Hiring in Hong Kong gives you access to one of Asia’s most business-friendly environments. The tax regime is straightforward, there’s no VAT or GST to account for, and the employment framework is well-established. That said, payroll in Hong Kong has its own rules around contributions, tax reporting, and contract classification that every employer needs to get right. This guide covers everything you need to know to run compliant payroll in Hong Kong.
Payroll frequency and pay date
Hong Kong operates on a monthly payroll cycle. Under the Employment Ordinance, wages must be paid within seven days after the end of the wage period. In practice, most employers pay on the last working day of each month.
There’s no statutory requirement to pay a 13th-month salary or an annual bonus. These are sometimes offered as part of a competitive compensation package, but they’re entirely discretionary unless they’re written into the employment contract.
Minimum wage in 2026
Hong Kong’s Statutory Minimum Wage applies to most employees and is reviewed periodically by the government. From May 1, 2026, the rate increases to HKD 43.1 per hour, up from HKD 42.1 per hour (which took effect on May 1, 2025).
Employers are required to track and record wages and hours worked for employees whose monthly wages don’t exceed the monetary cap for the record-keeping exemption. That cap is currently HKD 17,600 per month. If an employee earns above that threshold, simplified record-keeping rules apply. Below it, you need to maintain detailed records of hours worked to demonstrate minimum wage compliance.
How hong kong payroll deductions work
Running payroll in Hong Kong means handling two main obligations at source: the Mandatory Provident Fund and salaries tax reporting. Here’s how each one works.
Mpf contributions
The Mandatory Provident Fund (MPF) is Hong Kong’s retirement savings scheme. Both the employer and employee each contribute 5% of the employee’s relevant income every month. You deduct the employee’s share from their salary and pay both contributions to the MPF trustee.
The relevant income used to calculate contributions is capped at HKD 30,000 per month, which means the maximum contribution from each party is HKD 1,500 per month. There’s also a minimum relevant income threshold of HKD 7,100 per month. Employees earning below that threshold aren’t required to contribute, but the employer contribution still applies in certain cases, so it’s worth confirming the rules with your MPF trustee.
MPF contributions are due within the first 10 business days of the following month. Missing the deadline carries penalties, so build this into your payroll calendar from the start.
Salaries tax reporting
Hong Kong doesn’t operate a Pay As You Earn (PAYE) system. Employees are responsible for filing and paying their own salaries tax directly with the Inland Revenue Department (IRD). You don’t withhold income tax from payroll.
Your obligations as an employer are reporting-based. You’ll need to file:
- IR56E when a new employee starts (within 3 months of the hire date)
- IR56B annually, reporting each employee’s total remuneration for the year
The salaries tax rates are progressive, applied on successive HKD 50,000 bands of net chargeable income: 2%, 6%, 10%, 14%, and 17%. Alternatively, employees may be taxed at a standard rate of 15% on net income up to HKD 5,000,000, with 16% on any amount above that. The IRD applies whichever method results in the lower tax bill for the employee. As an employer, you don’t need to calculate the liability, but understanding the structure helps when discussing compensation with candidates.
The continuous contract: the 468 rule
One of the most important concepts in Hong Kong employment law is the continuous contract. Whether an employee qualifies as a continuous contract employee determines whether they’re entitled to statutory benefits including annual leave, paid sick leave, and severance pay.
The updated rule, which took effect on January 18, 2026, works as follows: an employee is employed under a continuous contract if they work 17 or more hours per week, or 68 or more hours in any four-week period.
If an employee meets this threshold, they’re entitled to the full range of statutory entitlements under the Employment Ordinance. If they don’t, those entitlements don’t apply. This makes it critical to track hours carefully for part-time workers or workers on variable schedules. Getting this wrong can result in underpaid statutory benefits and legal exposure.
Record-keeping requirements
Employers in Hong Kong are required to keep payroll records for a minimum of seven years. This covers wage records, hours worked (where applicable), and MPF contribution records.
You’re also required to provide employees with written wage details each pay period. This means issuing a payslip that breaks down their gross pay, any deductions (including the MPF contribution), and their net wages. While there’s no prescribed format, the payslip needs to be clear enough that the employee can verify their pay.
Maintaining clean records protects you in disputes, supports your annual IRD filings, and gives you a clean audit trail if the Labour Department ever reviews your records.
Running hong kong payroll through an Employer of Record
If you’re hiring in Hong Kong without a registered local entity, an Employer of Record (EOR) lets you bring on employees compliantly without setting up a company first. The EOR becomes the legal employer, handling payroll, MPF enrollment, IR56 filings, and Employment Ordinance compliance on your behalf.
This is especially useful for companies testing the Hong Kong market with one or two hires before committing to full incorporation. A what is an employer of record explains the model in detail if you’re new to it. When evaluating providers, comparing EOR services across cost, coverage, and local expertise will help you choose the right partner.
Book a demo to see how RemotePass manages Hong Kong payroll end to end.
Frequently asked questions
Does hong kong have income tax withholding for employers?
No. Hong Kong doesn’t operate a PAYE system, so you don’t withhold salaries tax from employee pay. Employees file and pay their own salaries tax directly with the IRD. Your responsibility is to file the IR56B annual return and the IR56E new hire notification on time.
What is the mpf contribution rate in hong kong?
Both employer and employee each contribute 5% of the employee’s relevant income, up to a monthly cap of HKD 1,500 per party. This is based on a relevant income ceiling of HKD 30,000 per month. The minimum relevant income threshold is HKD 7,100 per month.
What is the current minimum wage in hong kong?
From May 1, 2026, the Statutory Minimum Wage is HKD 43.1 per hour. Employers who pay employees below the record-keeping exemption threshold of HKD 17,600 per month must keep detailed records of hours worked to demonstrate compliance.
Which employees are entitled to statutory leave and severance in hong kong?
Employees employed under a continuous contract are entitled to the full range of statutory benefits, including annual leave, sick leave, and severance pay. Under the rule updated on January 18, 2026, an employee qualifies as continuous if they work 17 or more hours per week or 68 or more hours in any four-week period.
