Key Takeaways for Hiring in Hong Kong
- Employment contracts in Hong Kong are flexible but must clearly state notice terms, probation, compensation, and statutory entitlements.
- MPF contributions are mandatory for most employees, with 5% contributions from both employer and employee.
- Salaries Tax uses low progressive rates (2% – 17%) or a standard rate of 15%, whichever results in a lower tax bill.
- Foreign employees require employer notification to immigration authorities upon termination, and visas end immediately unless replaced.
Continent
Asia
Capital
Hong Kong
Currency
Hong Kong Dollar (HKD)
Language
Chinese, English
Payroll Cycle
Monthly
VAT
0%
Quick Facts For Hiring In Hong Kong
Hong Kong Employment Contract Overview
Hong Kong employment contracts are straightforward and flexible, but they must clearly set out terms like notice, probation, compensation, and leave entitlements. Below is the basic structure we follow for compliant contracts.
What Do You Need To Include In A Hong Kong Employment Contract?
Hong Kong keeps employment contracts refreshingly straightforward, but you still need to cover a few essentials to stay compliant. Here’s what every employer should spell out clearly so you and your new hire start off on solid ground.
Employee Information
- Full name
- ID number
- Role / Job title
- Start date
- Contract duration
- Working hours
- Probation and notice conditions
- Termination provisions
- Compensation details
- Address details
- Leave entitlement
- End date (if applicable)
Payroll
Average employer cost
5.00% + 1500.00 HKD
| Category | Details |
|---|---|
| Salaried Employees | Monthly, typically paid on the last working day of the month |
| 13th Salary | Common practice, especially in finance and professional services, but not required by law |
| Avg employer tax | 5.00% + 1500.00 HKD |
Tax Breakdown
Average Employer Contributions
| Category | Rate / Details |
|---|---|
| Mandatory Provident Fund (MPF) | 5% of employee’s monthly salary (capped at HKD 1,500/month) |
| Other taxes | None (no social security or payroll taxes for employers) |
Average Employee Contributions
| Category | Rate / Details |
|---|---|
| MPF | 5% of salary (capped at HKD 1,500/month) |
Salaries Tax (Progressive)
| Category | Rate / Details |
|---|---|
| On first HKD 50,000 | 2% |
| On next HKD 50,000 | 6% |
| On next HKD 50,000 | 10% |
| On next HKD 50,000 | 14% |
| On the remainder | 17% |
| OR | Flat 15% tax on net income, whichever is lower |
VAT
| Category | Rate / Details |
|---|---|
| VAT | 0% |
Onboarding Process
Onboarding in Hong Kong typically includes the following steps to ensure a smooth transition for new hires:
- Employment Contract
- MPF Enrollment
- Tax Setup
- Payslip & Payroll Setup:
- Onboarding Documents — Collect copy of HKID or passport, visa (if applicable), address proof, and bank account details
- Pre-boarding — Pre-boarding Pre-boarding
Leave and Holiday Entitlement in Hong Kong
Annual Leave
Employees earn statutory paid annual leave based on their continuous years of service:
-
One to two years: seven days
-
Three years: eight days
-
Four years: nine days
-
Five years: 10 days
-
Six years: 11 days
-
Seven years: 12 days
-
Eight years: 13 days
-
Nine+ years: 14 days
Employers schedule leave after consulting the employee and must give at least 14 days’ written notice unless the employee agrees to a shorter period. Leave accrued in one year can generally only be taken the following year, though many employers allow same-year use.
Public Holidays
Hong Kong has 14 statutory public holidays under the Employment Ordinance:
-
New Year’s Day (Jan 1)
-
Lunar New Year (first 3 days)
-
Ching Ming Festival
-
Good Friday
-
The day following Good Friday
-
Labour Day (May 1)
-
Birthday of the Buddha
-
Tuen Ng Festival (Dragon Boat Festival)
-
Hong Kong Special Administrative Region Establishment Day (July 1)
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The day following the Chinese Mid-Autumn Festival
-
Chung Yeung Festival
-
and the first weekday after Christmas Day.
If a statutory holiday falls on a rest day, employers must provide a substitute holiday. Under the Employment (Amendment) Bill of 2021, the number of statutory holidays will progressively increase to 17 days from January 1, 2022 onward.
Sick Leave
Paid sick leave accumulates at a rate of two days per month of service during the first year and four days per month in subsequent years, up to a maximum balance of 120 days. Sick leave is paid at 80% of the employee’s average daily wage based on prior earnings.
Maternity Leave
Employees are entitled to 14 weeks of statutory maternity leave. Through the RMLP Scheme, employers can apply for reimbursement for weeks 11 – 14, up to HKD 80,000 per employee.
Paternity Leave
Employees receive five days of paid paternity leave for children born on or after January 18, 2019 (previously three days).
Eligibility requires continuous employment for four weeks at 18 hours per week or more, with proper notification given; three months before the expected birth date or at least five days in advance if notice is late. Paternity leave is paid at four-fifths (⅘)of the average daily wage calculated over the last 12 months.
Other Types of Leave
None.
Termination and Offboarding in Hong Kong
Terminating employment in Hong Kong is all about timing, documentation, and paying out what’s owed. Once you know the statutory notice rules and what counts as a lawful dismissal, the offboarding process becomes much easier to manage.
| Type | Possible? |
|---|---|
| Termination for Cause (poor performance, misconduct, etc.) | Yes |
| Termination without Cause | Yes |
| Mutual Termination Agreement (MTA) | Yes |
| Redundancy | Not possible under the EOR setup |
Hong Kong Employee Resignation
Notice
Form
A written notice by the employee to the employer to resign under a continuous contract.
Notice period
-
If the employee is in their first month of probation, a minimum notice period is not required
-
After the first month of probation, the employee must give at least seven days notice or apply the longer contractual notice period if the employment contract provides one.
-
Once the employee has completed probation (or if no probation applies), the employer follows the contractual notice period; if the contract does not specify one, the employer must give one month’s notice.
Payment in lieu of notice or notice waiver
Either party may offer payment instead of working the notice period if both agree; if no notice is given and no payment in lieu is agreed, the employee may be in breach under the contract.
End-of-Service Benefits
Severance/Gratuity
Not applicable in resignations.
Other Benefits
-
Payment of wages earned up to the date of resignation
-
Payment for any unused statutory annual leave
-
Any other contractual entitlements including bonuses, allowances, etc. that have accrued
Termination Documentation
-
Written acknowledgement by employer of the resignation and its effective date
-
Final pay slip showing all components (wages, unused leave, etc.)
-
Certificate of employment or proof of service if requested by the
Employer Termination With Cause in Hong Kong
Acceptable grounds
-
Wilful disobedience of a lawful and reasonable order
-
Misconduct inconsistent with the duty of loyalty and faithful discharge of duties
-
Fraud or dishonesty
-
Habitual neglect of duties
Notice
Form
Written notice of termination or summary dismissal, clearly specifying the effective date of termination.
Notice period
If terminating for cause (summary dismissal), no notice is required in advance.
Payment in lieu of notice or notice waiver
In case of summary dismissal, no payment in lieu of notice is required.
End-of-Service Benefits
Severance
No entitlement to severance or long service payment when termination is for cause via summary dismissal.
Other Benefits
-
Payment of wages accrued up to the date of termination
-
Holiday pay for unused leave accrued before termination
-
Any other contractual benefits that have become due prior to termination
Termination Documentation
-
Written termination letter specifying the cause and date of dismissal
-
Payslip or statement showing final settlement of wages, leave pay etc.
-
If requested, a certificate of employment or separation showing employment period and position
Employer Termination Without Cause in Hong Kong
Acceptable Grounds
The employer does not need to provide a specific reason when terminating without cause, as long as proper notice or payment in lieu is given.
Notice
Form
Written.
Notice period
-
During probation period: if beyond the first month of probation, at least 7 days notice is required unless the contract specifies more.
-
After probation: usually the notice period is agreed in the contract; if none is agreed, a minimum of 1 month notice is required
Payment in lieu of notice or notice waiver
The employer can choose to waive the notice period by paying the employee an amount equal to their earnings for that notice period.
End-of-Service Benefits
Severance
-
Severance payment is due where the employee has been continuously employed for at least 24 months and is dismissed because of redundancy (not possible under the EOR setup) or other genuine operational reasons.
-
If the employee qualifies for severance, they are not eligible for long service payment and vice versa.
Other Benefits
-
Wages earned up to the date of termination
-
Payment for untaken annual leave and pro rata public holidays as per contract or statute
-
Payment for any other contractual or statutory entitlements accrued up to termination
Termination Documentation
-
A termination letter to the employee specifying the termination date and notice given or payment in lieu
-
A final pay statement detailing all wages, leave payments, severance or other benefit payments
-
If requested, a certificate of employment or separation showing period of service and position
Mutual Termination Agreements in Hong Kong
Notice
Form
A written mutual agreement signed by both parties.
Notice period
Not required by law if termination is by mutual consent, unless specified in the agreement.
Waiver of notice
Not applicable unless the mutual agreement includes payment in lieu as part of the terms.
End-of-Service Benefits
Severance
-
Severance payment is not automatically due in mutual termination.
-
However, if the termination is initiated by the employer and agreed to by the employee, and the employee qualifies for severance (at least 24 months of service and redundancy-type situation, which is not possible under the EOR setup), it can be included.
-
Long service payment may also apply if the employee has at least 5 years of service and the agreement is not treated as a resignation.
Other Benefits
-
Wages earned up to the termination date must be paid
-
Payment for any unused statutory annual leave and pro-rated entitlements
-
Other contractually agreed benefits or ex gratia amounts may be included in the termination agreement
Termination Documentation
-
Signed mutual termination agreement setting out the terms, final date of employment, and any payments to be made
-
Final wage and benefit statement
-
Certificate of employment if requested by the employee, indicating the period and nature of employment
Offboarding Process for the End of Fixed-term Contracts in Hong Kong
If the Fixed-Term Contract Ends Normally
Notice
- No statutory notice is required if the fixed-term contract expires on its agreed end date and neither party seeks to renew it.
- However, if the contract includes a renewal clause or requires notice before expiry, those terms must be followed.
End-of-Service Benefits
Severance/Gratuity
- If the contract ends due to redundancy and the employee has at least 24 months of continuous service, severance payment may be required (not possible under the EOR setup).
- If the employee has worked for five or more years and the contract ends without serious misconduct or resignation, long service payment may apply if severance is not paid.
Other Benefits
- Payment for wages up to the contract end date
- Compensation for unused statutory annual leave and pro-rated statutory holidays
- Other contractually agreed benefits (e.g. bonuses, allowances), if accrued before the end date
If the Employer Terminates Early
Notice
- If the contract allows early termination with notice, the employer must give the agreed notice period or payment in lieu.
- If no early termination clause exists, ending the contract early can be considered a breach of contract and could entitle the employee to compensation.
End-of-Service Benefits
Severance/Gratuity
- Severance is payable if the employee has at least 24 months of continuous service and is terminated due to redundancy (not possible under the EOR setup).
- Long service payment may be due if the employee has at least 5 years of service and is dismissed without cause and not paid severance.
- Compensation in lieu of the remaining contract term may apply if the contract is breached without proper notice.
Other Benefits
- Final payment of earned wages
- Payment for unused leave and other accrued statutory entitlements
- Any other compensation agreed in the employment contract or negotiated upon early termination
Final Payment Timing & Immigration and Visa Compliance in Hong Kong
Final Payment Deadline
The employer must pay all outstanding wages and termination-related payments (including notice pay, leave pay, and any severance or long service payment) no later than seven days after the date of termination of employment.
Penalty
If the employer fails to make final payment within seven days, they are in breach of the Employment Ordinance. The employee may lodge a complaint with the Labour Department. The employer may face criminal liability, including fines and prosecution. Continued failure to pay can also entitle the employee to lodge a civil claim and may result in additional penalties or court-ordered compensation.
Visa and Immigration Compliance
- For foreign employees on employment visas, the employer is required to notify the Immigration Department of the termination in writing.
- The notification should be made as soon as possible after termination.
- The work visa becomes invalid upon termination, and the foreign national must either leave Hong Kong or obtain a new visa if they wish to stay.
- The employer should also issue a Certificate of Employment if requested, to support future visa applications or immigration processing.
- Employers must retain accurate records of employment and termination for compliance purposes.
Supporting Guides
Frequently Asked Questions
Who’s exempt from MPF contributions?
Very few people. If your employee is aged 18-64 and works at least 60 days, MPF applies whether they’re full-time, part-time, or casual. The only real exemptions are for those covered under recognized overseas retirement schemes or employees in specific exempt categories.
Seven days of annual leave after a year seems low. Is that normal?
Yes, that’s Hong Kong. It scales slowly. One extra day per year of service until it caps at 14 days after nine years. Many competitive employers offer more generous leave in their contracts to attract talent.
What’s the difference between severance and long service payment?
You can’t get both. It’s one or the other. Severance applies when someone’s dismissed due to redundancy (not possible under EOR) after 24 months. Long service payment applies when someone’s dismissed without cause after five years. Different thresholds, different reasons, but never both.
What happens to an expat’s visa when they leave?
It becomes invalid immediately. You must notify Immigration in writing as soon as possible. The person needs to leave Hong Kong or secure a new visa quickly—there’s no grace period once employment ends.
How does the Salaries Tax calculation work?
Hong Kong calculates it both ways, progressive rates (2%-17%) and a flat 15% standard rate, then charges whichever is lower. For most employees, progressive rates result in less tax. High earners usually hit the 15% standard rate cap.
Does sick leave carry over if I don’t use it?
Yes, it accumulates up to a maximum of 120 days. Employees build a sick leave bank over time, which makes it less likely you’ll face long unpaid absences.
