Hong Kong

Overview

Hong Kong, covering an area of 1,104 sq. km, is an autonomous Chinese territory and one of the world’s major financial centers. It consistently ranks as one of most open and competitive economies of the world.

According to the UNCTAD World Investment Report 2017, Hong Kong’s FDI inflows amounted to US$108 billion, making it the 4th best destination globally for investment. With outflows of US$ 62 billion, it ranked third in Asia after the Chinese Mainland and Japan.

Hong Kong’s tertiary sector-focused economy is supported by independent judiciary system and simple taxation. Trade is important to the economy, and the combined value of exports and imports equals 400% of GDP. An efficient regulatory framework protects business freedom and transparency in rules for setting up business encourages entrepreneurship. The overall environment promotes formation and operation of businesses.

Currency: Hong Kong dollar (HKD)

Principal language: Cantonese (official) 89.5%, English (official) 3.5%, Putonghua (Mandarin) 1.4%, other Chinese dialects 4%, other 1.6%

Government: Limited democracy

Major Cities: Tsuen Wan, Sha Tin, Tuen Mun New Town, Tai Po

Employment Contracts

Employment can either be oral or written. If in writing, employers are required to provide a copy of the employment contract to employees. In case the contract is not in writing, employers must inform employees of the following terms prior to the start of employment:

  • Wages
  • Wage period
  • Length of notice required for termination, and
  • If the employee is entitled to a year-end bonus, the amount of the bonus and the payment period

Work/Time Regulations

Hong Kong law doesn’t have provisions of outlining work hours limits, and neither requires employers to provide rest periods, though the Labor Department’ Guide on Rest Breaks encourages employers to give breaks to employees. The guide mentions that employers, under the Occupational and Health Ordinance, must take steps to ensure the safety and health of employees at work. Employees can take at least 1 day off in a week, and it can be scheduled according to the employer’s convenience. Rest days can be with or without pay as agreed to by employers and employees.

Leave

Holidays
All Sundays are holidays, in addition to several officially recognized holidays. Germany observes the following 9 national holidays, the dates of some of which differ year to year:

  • Jan. 1
  • Lunar New Year's Day, date varies
  • The 2nd day of Lunar New Year
  • The 3rd day of Lunar New Year
  • Ching Ming Festival, date varies, usually April 4 or 5
  • May 1, Labor
  • Tuen Ng Festival, date varies, 5th day of the 5th lunar month
  • July 1, Hong Kong Special Administrative Region Establishment Day
  • The day following the Chinese Mid-Autumn Festival, which is 15th day of the 8th lunar month
  • Chung Yeung Festival, date varies, the 9th day of the 9th lunar month;
  • Oct. 1, National Day, and
  • Chinese Winter Solstice Festival, date varies in December, or Dec. 25, Christmas Day (at the choice of the employer)

The General Holidays Ordinance has provisions for providing general holidays when most schools, banks, courts, and government offices are closed. Certain registered schools and colleges can conduct classes on general holidays.

Annual Leave
Employees are entitled to 7 days of paid annual leave after 12 months of employment with the same employer. Leave increases according to employees’ length of service:

  • 8 days after 3 years of service
  • 9 days after 4 years of service
  • 10 days after 5 years of service
  • 12 days after 8 years of service
  • 13 days for 9 years
  • 14 days for more

Sick Leave
Employees, under a continuous contract, accrue 2 days of paid leave for every month of employment during the 4 year and 4 days’ of paid leave for every month after the 1st year. Sick leave can be accumulated to a maximum of 120 days. Employees receive sick leave pay if they take 4 continuous days of sick leave and submit a medical certificate. The sick leave is paid at 80% of regular wages.

Maternity Leave
Pregnant employees are entitled to 10 weeks of paid maternity leave if they have:

  • been working under a continuous contract for a minimum of 40 weeks prior to the start of maternity leave
  • given notice of pregnancy
  • submitted a medical certificate confirming pregnancy to the employer
  • produced a medical certificate specifying the expected date of delivery if required by the employer

If the length of service is less than 40 weeks, employees qualify for 10 weeks of maternity leave without pay.

Paterntal Leave
Hong Kong law has no provisions for providing paternity leave, but in November 2012, the labor advisory board set by the government recommended giving 3 days of leave at 80% of regular pay.

Benefits

Both employees and employers contribute to Mandatory Provident Fund (MPF) schemes which are privately managed. Under the MPF schemes, employees can invest in varied investment products and can transfer the funds to the new employer’s MPF scheme or a personal MPF account when changing jobs. Employees can also choose to keep the funds in the original employer’s scheme.

Individuals aged 65 or those who take early retirement at 60 can withdraw funds from their MPF accounts. If an employee dies before retirement, the funds are given to the employee’s survivors. Employees who leave Hong Kong permanently before retirement can withdraw funds from the MPF accounts.

Mandatory Provident Fund Schemes Ordinance (MPFSO)
MPFSO requires employers to enroll employees in MPF schemes, and both employers and employees are required to make contributions to it. Foreign nationals are not required to make contributions if they have an employment visa and:

  • Contribute to a retirement scheme outside of Hong Kong, or
  • Are posted in Hong Kong for no more than 13 months

Occupational Retirement Schemes Ordinance (ORSO)
ORSO establishes a registration system for retirees and also regulates certain retirement schemes.

Occupational Safety and Health Ordinance (OSHO)
OSHO ensures the safety and health of employees when they are at work and prescribes measures to improve the safety and health standards applicable to specific hazardous processes and substances used or kept at workplaces.

Employees' Compensation Ordinance (ECO)
Employers are generally liable to compensate employees for an injury sustained during the employment in Hong Kong or overseas if the travel is authorized by the employer, under the ECO. Eligible family members of an employee killed in a work-related accident can also receive compensation. Employees must maintain insurance policies to cover their liabilities under the ordinance.

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Hong Kong and hire their employees without having to establish a branch office or subsidiary in Hong Kong .

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24/7 Support in 100+ Countries

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Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Lean more about our end-to-end international expansion services.