Employment Laws in Hong Kong

Contractual Agreements

Contracts are vital for outlining the relationship between employers and employees in Hong Kong. The law system dictates general contract principles like offer and acceptance, consideration, and legal capacity. 

You can have written contracts for clarity and enforceability. Further, Data Processing Agreements protect you from privacy concerns while processing employee personal data during employment. 

Types of employment contracts in Hong Kong 

• Hong Kong labor law specifies two types of employment agreements:

• The contract employment laws in Hong Kong also allows you to engage with full-time employees, part-time workers, remote workers, or self-employed individuals through any of the above employment agreements. 

Obligations and rights for both parties

• The Employment Ordinance in Hong Kong outlines rights and protections for employees.
• Additional benefits can be negotiated for continuous contracts. 
• You cannot terminate the employment contract of pregnant employees or employees on maternity leave.
• Further, you must allow unionization of the workforce.

Working Hours and Overtime

There are no statutory limits on working hours in Hong Kong, nor are there overtime regulations. The employment laws in Hong Kong allow you to negotiate regular working hours individually per the job role. 

Regular working hours

• You may follow the usual practice of 40 hours a week.
• However, the labor law in Hong Kong mandates at least one rest day every seven days. 

Overtime regulations and compensation

• Managing compensation and benefits may be difficult, especially without statutory regulation. 
• However, for any overtime work exceeding the regular working hours determined in the employment agreement, employees may be paid 1.5 times the usual hourly wage. 

Minimum Wage and Compensation

Hong Kong labor law prescribes the following minimum wage and compensation standards for full-time employees. You may apply the same labor law regulations for remote employees.  

The minimum wage rate in 2024

• The national minimum wage rate in Hong Kong is HK$40 per hour.

Factors affecting wage determination

• Market forces (supply & demand, productivity), institutional factors (minimum wage, cost of living, industry, and company size), and individual factors (education, skills, and experience) determine wages in Hong Kong. 
• The payroll frequency in Hong Kong is monthly, whereas salaries are usually negotiated and settled in Hong Kong Dollars (HK$).
• The labor laws of Hong Kong mandate interest on outstanding salaries past seven days from the due date. 

Subsequently, you may partner with an Employer-Of-Record (EOR) solution in Hong Kong to find more effective ways to pay your remote employees.

Employee Benefits and Social Security

The employment laws in Hong Kong lay down the following employee benefits and social security obligations: 

Statutory benefits

• Regardless of the number of working hours, you must extend protections such as timely salary payments. 
• Additionally, you must offer at least 14 statutory holidays, which may gradually increase to 17 by 2026.

Additional perks and benefits

• Anyone under a continuous contract enjoys statutory rest days, paid maternity benefits, paid vacation time, sickness allowance, severance pay, long service payment, etc. 

• You must ensure regular contributions to the mandatory social security system, Mandatory Provident Fund (MPF). 

• While the employment laws in Hong Kong do not prescribe 13th-month pay, extending bonus salary payments in December or before the Chinese New Year has emerged as a customary practice. 
• The employment ordinance does not mandate carry forward of leaves but you may opt for it. Further, the labor laws of Hong Kong restrict you from extending payment in exchange for vacation entitlements over 10 days.  

Social security contributions and requirements

• The MPF offers a retirement savings scheme, allowing members to access their accumulated contributions upon retirement. 

Vacations and Paid Time Off

The employment laws in Hong Kong require you to grant vacations and paid time off in addition to unpaid leave benefits. Let’s list out the reasons below: 

Annual leave entitlement

• You may extend annual leave entitlements based on the term of employment: 

• Additionally, you may grant three days separately when the total leave entitlement does not exceed 10 days. 
• However, when the leave entitlement exceeds 10 days, you must grant leave for at least seven consecutive days.

Public holidays and special leaves

• Hong Kong labor law extends 14 statutory holidays such that the regular working day following any statutory holiday on a rest day is also considered a holiday. 

• Further, you may extend the following family leave benefits to employees with at least 40 weeks of service: 
  • Maternity leave: Follow the statutory mandate of 14 weeks of paid leave. 
  • Paternity leave: Provide five days of paid leave.

Termination and Severance

Here are the statutory requirements under the employment laws in Hong Kong for terminating employees legally:  

Grounds for termination

• Termination due to poor performance: Unsatisfactory performance even after documented evaluations and feedback sessions.
• Termination due to business redundancy: Company restructuring, downsizing workforce, or liquidity crunch. 
• Termination without notice: Reasons include serious misconduct, wilful disobedience, breach of contractual terms, or criminal conviction.

• Other common reasons like mutually agreed exit due to contract expiry or otherwise and termination during the probation period are valid in Hong Kong. 

Notice period and severance pay

• You must extend at least 30 days of notice period for termination due to poor performance, business redundancy, or mutually agreed exit. 
• Termination during the probation requires a minimum notice of seven days (after one month of service). 

• Additionally, the laws require you to offer end-of-service (gratuity) payment upon terminating employees who have completed more than five years of service. 
• The severance pay amount is typically two-thirds of monthly wages for each year of service, up to a monthly salary cap of HK$22,500.

Discrimination and Equal Opportunity

The employment laws in Hong Kong provide for equal opportunity and anti-discrimination regulations in the workplace. Here's a breakdown:

Prohibitions against workplace discrimination

• The Equal Opportunities Commission (EOC) in Hong Kong enforces the following ordinances to ensure fair and equal treatment at the workplace: 
  • Sex Discrimination Ordinance (SDO)
  • Disability Discrimination Ordinance (DDO)
  • Race Discrimination Ordinance (RDO)
  • Family Status Discrimination Ordinance (FSDO)

• Further, you must avoid direct discrimination (treating someone less favorably due to a protected characteristic) and indirect discrimination (seemingly neutral policies that unfairly impact a particular group).

Health and Safety Regulations

The Occupational Safety and Health Ordinance (OSHO) is the main legislation in Hong Kong regulating accident prevention, fire safety, workplace hygiene, and proper machinery use. The Labor Department may fine you for non-compliance.

Stay Compliant with Skuad

Managing a global workforce can add complexities, especially regarding compliance with local employment laws. It is where Skuad comes in.

Skuad's Employer of Record (EOR) platform can onboard, pay, manage, and support talent in Hong Kong and over 160+ countries. It frees you to focus on achieving your business goals without the burden of entity setup and complying with employment laws in Hong Kong. 

‍Contact us today to learn more about our comprehensive HR solutions.

FAQs

Q1. What are the rules for working in Hong Kong?

A1. Hong Kong relies on individual employment agreements for essential rules like working hours and statutory benefits. Whereas the labor laws mandate statutory minimums like 30 days of notice period for termination, 13 public holidays, anti-discrimination and equal opportunity requirements, etc. 

Q2. What is the Employment Ordinance Act in Hong Kong?

A2. The Employment Ordinance is the foundational legislation governing employment rights in Hong Kong. It covers almost all employees and offers minimum wage protection, restrictions on wage deductions, and paid public holiday benefits. 

Q3. What is the 418 rule in Hong Kong?

A3. The 418 rule in Hong Kong defines continuous contracts, granting additional benefits to employees who worked at least 18 hours/week for four weeks under the same employer. 

However, in February 2024, the new 468 framework replaced the 418 rule, closing a loophole to qualify employees for a continuous contract who worked 68 hours over four weeks, regardless of the hours worked per week. 

Q4. What are the termination laws in Hong Kong?

A4. To terminate continuous contracts, you need a valid reason and a minimum of 30 days’ notice (or severance pay). However, non-continuous contracts are more flexible and require less notice.