Global HR Compliance in Hong Kong

If you hire an international workforce, or plan to hire, then Hiring and Firing Workforce in Hong Kong Guide below will help you understand the nuances of labor legislation in the country.

When the company is planning to enter a new foreign market of Hong Kong and has a need to employ a local national there, the first question to answer is how it is going to make local hires.

We have designed a Global Employer of Record service to help you outsource global employment of your foreign workforce to companies like ours.

This solution helps you employ your global sales force in Hong Kong as well as in other 180+ countries of the world, and provide pay and benefits to your employees, as well as administer any business expenses with our help.

Our solution is different from other hiring modes in that it helps you engage your foreign workforce in full compliance with the local labor legislation. This means you are protected from any non-compliance and employee misclassification risks while we bear all employment risks, not you.

So, it looks very much like hiring your in-house sales force in your home country. However, you focus on only on your global business development while we admin your global HR. In addition, you don’t need to open your own entities in the foreign countries and can leverage our infrastructure in Hong Kong instead. With our service, you can become a global company with reduced costs and minimized time and effort on your end.

Your employed foreign sales force will devote 100% of their time to your company product and may stay with you longer than foreign independent sales reps.

Global Employer of Record solution is 100% compliant solution that guarantees you and your employees fully compliance with local legislation in Hong Kong .

We are experts in global workforce employment in Hong Kong, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.

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Hiring and Firing in Hong Kong Guide

# Employment Agreements

Permanent employment agreement

Prior to commencement of employment, an employer must clearly inform the employee of certain essential terms and conditions of the employment. These include:

• Wages and, if applicable, the manner of calculation.
• Wage period and thus when the wages applicable to the period will be paid.
• Length of prior notice that must be given to terminate the employment contract, in the absence of an agreed period, the statutory notice period will apply.
• If the employee is entitled to an end-of-year payment (commonly called 13th month pay or Chinese New Year bonus) or a proportion thereof, and when it will be paid.

Casual employment contract

Casual employees referred to employees who are employed by an employer on a day-to-day basis or for a fixed period of less than 60 days at the time of enumeration. Casual employees are entitled to all the rights and benefits under the Employment Ordinance. Statutory Minimum Wage (SMW)applies to casual employees.

Fixed-term contract 

Fixed-term employment contracts are permissible, and there is no restriction on the minimum or maximum duration of those contracts. However, every contract where the employee is employed for at least 18 hours per week for more than one month will be deemed to be a one-month contract, renewable from month to month unless there is an express term in the contract that provides for the contrary.

#Employment Termination and Severance Pay (Dismissal)

A contract of employment may be terminated by the employee through giving the other party due notice or payment in lieu of notice. An employee may terminate his/her employment without notice or payment of wages in lieu of notice to the employer (but with compensation in the form of severance payment and long service payment, where applicable), if the employee:

• Reasonably fears physical danger to himself/herself by violence or disease in the course of employment.
• Is subjected to ill-treatment by the employer.
• Has been employed for not less than five years and he/she is certified by a registered medical practitioner as being permanently unfit for the type of work in which he/she is engaged.

A contract of employment can be at any time be terminated by an employer by notice or by payment in lieu of notice. Dismissal generally means summary dismissal where no notice (or payment in lieu of notice), compensation of severance or long service payment is required. Under the Employment Ordinance, an employer may exercise its right of summary dismissal if the employee has committed any of the following acts or conduct:

• Willful disobedience of a lawful and reasonable order.
• Misconduct inconsistent with the due and faithful discharge of duties.
• Fraud or dishonesty.
• Habitual neglect of duties.

#It is prohibited to dismiss

The EO prohibits an employer dismissing an employee in the following circumstances:

• The employee is pregnant or is on statutory maternity leave.
• The employee is on statutory sick leave.
• The employee has been injured at work and compensation under the Employees’ Compensation Ordinance is pending, unless the Commission for Labour’s consent to the dismissal has been obtained.

In addition, it is unlawful to dismiss an employee for any of the following reasons:

• The employee is a trade union member or officer or participates in any trade union activity (including any strike).
• The employee has done or is required to do jury service.
• The employee is of a certain gender, is pregnant, has a particular marital status, is of a particular race, has family responsibilities or is disabled.

#Notice period

During Probation Period

• Within first month: not required
• After first month where contract makes provision for required length of notice: as per agreement.
• After first month where contract doesn’t make provision: not less than 7 days’ notice.

For continuous contract / After probation period

• Where contract makes provision: as per agreement, no less than 7 days.
• Where contract doesn’t make provision: not less than 1 month.

#Severance payments

An employee who is made redundant after having been employed continuously for at least two years will be entitled to a severance payment. The amount is calculated by multiplying two-thirds of the employee’s last month’s wages and the period of continuous employment (in years, including any fraction of a year).

#Employee Benefits and Contributions

Mandatory benefits required by law to be provided by an employer

Public holidays entitlement, sickness allowance, annual leave, maternity and paternity leave, employees are also entitled to the benefit of compulsory employees’ compensation insurance to cover work injury, Mandatory Provident Fund, and termination payments including severance and long service payments.

#Probationary period

Probationary periods are allowed and they are common. There is no restriction on the length of a probationary period and the norm is three months. Under the Employment Ordinance, during the first month of the probation period, either the employer or the employee may terminate the employment contract without giving notice. From the second month of the probation period, the party terminating the contract must provide a minimum of seven days’ notice (or a longer notice period as agreed by the parties).

Overtime

The Employment law does not specifically provide for the obligation to pay overtime as the hours of work can be agreed. Thus, there is also no minimum rate of overtime payment. However, overtime payments, if payable, are considered as part of wages. Accordingly, all statutory provisions that apply to wages also apply to overtime payments. Employers are not prohibited from specifying categories of employees that are entitled to overtime pay and the method of calculating overtime pay in the employment agreement.

Hong Kong encourages freedom of contract and one factor of its success has been its hardworking labor force. There are therefore no specific regulations on the hours of work enacted so far, except for young employees between the age of 15 and 17, the maximum working hours is eight hours a day and 48 hours a week; and there are statutory provisions for minimum holidays and every employee who has been employed by the same employer under a continuous contract must be granted not less than one rest day in every period of seven days.

#Annual leave

The Employment Ordinance governs employees’ rights to annual leave. An employee is entitled to seven days’ paid annual leave after serving every period of 12 months under a continuous contract. An employee’s entitlement to paid annual leave varies depending on his or her length of employment.

#Sick leave

For the first 12 months of employment, the employee accumulates two paid sick leave days at the end of each completed month. For each month thereafter, the employee accumulates four paid sick leave days at the end of each completed month. For employees employed under a continuous contract, up to a maximum of 120 paid sick leave days can be accumulated. Paid sick leave days are divided into two categories: category 1 being the first 36 days accumulated, and category 2 being the subsequent 84 days. Paid sick leave taken under category 1 requires a medical certificate issued by a registered medical practitioner, a registered Chinese medicine practitioner or a registered dentist. Paid sick leave taken under category 2 requires a medical certificate issued by a registered medical practitioner, a registered Chinese medicine practitioner or a registered dentist attending to the employee as an outpatient or inpatient in a hospital.

An employee is entitled to paid sick leave days when:

• The employee has accumulated the number of paid sick leave days taken.
• The sick leave taken is not less than four consecutive days.
• The sick leave is supported by an appropriate medical certificate.

#Parental leave

Maternity leave

Female employees under a continuous employment contract for not less than 40 weeks immediately before the commencement of scheduled maternity leave are entitled to paid maternity leave for a continuous period of 10 weeks. The daily rate of maternity leave pay is equal to four-fifths of the average daily wages earned by an employee in the 12-month period preceding the first day of the maternity leave.

Paternity leave

A male employee is entitled to five days’ paternity leave for each confinement of his spouse or partner if he is the father of a new-born child or a father-to-be, has been employed under a continuous employment contract for not less than 40 weeks immediately before the day of paternity leave and has given the required notification to the employer. The daily rate of paternity leave pay is a sum equivalent to four-fifths of the average daily wages earned by an employee in the 12-month period preceding the first day of paternity leave. A male employee’s entitlement to statutory paternity leave for a total of five days will remain unchanged under the Amendment Ordinance but the period in which he can take his paternity leave will be extended. Currently, male employees are entitled to take paternity leave starting from four weeks before the expected date of delivery until ten weeks after the actual date of delivery. This will extend to 14 weeks to align with the extended period of statutory maternity leave.

Acumen International can help you fast-track your possibilities of entering and expanding your business in Hong Kong by providing you with an Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations almost immediately, cost-effectively and compliantly without you having to set up a legal entity there.