Key Takeaways

  1. Hong Kong operates as one of Asia’s most business-friendly jurisdictions, with no capital gains tax, no VAT, and a territorial tax system that only taxes income sourced within the city.
  2. Despite its small geographic size, Hong Kong ranks among the top 10 largest trading entities in the world, making it a strategic gateway for businesses expanding across Asia-Pacific.
  3. Employer costs are among the lowest in the region at approximately 5%, driven primarily by MPF contributions — making Hong Kong a cost-efficient location for international hiring.
  4. A significant regulatory change took effect in May 2025, prohibiting employers from offsetting MPF contributions against severance or long service payments — a change that directly increases termination costs for employers.
  5. Hong Kong’s highly skilled, bilingual workforce of nearly 4 million people, combined with its proximity to mainland China, makes it a natural hub for finance, trade, logistics, and technology operations.

Hong Kong is an attractive destination for businesses that are looking to expand across the globe. With a GDP growth rate that consistently outperforms many other developed economies, Hong Kong has managed to establish itself as a major player in international trade and investment.

As of some of the most recent reports, the city boasts a diverse and highly skilled workforce of over 3.97 million people, which has helped to contribute to its reputation for innovation and productivity. 

Despite its relatively small geographic size of only 1,104 square kilometers, Hong Kong ranks as the 10th largest trading entity in the world. There are many employment opportunities across various industries such as finance, trade, logistics, and digital technology making it an excellent location for businesses that are striving for growth and expansion.

Here we set out all you need to know about how a Hong Kong Employer of Record (EOR) works, including key labor laws, costs, and how Remote People can help you hire compliantly in Hong Kong.

What is a Hong Kong Employer of Record?

A Hong Kong Employer of Record (EOR) is a service that acts as the legal employer for employees on behalf of another company. This type of service is especially beneficial for businesses that are not based in Hong Kong or for those that are looking to expand into this market without having to establish a local entity first.

This arrangement means that the EOR in Hong Kong is responsible for all employment-related legalities, including payroll, tax filings, and adherence to local labor laws, while the actual work performed by the employees benefits the client company.

The main appeal of using an EOR in Hong Kong is in its ability to easily and efficiently navigate the complexities of the local employment landscape, which can often be overwhelming for foreign businesses.

This includes managing contracts, ensuring compliance with the Employment Ordinance, handling employee benefits, and mandatory contributions like the Mandatory Provident Fund (MPF).

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Hong Kong EOR vs PEO: What's the Difference?

A similar service provider to a Hong Kong EOR, is a Hong Kong Professional Employer Organization (PEO). Like an EOR company, a Hong Kong PEO supports global companies with hiring and payroll in Hong Kong. However, traditionally, a PEO acts as a co-employer of your Hong Kong team, rather than the legal employer. 

In Hong Kong, EOR model is particularly common because company incorporation (1–2 weeks via Companies Registry) still requires ongoing compliance with Business Registration Ordinance, Inland Revenue filings, and MPF obligations. An EOR eliminates these requirements entirely.

How Does a Hong Kong EOR Work?

An Employer of Record in Hong Kong simplifies the process for foreign companies that want to hire locally without all of the complexities of establishing their entity. Here’s a step-by-step guide on how it works:

1

Choosing an EOR

The first step involves selecting a reputable EOR provider in Hong Kong that understands the local employment laws and can cater to your specific business needs. Check out our list of top Hong Kong providers above, or use reputable review sites like TrustPilot and G2 to narrow down your list. Look out for EORs to be transparent and avoid hidden fees.

2

Contract Agreement

Once you’ve chosen an EOR, you’ll enter into an EOR agreement. This outlines the services the EOR will provide, including payroll management, tax compliance, and HR support.

3

Employee Recruitment

The EOR can assist in the recruitment process and help you find the right talent for your business. You can also choose to select your employees, and the EOR will formally employ them on your behalf. Note, only some Hong Kong EORs also provide Hong Kong recruitment services.

4

Onboarding Employees

The EOR then onboard the employees, ensuring that contracts comply with Hong Kong laws, and will handle all administrative tasks that are related to employment.

5

Ongoing Management

The EOR manages payroll, tax filings, employee benefits, and any legal changes in employment law, keeping you compliant and allowing you to focus on your business operations.

Which Labor Laws Apply when Hiring in Hong Kong?

For a smooth hiring process in Hong Kong, it is important to have a thorough understanding of the Hong Kong labor laws – labor law compliance is one of the main specialties of EOR companies. These laws are designed to protect both employees and employers, ensuring a fair and productive working environment.

Here’s a breakdown of some of the key pieces of information covered under Hong Kong labor laws:

Employment Contracts

In Hong Kong, employment contracts solidify the employment relationship and detail all obligations such as job duties, compensation, working hours, and termination guidelines.

Both verbal and written contracts are legally valid under Employment Ordinance, though written strongly recommended. Contracts should specify job title and duties, remuneration and payment cycle, working hours, rest days, annual leave, probation period, notice period, and restrictive covenants. Employers must provide written employment terms within 1 month of start date.

Working Hours and Overtime

Hong Kong does not have fixed statutory working hours, leaving this to be determined by individual contracts. While overtime payment is not legally required, it is common practice for employers to compensate or offer time instead of additional hours worked, which should be explicitly agreed upon and detailed in the employment contract.

Public Holidays

Hong Kong has 17 general holidays and 13 statutory holidays (increasing to 17 by 2030). Employees who work on statutory holidays are entitled to holiday pay, provided they have been employed for at least three months.

Statutory holidays include:

  • New Year’s Day (1 January)
  • Chinese New Year – First Day (Lunar January 1)
  • Chinese New Year – Second Day (Lunar January 2)
  • Chinese New Year – Third Day (Lunar January 3)
  • Ching Ming Festival (4 or 5 April)
  • Labour Day (1 May)
  • Buddha’s Birthday (Lunar April 8)
  • Dragon Boat Festival (Lunar May 5)
  • HKSAR Establishment Day (1 July)
  • Day after Mid-Autumn Festival (Lunar August 16)
  • National Day (1 October)
  • Chung Yeung Festival (Lunar September 9)
  • Winter Solstice (21 or 22 December) or Christmas Day (25 December)

Mandatory Provident Fund (MPF)

The MPF scheme is a very important part of Hong Kong’s retirement system and requires both employers and employees to contribute a minimum of 5% of the employee’s relevant income, subject to a monthly income cap of HK$30,000, resulting in a maximum contribution of HK$1,500 per month from each party. Employees earning below HK$7,100 per month are exempt from making employee contributions, although employers must still contribute 5% of the employee’s income.

MPF offset abolished 1 May 2025 – employers can no longer offset accrued MPF against severance or long service payments. All schemes must migrate to eMPF digital platform.

Probation Period

Probation periods in Hong Kong are typically 1–3 months, as agreed in employment contract. No statutory maximum. During probation, shorter notice periods may apply (commonly 7 days or as specified). After probation, standard contractual notice applies.

Anti-Discrimination Laws

To create an inclusive and fair work environment, Hong Kong has enacted several anti-discrimination laws enforced by the Equal Opportunities Commission (EOC). These laws include:

  • Sex Discrimination Ordinance (Cap. 480)
  • Disability Discrimination Ordinance (Cap. 487)
  • Family Status Discrimination Ordinance (Cap. 527)
  • Race Discrimination Ordinance (Cap. 602)

Protection under these ordinances covers recruitment, terms of employment, promotion, training, and dismissal, ensuring that employers cannot discriminate against employees based on these protected characteristics.

Payroll and Employment Taxes in Hong Kong

Income Tax

In Hong Kong, Salaries Tax is charged on income earned in the city and is progressive, meaning higher income is taxed at higher rates. Everyone receives a basic personal allowance, and only income sourced in Hong Kong is taxed.

Tax BandRateNotes
First HK$50,0002%Progressive tax
Next HK$50,0006%Progressive tax
Next HK$50,00010%Progressive tax
Next HK$50,00014%Progressive tax
Remainder17%Progressive tax
Standard Rate15% on first HK$5,000,000; 16% thereafterApplied if higher than progressive rates
Basic Personal AllowanceHK$132,000/yearReduces taxable income
Tax BasisTerritorialOnly income sourced in Hong Kong is taxed

Minimum Wage

Hong Kong’s Statutory Minimum Wage (SMW) is HK$42.1 per hour, effective from 1 May 2025 (5.25% increase from HK$40). Applies uniformly across sectors, ages, districts. Calculated hourly. Reviewed annually. Non-compliance penalties: fines up to HK$350,000 and imprisonment up to 3 years.

All employment obligations denominated in Hong Kong Dollars (HKD). HKD pegged to USD at approximately HK$7.75–7.85 per USD 1 under Linked Exchange Rate System, providing exceptional currency stability for international employers.

Employees' Compensation Ordinance

Under Employees’ Compensation Ordinance (Cap. 282), all employers must maintain employees’ compensation insurance covering work-related injuries and occupational diseases. Failure to have valid insurance: criminal offense with fines up to HK$100,000 and imprisonment up to 2 years.

Employees entitled to at least 1 rest day per 7-day period. Rest days typically Sundays but can be designated by mutual agreement. Employers cannot compel work on rest days except in emergencies.

Time Off and Leave in Hong Kong

Annual Leave

In Hong Kong, statutory annual leave increases with an employee’s length of service under a structured progression, starting from 7 days and peaking at a maximum of 14 days.

Years of Service Annual Leave Entitlement
1 to 2 years7 days
3 years8 days
4 years9 days
5 years10 days
6 years11 days
7 years12 days
8 years13 days
9 years or more14 days

Statutory leave must be paid at the rate of the employee’s average daily wages earned during the 12-month period preceding the leave.

Sick Leave

Employees accrue 2 paid sickness days per month during first year, then 4 per month thereafter, up to maximum 120 days. Sickness allowance paid at 4/5 (80%) of average daily wages for absences of 4+ consecutive days with medical certificate.

Maternity Leave

In Hong Kong, maternity leave is 14 weeks, extended from 10 weeks in December 2020. The first 10 weeks are paid by the employer at four-fifths (80%) of the employee’s average daily wages, while the additional 4 weeks are reimbursed by the government, with a maximum reimbursement of HK$80,000. To qualify, employees must have completed at least 40 weeks of continuous employment before their expected due date.

Termination and Severance in Hong Kong

Termination / Notice Period

During probation, notice can be 7 days or as specified in contract. After probation, typically 1 month or as stated in contract. Either party may pay wages in lieu. Summary dismissal (without notice) permitted only for willful disobedience, misconduct, fraud, or habitual neglect.

Severance / Long Service Payment

In Hong Kong, employees may be entitled to severance payment or long service payment depending on their length of service and the circumstances under which their employment ends. Both payments follow the same statutory formula under the Employment Ordinance.

Payment TypeEligibilityCalculation & Key Details
Severance PaymentEmployees dismissed (not for gross misconduct) with at least 2 years of continuous service2/3 × last month’s wages × years of service, capped at HK$390,000
Long Service PaymentEmployees with 5+ years of service who are dismissed (not for misconduct), resign due to ill health, retire at age 65+, or are not re-offered a contract2/3 × last month’s wages × years of service, capped at HK$390,000

Since 1 May 2025, employers cannot offset MPF against these payments.

What Are the Benefits of a Hong Kong EOR Provider?

Engaging a Hong Kong Employer of Record can provide many different advantages for businesses that are looking to expand into this market without having to establish a local entity. This approach can simplify many aspects of employment and compliance and can enable companies to focus on their core operations.

  • Compliance with Local Laws: EORs ensure that employment practices are in full compliance with Hong Kong’s labor laws, including contracts, working hours, minimum wage, and termination procedures, reducing the risk of legal issues.
  • Simplified Payroll and Tax Filings: Handling payroll and tax obligations can be difficult in a new market. EORs manage these processes efficiently and ensure accurate and timely payments and filings.
  • Quick Market Entry: Using an EOR significantly speeds up the process of entering the Hong Kong market, allowing businesses to start operations immediately without the delays of setting up a legal presence.
  • Reduced Administrative Burden: By taking on the administrative tasks that are associated with HR, payroll, and legal compliance, EORs free up the company resources that can be better used towards strategic growth initiatives.
  • Flexibility in Hiring: EORs provide the flexibility to quickly scale up or down, adapting to the business needs without the long-term commitments associated with direct hires.
  • Access to Local Expertise: EORs bring valuable local knowledge and expertise which can help navigate the many unique nuances of the Hong Kong employment landscape and advise on best practices.
  • Risk Mitigation: Operating under an EOR minimizes the legal and financial risks involved in international employment and compliance which can provide peace of mind to foreign businesses.

What Are the Downsides of a Hong Kong EOR?

While using an Employer of Record in Hong Kong can offer many advantages, it’s important to consider some potential downsides to this approach as well. Understanding these aspects can help businesses make an informed decision about whether an EOR is the right fit for their expansion strategy.

  • Cost Implications: Employing an EOR comes with service fees, which can be substantial depending on the scale of your operations, potentially affecting your budget and financial planning.
  • Reduced Direct Control: Since the EOR becomes the legal employer, companies may experience less direct control over their employees and day-to-day management, which might not align with all business models.
  • Dependence on Provider: Relying on an EOR for important HR functions creates a dependency that could pose risks if the provider faces issues, such as financial instability or service disruptions.
  • Cultural and Communication Barriers: Working through an EOR might lead to challenges in building a strong company culture and direct communication lines with employees, especially if the EOR does not fully align with the company’s values and operational style.
  • Limited Flexibility in Employee Benefits: EORs offer standard benefits packages that might not cater to the specific needs or preferences of all employees which could potentially impact recruitment and retention.

Maximizing Your Business Potential With an EOR in Hong Kong

Partnering with an Employer of Record (EOR) in Hong Kong gives your business a fast, flexible way to expand while staying fully compliant with local laws. It’s a smart move for companies that want to tap into Hong Kong’s vibrant market without the complexity of setting up a local entity.

As you explore your options, it’s important to weigh the advantages and limitations carefully and to choose an EOR partner that truly understands your goals and can grow alongside your business.

To access special discounts on Hong Kong EOR services, get in touch with Remote People—your trusted partner for compliant and cost-effective hiring solutions.

Frequently Asked Questions

Yes, it’s completely legal. EORs in Hong Kong operate within the framework of local labor and tax laws, allowing foreign companies to hire employees without establishing a local legal entity, all while staying fully compliant.

Hiring through an EOR in Hong Kong is usually fast. Once contracts are signed and documents are in place, employees can often be onboarded within one to two weeks, much quicker than setting up a local company.

A Hong Kong Employer of Record is commonly used by startups, remote-first companies, global tech firms, and multinational organizations that want to hire talent in Hong Kong without opening a legal entity. It is especially useful for businesses testing the market, hiring remote employees, or expanding quickly into the Asia-Pacific region.

Yes. An Employer of Record in Hong Kong can manage the legal aspects of employee termination, including notice periods, final salary payments, severance or long service payments, and compliance with local labor laws. This support helps companies avoid costly legal disputes and ensures that offboarding is handled correctly.

Yes. An Employer of Record can be a practical solution for short-term or project-based hiring in Hong Kong. Companies can employ contractors, temporary workers, or project specialists while the EOR manages payroll, benefits, and compliance. This flexibility allows businesses to scale teams up or down based on project needs.