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Country Introduction
Hong Kong, officially the Hong Kong Special Administrative Region of the People’s Republic of China, is a metropolitan area and special administrative region of China on the eastern Pearl River Delta in South China. Hong Kong is the city with the most skyscrapers in the world. The city houses 355 skyscrapers. The International Commerce Centre (ICC) building with 118 floors is currently the highest skyscraper in Hong Kong.
Contract of Employment
The Employment Law mandates the employer to enter into an Employment Agreement in writing. Such agreement shall be entered on or before the commencement of employment. There are no exceptions to the rule, and consequently even small employers are required to comply.
The particulars of Employee, such as, name, present and permanent address, phone no, identity card number (for locals), passport and work permit number (for foreigners), date of birth, nationality, name and address of emergency contact person.
Details of Employment, such as job title, job level / grade: (if applicable), date of commencement of employment, probation period, place of employment, normal working hours per day and per week, pay period and type of employment (that is fixed term, permanent or project based), salary and allowances and other benefits, leaves and holidays, grievance and disciplinary procedures must be specified.
Probation Period
A probationary period in Hong Kong usually lasts from 1 to 3 months. The probation clause of the employment contract should state the length of notice for termination of the contract during the employment probation period.
Termination
Termination of Employment Contract Notice/Payment in lieu:
– Within the first month of probation: not required
– After the first month of probation: not less than 7 days-notice
– After probation for the continuous contract: not less than 1 month
Working Hours
There is no statutory standard working hour system, as well as no statutory maximum number of hours. Typically, employees work between 40 – 48hrs work week.
Overtime
There is no law in Hong Kong requiring the payment of overtime.
Annual Leave
An employee is entitled to annual leave with pay after having been employed under a continuous contract for every 12 months. An employee’s entitlement to paid annual leave increases progressively from seven days to a maximum of 14 days according to his length of service.
Sick leave
Two (2) days of paid Sick Leave for each completed month of employment during the first twelve (12) months. After which you receive four (4) days of paid Sick Leave for each completed month, up to a maximum of one hundred and twenty (120) days.
Maternity Leave
A female employee is entitled to a continuous period of 14 weeks’ maternity leave if she is employed under a continuous contract immediately before her maternity leave commences and has given notice of pregnancy and her intention to take maternity leave to her employer.
VAT / GST:
There is no Value Added Tax, VAT, GST or any other sales tax in Hong Kong.
13th month salary
13th month pay is not mandatory in Hong Kong, but it is customary to be paid as an extra month’s salary either in December or before the Chinese New Year. It is included in the payroll for the month that it is paid out.
Income Tax
The marginal tax rates range from 2% to 17% with a cap at the standard rate of 15% on assessable income (i.e. taxable income without the deduction of allowances). deductible expenses (e.g. charitable donations, self-education expenses) and allowances.
| Taxable income bracket | Tax rate on income in bracket | Tax | |
| From HKD | To HKD | Percent % | HKD |
| 0 | 50,000 | 2 | 1,000 |
| 50,001 | 100,000 | 6 | 3,000 |
| 100,001 | 150,000 | 10 | 5,000 |
| 150,001 | 200,000 | 14 | 7,000 |
| 200,001 | Over | 17 | |
Employer and Employee Contributions
MPF stands for Mandatory Provident Fund, which is a compulsory savings scheme that covers all employees and self-employed persons aged 18-64 in Hong Kong. The MPFSO creates the framework for implementing employment related MPF schemes for workers in the labour force to receive financial benefits when they retire. Typically, this amount is USD 193 per month.
Public Holidays
Under the Employment Ordinance employees in Hong Kong are entitled to 12 statutory holidays per year.
1. The first day of January
2. Lunar New Year
3. Second day of Lunar New Year
4. Third day of Lunar New Year
5. Ching Ming Festival
6. Labour Day
7. Tuen Ng Festival
8. Hong Kong Special Administrative Region establishment day: the first day of July
9. The day following Chinese Mid-Autumn Festival
10. National day, being the first day of October
11. Chung Yeung Festival
12. The Chinese Winter Solstice Festival or Christmas Day
The Employment Ordinance only requires employers to observe the minimum 12 statutory holidays and not the general holidays but it’s common in Hong Kong for an employer to grant the general holidays as paid holidays.
1. Good Friday
2. The day following Good Friday
3. Easter Monday
4. Buddha’s birthday
Severance Pay
An employee employed under a continuous contract for not less than 24 months is eligible for severance payment if:
– Dismissed by reason of redundancy
– Fixed term employment contract expires without being renewed due to redundancy
– Laid off
An employee employed under a continuous contract for not less than 5 years is eligible for long service payment if:
– Dismissed (except by reasons of redundancy or summary dismissal due to the employee’s serious misconduct)
– Fixed term employment contract expires without being renewed
– Dies during employment
– Issued a certificate that he/she is permanently unfit for the present job and resigns
– Aged 65 or above and resigns on ground of old age.
The following formula applies to the calculation of both severance payment (not less 24 months under continuous contract) and long service payment (not less than 5 years under continuous contract):
Monthly-paid employee
(Last month wages* X 2/3) × reckonable years of service
Service of an incomplete year should be calculated on a pro rata basis.
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