Hiring Employees in Hong Kong: Taxation, MPF, Employment Law, and Insurance Considerations

Hiring Employees in Hong Kong: Taxation, MPF, Employment Law, and Insurance Considerations

As your company gains traction and establishes its foothold, the prospect of expanding your operations may naturally arise. One pivotal phase of this expansion journey involves the recruitment of employees. This decision is no small matter; in fact, it's a critical step that demands precision to avoid any inadvertent missteps. Whether you're considering hiring local talent or extending your reach to international prospects, navigating the process correctly is paramount. This guide is designed to provide you with foundational insights into the hiring procedures, ensuring that you tread the path of compliance and competence as you embark on this pivotal journey.

Who can be considered employable in Hong Kong?

You can employ anybody above 18 years old above, or children and young person aged 13-17 years old under specific circumstances.

What should I consider  in the employment contract?

Employment contract is always a critical step, and having the Employment Ordinance in mind is important to ensure a good level of protection for both employer and employee.

Let’s check together which are the common elements to consider when drafting an employment contract:

  1. Position and Job Title
  2. Commencement Date and duration of contract.
  3. Probation Period: If applicable, mention the duration and terms of the probationary period.
  4. Salary and Compensation: Outline the employee's salary, including frequency of payment (e.g., monthly), method of payment, and any additional compensation or benefits.
  5. Working Hours: Detail the standard working hours, breaks, and days off.
  6. Leave Entitlement: Specify the types of leave (e.g., annual leave, sick leave, public holidays) and the corresponding entitlements.
  7. Termination Clause: Define the conditions under which the employment contract can be terminated by either party, including notice periods for resignation and termination.
  8. Notice Period: Indicate the notice period required for either party to terminate the employment.
  9. Code of Conduct and Policies.
  10. Confidentiality and Non-Compete: Include clauses about maintaining confidentiality of company information and any restrictions on the employee's ability to compete with the company after employment.
  11. Intellectual Property: Clarify ownership of intellectual property created by the employee during the course of employment.
  12. Benefits and Perks: List any additional benefits, allowances, or perks provided by the company.
  13. Performance Reviews: Describe the company's process for conducting performance reviews and evaluations.
  14. Grievance Procedures: Outline the steps an employee can take to address grievances or disputes within the company.
  15. Health and Safety: Highlight the company's commitment to providing a safe and healthy work environment.
  16. Applicable Law and Jurisdiction: Specify the jurisdiction where disputes arising from the contract will be resolved and the laws that will govern the 

I want to hire somebody but without an employment contract, can I do it?

Verbal employment agreement is legal in Hong Kong and the minimum requirements are: 

  • Intention to create legal relations
  • A valid offer
  • A valid acceptance
  • Consideration
  • Capacity to enter into a contract 

Employers in Hong Kong are required to to prepare tax form on behalf of employees and keep payroll records for seven years.

MPF contribution

Another aspect to consider before hiring new employees, is the Mandatory Provident Fund (MPF). Employers and employees are each required to contribute 5% of the employee’s monthly cash income, up to HK$1,500 for salaries above HK$ 30,000, to a registered MPF scheme. The MPF scheme must be enrolled within 60 days from the day of employment, and on the 10th day of the month the employer must contribute for the first MPF. Employee’s contributions are made by the employer by deducting the amount from the monthly salary.

The following employees are exempt from the MPF Scheme:

  • Domestic employees:
  • Self-employed hawvkers;
  • People covered by statutory pension or provident fund schemes, such as civil servants and subsidized or arant school teachers;
  • Members of occupational retirement schemes that are granted MPF exemption certificates;
  • Foreigners who enter Hong Kong for employment for less than 13 months, or who are covered by overseas retirement schemes; and
  • Employees &f the European Union Office of the European Commission in Hong Kong.

Moreover, employees contribution are Not mandatory for monthly income below HK$ 7,000.

Employers must provide monthly pay-records to each employee within seven working days after the mandatory contributions are made. Information in the pay-record should include the employee's relevant income, the amount of contributions made and the date the contributions were paid to the scheme.

ECI and other insurances

Employee's Compensation Insurance (ECI) is an insurance policy that covers an employer’s liability when a member of their staff suffers injury or illness while working. The policy can cover full and part-time staff, contractors, sub-contractors, or freelance staff in companies across every industry. ECI is a legal requirement for all employers in Hong Kong, according to section 40 of the Employment Ordinance. 

ECI coverage includes:

  • Medical expenses related to workplace injuries or illnesses.
  • Compensation for lost wages due to temporary or permanent disabilities resulting from work-related incidents.
  • Rehabilitation costs to help employees recover and return to work.

In addition to ECI, employers in Hong Kong often provide employees with other types of insurance to enhance their well-being and job satisfaction. Here are some typical types of insurance that employers may offer:

  • Health Insurance
  • Life Insurance
  • Accident Insurance
  • Medical Insurance

Hiring students

Students who are citizens or PRs of Hong Kong can be hired on a full time or part time basis, without any restrictions. Students, including interns, are entitled to MPF contributions. The common practice is to pay interns only a monthly allowance.

The following prerequisites must be met in order for foreign students enrolled in full-time, locally accredited programmes at the degree level or higher with a study term of at least one academic year to be hired as interns: 

  • The internships must be study or curriculum-related and be arranged or endorsed by the institutions where the student is studying; and
  • The duration of the internship is up to one academic year, or one-third of the normal duration of the relevant full-time academic program, whichever is shorter.

There is no restriction on the nature of work, level of salary, location, number of working hours and employers.

Hiring Foreign Employees

The Hong Kong government strongly advocates that employers must give first preference to the local workforce for filling job vacancies. Foreigners who possess special skills, knowledge or experience of value to and not readily available in Hong Kong are allowed to enter and stay in Hong Kong for employment as professionals.

A foreigner must have a valid work visa to be able to work in Hong Kong. If you wish to hire a foreigner, you will have to apply for a valid work visa on your employee’s behalf before (s)he can commence employment with you.

The foreign work force can be categorized in two main groups:

  • Skilled professionals such as software engineers, doctors and R&D specialists who are issued an Employment Visa; and
  • Semi-skilled professionals such as technicians who are issued a visa under the Supplementary labor Scheme.

Can I use my Hong Kong company to hire somebody abroad?

Hiring employees abroad for your Hong Kong company offers new opportunities for growth and expansion. However, it also presents a range of considerations related to taxation, MPF, employment law, and insurance. Let’s have a look at it:

  1. Tax - The tax residency status of remote employees determines where they are subject to taxation. Remote employees may be subject to taxation in their country of residence, and your Hong Kong company may need to assess tax implications accordingly. Hong Kong has signed Double Taxation Agreements (DTAs) with other countries to aiming  to prevent double taxation and determine where income is taxed.
  2. MPF Requirement - Employees who work abroad but are employed by a Hong Kong company may not be required to contribute to the MPF scheme. However, it's important to review the terms of employment and any reciprocal arrangements with the employee's country of residence.
  3. Employment Law Considerations - Employees working abroad are likely subject to the employment laws and regulations of their country of residence. It's important to understand these laws to ensure compliance with local requirements. While Hong Kong employment laws may not directly apply to employees working abroad, certain rights and benefits under Hong Kong law might still apply depending on the terms of the employment contract.
  4. Insurance Coverage - Remote employees may require health and safety coverage and insurance that complies with their country's regulations. Depending on the nature of the work, your Hong Kong company might need to ensure that remote employees are covered by professional liability insurance or other relevant policies.


In conclusion, the process of hiring employees in Hong Kong is a crucial step for businesses looking to expand their operations. Whether you're hiring local talent, students, foreign employees, or exploring opportunities to hire abroad, it's vital to navigate the complexities of employment law and taxation diligently.

To embark on this journey with confidence and clarity, consult with our professionals who specialize in employment and taxation matters to optimize your hiring processes and set your business on a path to success.

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