Hire and pay employees in Hong Kong, China

Employer of Record (EOR) vs. entity

One of the first things you'll need to do is decide whether you want to set up your own legal entity in Hong Kong, or hire through an Employer of Record (EOR). There are pros and cons to both approaches.

• Legal entity in Hong Kong. Setting up a legal entity in Hong Kong requires registering with the Companies Registry, opening a bank account, and obtaining a Business Registration Certificate. Taking this route provides you with more control over your business and employees, but requires navigating Hong Kong's legal and tax systems on your own.
• Hong Kongese EOR. An EOR is a third-party service that handles all the legal requirements for hiring full-time Hong Kongese employees on an employer's behalf. EORs can handle payroll, benefits administration, and other complex compliance issues.

When deciding between an EOR and creating your own legal entity, consider your company's size, resources, and plans to scale.

The next step is onboarding. You can begin the onboarding process by collecting employee's information (including their full name, Hong Kong Identity Card number (HKID), bank account details, details of their Mandatory Provident Fund (MPF) scheme, marital status, and family members).Learn more about hiring through an EOR in Hong Kong—plus, how Rippling can help you hire and onboard Hong Kongese employees in just 90 seconds—in our guide.

Classifying Hong Kongese workers: employees vs. contractors

Another crucial early step in the hiring process is classifying your workers. Like many other countries, Hong Kong legally distinguishes between employees and independent contractors (also called contractors or self-employed individuals). It's essential to classify your workers correctly—failing to do so can result in financial penalties, legal disputes, and reputational damage.

Here’s an overview of some of the ways Hong Kongese law distinguishes between employees and contractors:

Learn more about how to correctly classify workers in Hong Kong—and stay compliant with Hong Kongese labor and employment laws—in our guide.

Work permits for Hong Kongese employees

The last consideration before onboarding is making sure your prospective employee is able to legally work in Hong Kong. Most foreign nationals who aren’t citizens or permanent residents of Hong Kong need a work permit (or employment visa) if they plan to work there—though there are some exceptions for citizens of mainland China, Taiwan, Afghanistan, Nepal, and Vietnam, who have different arrangements under Hong Kong law. 

Here are some common visa types in Hong Kong to consider for your foreign employees:

• General employment policy (GEP) Visa: This is the standard work visa issued to foreign nationals who have special skills, knowledge, or experience not readily available in Hong Kong. To qualify for this visa, the applicant must have a job offer from a Hong Kong company.
• Immigration arrangements for non-local graduates (IANG): This type of visa is for those who have obtained a degree or higher qualification from a full-time and locally accredited program in Hong Kong. Graduates who apply within six months of graduating are known as "non-local fresh graduates" and do not need a job offer to qualify for the visa.
• Admission scheme for mainland talents and professionals (ASMTP): This visa type is for mainland China residents who have special skills, knowledge, or experience of value to (and are not readily available in) Hong Kong.
• Entrepreneur visa: This type of visa is for individuals who plan to start a business in Hong Kong that will contribute to the local economy.

For a full list of visas and details on how to apply, see our guide to work permits in Hong Kong.

New hire onboarding checklist

Once you've verified that your new employee can legally work in Hong Kong, it's time to onboard them. Onboarding is about more than training them—it's your chance to lay the groundwork for a fulfilling employment relationship for the long term.

With that in mind, it's important to recognize that a successful onboarding experience goes well beyond the employee's first day. Here's how to handle each stage of onboarding to set your new employee up for success:

Before their first day

• Complete a background check. 
• Send an offer letter (more on that in the next section).
• Prepare for tax withholdings.
• Register them for the Mandatory Provident Fund (MPF).
• Enroll them in benefits.
• Add them to payroll.
• Order and configure their devices.
• Schedule their orientation.

On Day 1

• Make sure their workspace is ready. 
• Send a welcome email.
• Give them an agenda.
• Schedule a meeting with their onboarding mentor. 
• If they work on-site, give them an office tour. 

During their first 90 days

• Schedule training. 
• Assign work and help them set goals. 
• Schedule regular check-ins. 
• Seek their feedback on how to improve the experience.

For the full list of onboarding must-haves, see our guide on new hire onboarding in Hong Kong.

What to include in an offer letter in Hong Kong

The offer letter is an important part of the hiring process—it helps define the roles and responsibilities of both the employee and the employer. Here's what needs to be included in an offer letter (also known as an employment agreement) for an employee in Hong Kong:

• Position, job description, and job duties
• Start date and probationary period
• Definition of workplace
• Compensation and benefits, including statutory benefits as per Hong Kong law, such as Mandatory Provident Fund (MPF) contributions, annual leave, and insurance coverage
• Working hours
• Sick leave and maternity/paternity leave
• Termination policy
• Contact information
• Non-compete and non-solicit agreements, if applicable

Learn more about sending a legally compliant offer letter in Hong Kong in our full guide.

NDAs and confidentiality agreements in Hong Kong

In Hong Kong, it's typical to send a non-disclosure agreement (NDA) as part of the employment agreement. An NDA must include the full names of the consenting parties, a thorough definition of information that cannot be disclosed, any situations where the NDA doesn't apply, and terms for maintaining confidentiality after the employment relationship ends. 

NDAs can be used to protect:

• Trade secrets
• Proprietary technology
• Business plans, strategies, and tactics
• Personal information of clients or co-workers
• Any information not intended for public consumption

Learn more about the different types of NDAs and their essential components in our guide to NDAs in Hong Kong.

Running background checks on Hong Kongese employees

As much as you may want to get your new employee started as soon as possible, don't skip their background check.

In Hong Kong, businesses commonly run several types of background checks on prospective employees and contractors to verify their credentials and suitability for a role.

These include:

• Criminal records check: This may be known as a "Certificate of No Criminal Conviction" provided by the Hong Kong Police Force. It reveals any criminal offenses in a candidate's past. 
• Employment verification: This verifies the candidate's stated employment history.
• Education verification: This verifies the candidate's educational history and academic qualifications.
• Reference check: The employer may reach out to provided references to learn more about a candidate.
• Directorship check: For high-level positions, this type of background check verifies if a candidate has held directorship positions at other companies.

Some less common but still valuable background checks may include credit history checks, particularly important for finance-related roles, and social media checks.

It's important to note that in Hong Kong, it's illegal to conduct any sort of background check without the candidate's explicit consent. Employers also cannot perform background checks that discriminate based on the candidate's race, sex, disability, family status, or pregnancy, or make decisions based on spent convictions, as per the Rehabilitation of Offenders Ordinance.

Learn about the different types of background checks you can—and can't—run in our guide to background checks in Hong Kong.

Paying employees in Hong Kong

When you hire international employees, one of the challenges is paying them. One of the easiest ways to pay international employees and contractors is with a global payroll solution like Rippling.

Once you’ve picked a payroll solution, take the following steps: 

• Ensure your employees are correctly classified.
• Collect employee information, including their full name, Hong Kong Identity Card number (HKID), bank account details, details of their Mandatory Provident Fund (MPF) scheme, marital status, and family members.
• Input the payment amount in HKD—or get written permission from the employee if you’re planning to pay them in a currency other than the Hong Kong dollar.
• Make sure you’re following all statutory requirements when calculating their payroll deductions.
• Run payroll.

Since you’re responsible for calculating payroll deductions for your employees in Hong Kong, you'll need to understand the territorial system of taxation, which means income tax is levied on income derived from or earned in Hong Kong, and not on income sourced from outside Hong Kong. The tax rate varies and is progressive, up to a standard rate of 17%.

Learn more in our step-by-step guide to running payroll for employees in Hong Kong.

Mandatory employee benefits in Hong Kong

Hong Kong's employment ordinance stipulates that certain employee benefits are mandatory for employers to provide. These include:

• Mandatory Provident Fund (MPF). A retirement scheme for all employees and self-employed persons aged between 18 and 65. It provides a financial cushion for residents when they retire. Both employers and employees contribute 5% of the employee's income, capped at HKD 1,500 per month for each party.
• Annual leave. Employees who have been under a continuous work contract for at least one year are entitled to annual leave. Leave is proportional to the length of service, starting at seven days for the first year of employment and adding one day per year up to a maximum of 14 days. Unused leave must be paid if the employee is terminated.
• Sick leave. Sick leave is based on length of service and begins accruing during the employee's first month under their work contract. Employers must pay sickness allowance, which is 80% of the employee's average daily wages, for any period of sick leave four consecutive days or longer, provided the employee has a medical certificate to support the leave.
• Statutory holidays and rest days. Hong Kongese employees are entitled to 12 statutory holidays each year. Additionally, the Employment Ordinance requires all employees to have one rest day every seven days.
• Severance payment and long severance payment. Depending on the length of service and reason for termination, employers may be required to provide severance payment and long severance payment when terminating an employee.
• Maternity leave and paternity leave. Female employees are entitled to 14 weeks of maternity leave. Male employees are entitled to five days of paternity leave.

Some other benefits, while not required, are common for employers to offer, including healthcare and medical insurance, life insurance, flexible work hours, work-from-home options, and more. Read our full guide on meeting statutory requirements—and how to go above and beyond when offering benefits to your Hong Kongese employees.

Managing remote employees’ computers and apps

In the age of remote work, distributed teams have a new challenge: Making sure all their employees, wherever they're based, are set up with all the apps, tools, and integrations they need from their first day. But that's a challenge for employers, from managing app accounts to managing the logistics of shipping devices and configuring and updating them from afar.

With Rippling:

• You can set up and secure employees' accounts in minutes, ensuring they have all the access and permissions they need from their first day.
• You have a single place where you can set up, manage, and disable apps and permissions, from Google Workspace to Slack and more.

Learn more about setting up and managing remote employee devices in our guide.

Protecting company IP in Hong Kong

There's always risk involved in giving new employees access to company apps, accounts and sensitive data—if you don't take the proper precautions. Clarifying intellectual property rights and protections is crucial to protecting your company's original ideas. This can include assignment agreements that clarify who owns IP created by your employees.

Learn more about intellectual property protections in our beginner's guide to IP ownership and rights in Hong Kong.

Complying with Hong Kongese labor laws

When hiring employees in other countries, there are many moving parts to keep track of. Most importantly, you need to know you're always in compliance with Hong Kong's labor laws—from minimum wage to entitlement to public holidays.

Read more about the most important things to know when hiring in Hong Kong, including:

• There are no standard working hours in Hong Kong, so it's important to clearly establish your expectations with your employee in their work contract to avoid disputes later on.
• Employers in Hong Kong are responsible for safeguarding the health and safety of all their employees at work, as outlined in the Occupational Safety and Health Ordinance. Non-compliance can lead to legal action and substantial penalties.
• The Personal Data (Privacy) Ordinance (PDPO) requires employers to ensure that the collection, use, and storage of personal data is done with consideration for their employees' privacy, especially as more and more employee records are digitized.

Terminating employees in Hong Kong

Both employees and employers in Hong Kong are required to give notice to terminate an employment agreement—the length of the notice period is typically defined by the employment contract, but must meet some statutory requirements:

Employees who are fired without cause and have been employed continuously for at least 24 months are also entitled to statutory severance. It's calculated as two-thirds of the employee's last month's wages (or two-thirds of HK$22,500, whichever is less) for each year of service.

Learn more about termination requirements in our guide.

Disclaimer: Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.