Hire Staff in Macau without Establishing a Local Entity.
Foreign investors are constantly looking for new opportunities and Macau is one. In 2010 and 2011, the GDP rose by over 20%, making it the world’s fastest growing market. Investors took note and the location received over $1 billion in foreign investment in 2018. The area’s thriving economy makes it an attractive option, as does the fact that it is the only part of China that allows freehold real estate ownership, allowing foreigners to permanently own property.
The area thrives in the tourism and gambling industries. Macau’s gambling industry brings in more than seven times the amount Law Vegas brings in and is considered the world’s top gambling destination. With tourist arrivals increasing by more than 10% each year and the potential growth opportunities, Macau is a prime location for investors to consider expanding their business.
Using a PEO in Macau is an efficient way to expand to Macau without having to set up a separate entity here and make a large investment. When you use an experienced PEO like New Horizons, you can transfer employer liabilities to the PEO while you maintain daily control over your staff. We ensure compliance by considering the following important aspects of employment in Macau:
Employment Contracts in Macau
Employment contracts are not required to be in writing and can be verbal. However, employment contracts must be written if they are entered into with non-resident workers. Also, written employment contracts are necessary when hiring minor workers, which is only permitted in specific circumstances. These contracts must contain the identification and signature of each of the parties signing it. Even when employment contracts are not required to be in writing, best practices dictate that the agreement be in writing to clearly establish the roles and responsibilities of the parties.
Employment contracts with non-resident workers must have a fixed term and be in writing. They must contain at least the following information:
- Complete identification of the parties
- Address of the parties
- Professional category of the worker or the specific duties the employee will be required to complete
- Place of work
- Normal working hours
- Execution and effective date of the contract
If the parties do not specify certain terms of employment, default laws will apply.
Work Hours in Macau
The standard work day is 8 hours a day, and a 6-day workweek is common. Therefore, the typical work week is 48 hours. Depending on the business of the employer and that the employee consents, the daily workday can be up to 12 hours, but the employer must provide additional resting time. The employer must give the employee a break of at least 30 minutes after working continuously for five hours. This time is not considered work time unless the employee is not allowed to leave the workplace during their break.
Overtime work is considered work provided beyond normal working hours. Both parties must agree to overtime. There are some exceptions when the employer may require overtime without the employee’s consent, such as if the employer confronts an instance of force majeure, the employer is facing a considerable loss or the employer is facing an unexpected increase in the amount of work. Employee-consented overtime is paid at a rate of 120% of the base pay while forced overtime is paid at a rate of 150% of the base pay.
Employees are entitled to one day of paid rest per week. However, the parties can agree that the paid rest period occur at a different frequency. The employee can receive a minimum of six paid days after one year of service. For contracts longer than three months, the employee can take half a day for every month of service.
Holidays in Macau
Employees are exempted from working during mandatory public holidays without losing pay. Holidays are decreed by law and may include:
- New Year’s Day
- Lunar New Year’s Day
- Second day of the Lunar New Year
- Third day of the Lunar New Year
- Cheng Ming Festival
- Good Friday
- The day before Easter
- Feast of Buddha
- Labour Day
- Dragon Boat Festival
- National Day of the People’s Republic of China
- The day following National Day of the People’s Republic of China
- The day following Chong Chao
- Chong Yeung Festival
- All Soul’s Day
- Feast of Immaculate Conception
- Macao S.A.R. Establishment Day
Sick Leave and Justified Absences
Employees can take 30 consecutive or 45 non-consecutive days due to sickness that is not related to work. Six days of sickness are paid by the employer. If the worker is absent because of a sickness or injury related to work, the employee may be entitled to compensation equal to two-thirds of his or her base salary during the period of absence.
Employees are also entitled to three days in the event that a direct relative dies, 12 days in case there is a pressing need to provided assistance to a family member and six days if they get married. There are additional absences that may be justified, but the employee will need to provide relevant documentation to the employer.
Maternity and Paternity Leave in Macau
Mothers can take 56 days of maternity leave, which also includes situations involving involuntary abortion after three months of pregnancy. Maternity leave of six days is paid if the mother has completed at least one year of service.
Paternity leave of two days is provided in case of childbirth or child adoption. This leave is extended to 12 days if the mother dies during childbirth.
Non-residents of Macau must have a work permit that is issued from the Labor Affairs Bureau. Before any work permit is issued, the employer must obtain authorization from the Chinese government to hire non-resident workers. This permission is granted from the Macau SAR’s Chief Executive or another delegated government body. Hiring non-resident workers should be aimed at fulfilling needs that local employees cannot meet. The employment of non-resident workers must not result in the termination of residents or a decline in working conditions for resident workers. The process to obtain a work permit often takes three to four months from the initial request to hire non-resident workers.
Termination and Redundancy
Employees are able to terminate their employment contracts at any time, but they must give at least seven days’ notice before the termination date. The employment contract may dictate a longer period of notice. The employee can be paid instead of working during the notice period.
Macau law differentiates dismissal with cause and without cause. Dismissal without cause requires at least 15 days’ notice or longer if the employment contract specifies otherwise. Payment can be made instead of the notice period. Employees who are dismissed without cause are entitled to redundancy pay based on the number of years of service they have provided, up to MOP 240,000.
Dismissal with cause is immediate. Also, the employee is not entitled to any severance pay or other compensation. The employer must specify in writing the reasons for dismissal within 30 days of becoming aware of grounds for dismissal.
Dismissal with cause is limited to the following grounds:
- Willful disobedience
- Repeated failure to fulfill duties
- Chronic tardiness or leaving work early without authorization
- Unjustified absences from work
- False statements regarding the justification of absences
- Acts of physical violence
- Severe harm to the business’ interests
- Continued provocation of disputes with other employees
- Reduced productivity the employee intentionally caused
- Violation of safety rules
If it is found that dismissal with cause did not have sufficient grounds, the employee is entitled to the compensation he or she would have received if there was no cause and to payment instead of notice.
If a mass layoff is necessary, non-resident workers should be dismissed before resident workers.
Resident and non-resident workers are subject to professional tax on income they generated while working in Macau. This is a progressive tax between 7 and 12%, with higher tax rates for individuals with higher income rates. A tax-free annual allowance is first deducted form the pay, which is MOP 144,000.
There is not taxation on global income under Macau’s tax system. Taxes are only due on the income a Macau employer paid to its employees.
Local employees must be registered with the Macau Social Security Fund. Employers must pay MOP90 each month and deduct MOP30 from each resident employee’s salary. The employer is required to pay MOP200 each quarter for each non-resident employee.
Employers are required to maintain records regarding employee compensation and maintain records with employee’s names, tax numbers, addresses and pay periods. Additionally, they must file documentation with the Macau Finance Department by February 28 each year that includes the names and tax numbers of all employees who received wages from the employer within the past year.
Benefits of Using a PEO
As you can tell from the discussion above, the laws and regulations regarding employment in Macau are complex. Using a PEO allows you to delegate these responsibilities to a trusted third party while you focus on the daily operations of your business. You can deploy staff sooner and before making any commitment to establish a legal entity in the area.
At the same time, you are insulated from employer liabilities and do not have to risk your relationship with Macau government agencies. Contact the New Horizons experts today to learn more about how we can help with your expansion to Macau.