What you should know when hiring your first employee in Hong Kong
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Thinking about hiring your first employee to help run your business? This guide will outline what you need to know, including relevant laws, compliance and more.
You ought to focus on understanding employment legislation in Hong Kong. So when it comes to hiring staff in Hong Kong, you cannot ignore the following:
- Labor laws in the jurisdiction
- Legal recruitment restrictions for local and foreign staff
- Recruitment guidelines specific to Hong Kong
- Common practices involved in the hiring process
- Administrative requirement involved in the recruitment process
Laws applicable to employees in Hong Kong
The Employment Ordinance governs employment laws in Hong Kong. The legislation outlines the basic terms related to labor and employment laws in Hong Kong, spelling out the employee’s rights and duties:
- The Employment Ordinance protects the rights of employees in Hong Kong. If your employee falls under the ordinance protection, you must ensure that the employment contract meets the minimum Employment Ordinance requirements. In the absence of non-coverage of the employee under the ordinance, the contractual terms depend on the agreement between both sides.
- The ordinance covers temporary, part-time, and contractual employees, except a few, including an employee whose family member also resides in the same building as the employer. Additionally, an employee covered under the Contracts for Employment Outside Hong Kong Ordinance is not eligible for the protection under the Employment Ordinance. Further, the ordinance does not cover an apprentice registered under the Apprenticeship Ordinance. This person may be entitled to some of the Ordinance protection.
- There is a special work permit scheme in Hong Kong for hiring skilled foreign employees. It is known as Employment for Professionals. Interested applicants must possess good educational qualifications and special skills that may not be readily available in Hong Kong. The work permit is issued for one year and can be renewed thereafter.
Duties and responsibilities of employers
The employment contract lays down explicit and implied terms for both employers and employees. However, if the Employment Ordinance covers the employee, the contract terms should comply with the minimum requirements laid down by the Ordinance.
- A copy of the employment contract should be handed over to employees.
- The employment contract cannot be changed without the consent of employees. The contract must include information on the duration of the contract, appointment position, date of appointment, obligations during employment, remuneration details, work hours, probation clause, employee benefits, termination causes, and code of conduct.
- Income Tax Ordinance requires employers to prepare tax forms on behalf of employees and keep payroll records for seven years.
Hiring foreign employees
The government allows foreigners with special skills, knowledge, and experience but prefer the first preference to go to the locals. Foreign professionals are divided into two categories, including skilled and semi-skilled. The latter are eligible for a one-year visa, which is non-renewable. However, the former can get their visas renewed after one year.
If you plan to hire a foreigner, it is important to apply for a work visa on their behalf before they can start working here.
Hiring students for internships
For students who are citizens or PRs, can be hired full/part time without any restrictions. They will also be entitled to the Mandatory Provident Fund (MPF) contributions. If you are a foreigner, you can also be hired as an intern but subjected to the following requirements:
- The internships must be study/curriculum-related and be arranged 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.
It is common practice to pay interns only a monthly basis.
Employers cannot hire a person less than 18 years of age as an employee in Hong Kong. However, children and young people aged 13– 17 years may be employed in some work conditions. Employers must abide by the restrictions on the type of work people of this age group can do. Hong Kong does not have a mandatory retirement age.
The workforce here comprises individuals from diverse backgrounds. Employment law in Hong Kong rejects discrimination on the base of gender, ethnicity, or age. Employers must follow the guidelines issued by the Labor Department in order to prevent discrimination in the workplace.
- The government has laid down specific selection criteria for recruitment, training, promotion, dismissal, or transfer. Employers must abide by the rules related to the conditions of employment.
- An employer cannot discriminate with an employee on the basis of gender, religion, age, or disability. Promotions should be allowed depending on the employee’s performance.
- An employer must ensure compliance with the employment rules while hiring employees in Hong Kong. In fact, recruitment staff must be trained to abide by the law and avoid discriminatory practices.
- No recruitment advertising materials should list such attributes as gender, age, race, ethnicity, marital status, language, or religion. Selections must be made based on skills, experience, and qualifications.
Mandatory Provident Fund (MPF)
All employees must contribute 5% of the monthly cash income to the provident fund. However, the scheme is not mandatory for some employees, including:
- Foreigners working in Hong Kong for less than 13 months
- Foreign workers covered by overseas retirement schemes
- Self-employed hawkers
- Domestic employees
- Employees covered by statutory pension
- Workers covered under provident fund schemes
- Members of occupational retirement schemes with MPF exemption certificate
- Employees making an income of HK $30,000 a month must contribute not more than HK $1,500
- Employees making a monthly income below HK $7,000 are not required to contribute to the scheme. However, the employer must do so
There is a separate scale of contribution for casual employees that work on daily wages.
All in all, employers are responsible to provide for monthly pay records to all employees within a week after making mandatory contributions.