The Employment Ordinance is the most important piece of labor law governing conditions of employment in Hong Kong. Below is a quick guide to hiring locally in Hong Kong.
The two types of employment contracts in Hong Kong are the fixed-term employment contract and the continuous employment contract. Employers can choose to draft either of two types of employment contracts:
Fixed-term employment contract: A fixed-term contract ends automatically at the end of the specified period, but can be extended or renewed by agreement. In this case, employers must extend basic protection in accordance with Hong Kong labor standards.
Standard employment contract: popularly known as continuous employment contract, it is applicable to those employed for four weeks or more and who work at least 18 hours per week.
Employers must also inform the Inland Revenue Department (IRD) of any new hires within three months of the date they began working for the employer.
Employers are also required to keep records of their employees' wages and all payroll records for the last seven years.
Brasia offers Human Resources services (learn more), which include drafting an employment contract considering current local legislation, calculating and issuing payrolls and maintaining all mandatory records in Hong Kong, providing security and clarity for employees and employer.
Employee legal licenses
These rights include severance pay, paid sick leave, paid annual leave, paid maternity leave and paternity leave, etc.
Annual Leave
By law, employees are entitled to 7 days of paid annual leave after serving each 12-month period on an ongoing contract. An employee's entitlement to paid annual leave will progressively increase up to a maximum of 14 days, in accordance with their length of service.
Taxes in Hong Kong
Hong Kong's tax system works differently for businesses and employees compared to some other countries. Companies in Hong Kong pay a corporate tax rate on profits made in Hong Kong.
There is a difference between corporate tax and employee income tax. Unlike many other places, Hong Kong does not withhold income tax through payroll throughout the year and employees are responsible for reporting and paying their income taxes directly to the Inland Revenue Department.
Social Security
In general, employees and employers in Hong Kong must contribute to the Mandatory Provident Fund (MPF), a pension fund set up by the Hong Kong government.
The MPF applies to all Hong Kong employees who have an employment contract of more than 60 days and to all self-employed people between 18 and 65 years of age.
Additionally, there are some exemptions, such as foreign nationals who have worked in Hong Kong for less than 13 months or who are already enrolled in retirement schemes in some other country.
Both the employer and employee must contribute a percentage of the employee's relative income, subject to minimum and maximum relative income levels.
Hire your local team for your company in Hong Kong with the help of Brasia and focus on your business: we focus on the rest.
Contact us for consultations on labor legislation and current market practices for your specific case.
Tags: labor law hire Hong Kong
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