labour law in Hong Kong

Labour law in Hong Kong

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Many are ready to abandon the framework and stability of their homecountry labour law to settle in Hong Kong. According to the figures, the French community has experienced the strongest growth in Hong Kong over the last 5 years.

Hong Kong law is not advantageous for the employee and is not regulated as such. Indeed, Hong Kong law is much less protective of employees’ interests. On the other hand, this is a boon for employers.

Labour law in Hong Kong

In Hong Kong there is no Labour Code, but a law called the Employment Ordinance (Chapter 57 of the Laws of Hong Kong). This law is the reference text in terms of labour law and is also qualified as the most liberal in the world for employers.

However, do not think that employees are disenfranchised, in fact their rights have been strengthened in recent years.

There are also other texts that are used in specific contexts:

  • a law concerning employment contracts allegedly concluded outside Hong Kong;
  • a law against discrimination based on the gender of the employee;
  • a law against racial discrimination.

In recent years, China has tried to come as close as possible to European standards of employee-employer relations.

Employment contracts in Hong Kong

Hong Kong is considered to be one of the most densely populated areas in the world with 7.2 million inhabitants.

The official languages of employment contracts in Hong Kong are either Chinese or English. Your employment contract will necessarily be written in one of these languages. First, the prospective employee receives a letter of offer which details the terms of compensation in Hong Kong dollars.

If you are a foreign national, Hong Kong immigration will require you to have a visa and a work permit. Similar to the United Arab Emirates system, the expatriate must have a sponsor to obtain a work permit. This sponsor is none other than the employer.

Hiring foreign employees

Foreign workers must have the appropriate visas and work permits for Hong Kong, in accordance with immigration laws. Some nationalities are allowed to enter Hong Kong without a visa, but may not be able to apply for a work visa while in Hong Kong. An employer is required to sponsor an employee for a work permit. This requires registration and a local licence, which can involve a lengthy process, depending on the type of business structure.

Dismissal in Hong Kong

The notice period for dismissal differs according to the duration of the employment contract. Generally, after the trial period the notice period is one month.

As far as severance pay is concerned, if the employee has between 2 and 5 years of service in the company then he/she will be eligible for severance pay.

Wages in Hong Kong

The minimum wage

Since 2020 and according to the Hong Kong authorities, the minimum wage for employees has been set at HKD 37.5. Note that this minimum does not apply to domestic workers. The latter, mostly women of Filipino or Indonesian origin, would be paid HKD 4,310 per month.

The average wage

According to the Hong Kong Department of Labour, the average gross monthly salary for employment is HKD 20,500. However, there is also a huge disparity in wages, with extremely high and very low wages.

Working hours

There is no law governing the number of hours worked per week. In Hong Kong, the legal working hours are 40 to 48 hours per week. Generally employees start in the morning at 7am and finish at 7am.

The working week in Hong Kong

Unlike many other areas, there is no law regulating the number of working hours per week. However, employees must have at least one day off in every seven working days.

Leave policy in Hong Kong

Paid holidays in Hong Kong

The number of paid holidays varies according to the employee’s seniority in the company. The number of days can vary from 7 to 14 days. Only after 9 years of seniority will the employee receive the maximum annual leave benefits.

In practice, employers generally grant 14 days of paid holiday to employees and three to four weeks in the case of senior managers.

Sick leave in Hong Kong

In Hong Kong, each employee is entitled to 2 days per month of paid sick leave at the employer’s expense for the first year, followed by 4 days per month for subsequent years (up to a maximum of 120 days per year).

Public holidays

Hong Kong has a number of public holidays. If an employer makes an employee work on one of these days, the employer must offer the employee another public holiday within two months before or after the public holiday. If the public holiday falls on a weekend, the employee should be allowed to serve on the next working day instead of the public holiday.

Here is a list of public holidays in Hong Kong:

  • New Year’s Day
  • Lunar New Year’s Day
  • The day after and the third day after the Lunar New Year
  • Ching Ming Festival
  • Labour Day
  • Tuen Ng Festival
  • Hong Kong Special Administrative Region Establishment Day
  • The day after the Chinese Mid-Autumn Festival
  • Chung Yeung Festival
  • National Day
  • Chinese Winter Solstice Festival or Christmas Day, as chosen by the employer

At the employer’s discretion, it is possible that the employer will offer you 5 extra days of leave. Please note:

  • Good Friday
  • The day after Good Friday
  • Easter Monday
  • Buddha’s birthday
  • The day after Christmas Day

Social security in Hong Kong

The health care system in Hong Kong is described as one of the best in the world, with the quality of care provided in Hong Kong facilities being of the highest standard. But at the same time, medical costs are also ranked among the most expensive in the world.

Contributions

With regard to employers’ contributions, employers are required to deduct 5% and pay a further 5% to the Mandatory Provident Fund (MPF).

For employees with a monthly income of more than HKD 7100, a tax deduction of 5% (up to a maximum of HKD 1 500) will be made from their salary, and is levied as a contribution to the Mandatory Provident Fund (MPF).

Employees subscribe to mandatory provident funds which are managed by private funds.

There is also a government social security scheme for the most vulnerable people only.

Corporate tax in Hong Kong

The tax system in place in Hong Kong is considered very attractive! It should be noted that Hong Kong tax is levied on a territorial basis, which means that only income generated in Hong Kong will be taxed. The rate for profits made in Hong Kong is 16.5%.

 

Our firm has been operating in Hong Kong since 1998. In addition to company formation in Hong Kong, we are also qualified to act as your Company Secretary as stipulated by Hong Kong law.

Our team is composed of legal and accounting professionals who are at your service to ensure the success of your business activities in Hong Kong and the rest of the world. Contact us at +971 52 820 0964 or send us an email: support@merritt.group