long wait times and few English-speaking health care providers. As such, many employers offer additional health benefits and life insurance. Employers in Hong Kong are advised to budget approximately 20% for supplemental benefits, on top of an employee’s gross salary.
Employees in Hong Kong are assured of seven vacation days per year, when they have worked for an organization for more than one year. Employees are then given an additional day’s vacation every year. However, this stops increasing once an employee has reached 14 day’s vacation, after nine years of service. Employees can elect to receive payment rather than vacation, but only for periods after 10 day’s vacation.
Hong Kong benefit management
Hong Kong benefit management is crucial for both employees and employers. It enables employees to receive what they are entitled to and ensures that employers maintain compliance with local regulations.
Employers must have a comprehensive understanding of the rules and regulations that govern employment in Hong Kong. As the employer, it is their responsibility to provide employees with guaranteed benefits and supplemental benefits that may be applicable.
Employers need to recognize that Hong Kong benefit management will involve substantial time and costs. There is a need to sign contracts pertaining to supplemental benefits, which often involves significant back-and-fourth travel to Hong Kong. As an alternative, employers can elect to work with a Hong Kong benefit outsourcing company. This will simplify the process, as the outsourcing company will select and manage benefits for your employees.
Benefits & compensation restrictions
For foreign employers, it is essential they recognize employment legislation, as it relates to the Hong Kong market. Businesses must comply with standard benefits and compensation restrictions that include minimum wage, working hours, and annual vacation time.
New Horizons will help your business to stay compliant with Hong Kong employment regulations. This ensures that all employees receive their entitled benefits and compensation.
On-boarding timeline & procedure
For local employees, the on-boarding process can be accomplished within days. Once the client company confirms the employment conditions for staff in Hong Kong, New Horizons will prepare the employment contract accordingly.
Upon approval, we arrange for the labor contract to be signed by the employee. This enables employees to commence working as soon as possible.
For international employees, it typically takes around one month to receive approval from the immigration authorities to begin work. The official commencement date will be the date when the visa (sponsored by the new employer) is activated. The contract, with an estimated length, is to be submitted to the immigration bureau.
Upon completion of the immigration process and reception of the authorities approval, on-boarding will be executed in around 7-10 days for the international employee.