In Hong Kong, you can expand your workforce by learning which benefits are mandatory and which perks attract top talent. 

The cosmopolitan city of Hong Kong is a major economic hub with a vibrant urban culture and bustling tourism sector. International companies prefer to do business in Hong Kong for its affordable tax regime and modern infrastructure. Because it serves as a gateway to mainland China, it is recognized as a Special Administrative Region (SAR) to China. 

Hong Kong’s finance, logistics, tourism, and trade industries that make up the service sector significantly contribute to its GDP. According to Statista, the services sector accounted for 93.5% of GDP in 2023. With a GDP of $380.81 billion in 2023, Hong Kong has one of the highest GDPs per capita in Asia-Pacific. 

When hiring employees in Hong Kong, businesses are rewarded with access to a large talent pool of skilled and well-educated job candidates. In addition to finding the best employees, Hong Kong’s transparent legal framework simplifies starting a business and onboarding workers. 

When it’s time to establish your workforce in Hong Kong, all employers must adhere to the Employment Ordinance, which is the Hong Kong labor law. The ordinance provides protections for workers, including a breakdown of mandatory employee benefits that should always form part of the employment contract. Failing to follow these laws simply increases the risk of non-compliance, and that means paying fines of up to HK$100,000 or issuing back pay to affected workers. 

To secure a motivated workforce based on the law, discover how a Hong Kong Employer of Record, or EOR, can help your business. This guide further takes a look at the labor laws, optional perks, and statutory employee benefits in Hong Kong that every business must follow. 

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Hong Kong Employment Laws

To do business in Hong Kong, employers are encouraged to familiarize themselves with the Employment Ordinance. This piece of legislation provides clear guidelines for hiring and operating in Hong Kong. A brief overview of these laws will provide an idea of the statutes you should implement to successfully hire a workforce and establish your business in East Asia: 

Minimum Wage

Hong Kong’s Statutory Minimum Wage (SMW) was updated in 2023 to $40 per hour.

Mandatory Provident Fund (MPF)

Both employers and employees are legally required to contribute to the Mandatory Provident Fund, which is the Hong Kong retirement fund. Hong Kong does not have a social security system per se but rather a provident fund that protects retirement. Employed persons aged 18 to 64 qualify for the fund. 

Three major funds exist in Hong Kong, including: 

  • Employer-sponsored schemes
  • Master trust schemes 
  • Industry schemes 

Both full-time and part-time employees must be registered for the fund within 60 days of employment. 

418 Rule

The 418 Rule determines an employee’s status and whether they qualify for benefits. Only employees who work for 18 hours per week for four weeks are considered continuously employed and eligible for benefits including severance pay, sick leave, and annual paid leave as per the Employment Ordinance. 

Employee Compensation Insurance

Employers must issue compensation to employees in the event of workplace injuries or illness as per the Employees’ Compensation Ordinance, Chapter 282. 

Hire Legal Professionals to Maintain Compliance

To prevent Hong Kong labor law violations, it is important to partner with local employment experts to ensure compliance. Legal professionals explain the legislation and keep you informed on changes in labor laws. 

To make this process easier and more affordable, international companies looking to expand in Hong Kong can use an EOR. The Employer of Record in Hong Kong assists with onboarding, termination of employment contracts, and payroll management. Because the EOR serves as the legal employer of your workforce, they assume full liability, which includes keeping updated on labor regulations and communicating reforms to clients. 

Mandatory Employee Benefits in Hong Kong 

Based on Hong Kong labor laws, employees must receive mandatory benefits. These benefits range from paid time off to maternity leave and severance pay. Understanding the statutory employee benefits in Hong Kong will help you protect the rights of your workforce while maintaining compliance with the Employment Ordinance. 

Social Security Contributions

Hong Kong’s social security system, known as the Mandatory Provident Fund, covers pension plans. Employers and employees make 5% contributions to the fund from the employee’s specific income. The contribution is capped at HKD 1500 for employees who earn more than HKD 30,000 per month. 

Annual Paid Leave

Hong Kong’s annual paid leave works on an accrual basis. Employees who have worked for the same company for one year receive a minimum of seven days’ leave. Those who have worked for the same employer for several years are awarded 14 days of annual paid leave but will accrue leave with every year of service. 

Working Hours

Employees work between 40 and 48 hours over five or six days. For those with continuous contracts, they must be given a full rest day after working for seven consecutive days. Failing to provide employees with this benefit will lead to violations. 

Overtime Pay

Hong Kong does not have a set overtime pay under the labor law; however, most employers offer at least 1.5 times the standard pay rate through collective bargaining. Overtime pay rates are increased for night shifts. 

Employees receive statutory public holidays, with several listed below: 

  • January 1, 2025: New Year’s Day
  • January 29, 2025: Lunar New Year’s Day
  • April 4, 2025: Ching Ming Festival
  • May 1, 2025: Labor Day
  • May 17, 2025: Buddha’s Birthday
  • July 1, 2025: Hong Kong Special Administrative Region Establishment Day
  • October 1, 2025: National Day
  • October 31, 2025 (Tentative): Cheung Yeung Festival (Ninth day of the ninth lunar month, date varies yearly)
  • December 26, 2025: The First Weekday After Christmas

Employees must receive paid sick leave that can be accrued under a continuous employment contract. Within the first year of employment, workers accrue sick leave at two days per month. After the first 12 months, sick leave is accumulated at four days per month but cannot exceed 120 days. 

Hong Kong has two categories under which sick leave may be issued: 

CategoryPaid Sick Leave Entitlement
Category 136 days of paid sick leave
Category 2

Paid sick leave can be accumulated for up to 84 days. The number of paid sick days taken exceeds the entitlement in Category 1.

Employers are legally required to keep records of sickness days taken by the employee.

Maternity Leave

Qualifying female employees receive 14 weeks of maternity leave only if they are employed for a total of 40 weeks in a continuous employment contract.

Paternity Leave

Based on the labor laws in Hong Kong, paternity leave is issued for five days only if he is the child’s father, has a continuous employment contract, and provides the employer with notice three months before childbirth. 

Severance Pay

If an employee is dismissed for redundancy after two years of employment, they can receive severance pay. It is calculated at a rate of two-thirds of the employee’s former monthly wages not exceeding HKD 15,000 for every year of completed service. Incomplete service years are based on pro rata, and severance pay is capped at HKD 390,000. 

Supplementary Employee Benefits in Hong Kong

Providing employees with mandatory employee benefits is a legal requirement in Hong Kong, but if you’re looking to attract local top talent and establish a motivated workforce with high retention rates, then optional perks should be offered in the employment contract. 

These employee perks can range from additional leave to private insurance, helping employees with the cost of living and work-life balance. The following fringe benefits should be considered when drafting an employment contract: 

  • Additional Leave: Extra leave can be issued to assist employees with private family matters, bereavement leave, and time off to maintain a healthy work-life balance. 
  • Meal Allowances: Meals at the workplace can be subsidized or free. 
  • Wellness Programs: Employers can invest in wellness programs such as access to a workplace therapist, gym memberships, and additional work breaks. 
  • Flexible Scheduling: Offering work-from-home and flexible working hours are popular supplementary benefits. 

Optimize Employee Benefits with Remote People

Hong Kong remains a sought-after investment destination for its business-friendly environment, large pool of talented job candidates, and access to the finest global infrastructure. 

To successfully expand your business in East Asia, an EOR can help you comply with local labor laws. The EOR company ensures that the correct employee benefits in Hong Kong are part of the employment contract, protecting your workforce and preventing the possibility of labor law violations. 

International employers can rely on Remote People’s EOR services when hiring in Hong Kong. Remote People supports client companies by optimizing employee benefits to satisfy the needs of your workforce while attracting talented job candidates. 

Remote People’s EOR services include compliance, payroll, and valuable benefits solutions in Hong Kong. Reach out to our team of experts today and discover how to make expansion simpler, more compliant, and more rewarding.