How to Hire Remote Employees In

Hong Kong

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The Basics

Currency
Hong Kong Dollar (HKD)
Employer Taxes
5.00%
Payroll Frequency
Monthly
Official Language
Chinese, English
OVERVIEW

Employment in

Hong Kong

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors

  • Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
  • Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
  • Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.

Disadvantages of Hiring Independent Contractors

  • Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
  • Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
  • Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
  • Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.
EMPLOYMENT IN
Hong Kong

Set up a subsidiary in

Hong Kong

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Hong Kong can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Hong Kong, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Hong Kong.

EMPLOYMENT IN
Hong Kong

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Hire with Panther

Paying Remote Employees

Paying employees in Hong Kong is not the same as paying workers in your own country. Employees have to be paid using Hungary’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Hong Kong

 Specific Information

Working Hours

There are generally no restrictions on working hours, except in relation to young persons (under 18 years of age) for whom the maximum working period is usually eight hours per day or 48 hours per week.

Rest Day: An employee employed under a continuous contract is entitled to no less than one rest day in every period of seven days. Whether rest day is paid or not is to be agreed by employers and employees. In general, the rest day is paid in Hong Kong.

There are no special restrictions applicable to the working hours or rest breaks for shift workers.

All employees covered by the Employment Ordinance, irrespective of their hours of work, are entitled to basic protections under the Ordinance. Employees who are employed under a continuous contract by the same employer for four weeks or more, with at least 18 hours worked in each week are further entitled to additional benefits.

Overtime

Optional (as long as minimum wages are respected overall).

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Taxes

Payroll Tax

Employer

5.00% - Employer Contributions
- Employer Contributions

Minimum Wage

The minimum wage is HK$37.50 hourly.

Payroll

Pay Cycle

Employees are paid on monthly basis. The wages must be no later than 7 days after they are due. The due date is decided between the employer and the employee.

13th Salary

End of year payment (including double pay, 13th-month payment, bonus) of a contractual nature. It applies to an employee employed under a continuous contract in accordance with a term of his contract (including agreement made orally or in writing, in express or implied term). It does not include any payment which is of a gratuitous nature or which is payable at the discretion of the employer.

Leave

Paid Time Off (PTO)

An employee is entitled to annual leave with pay after having been employed under a continuous contract for every 12 months. Annual leave entitlement increases progressively from 7 days to a maximum of 14 days according to years of service:

  • 1 year – 7 days
  • 2 years – 7 days
  • 3 years – 8 days
  • 4 years – 9 days
  • 5 years – 10 days
  • 6 years – 11 days
  • 7 years – 12 days
  • 8 years – 13 days
  • 9+ years – 14 days

Public Holidays

All employees are entitled to statutory holidays. Most employers however extend entitlement to all general holidays. There are 12 statutory holidays and 5 general holidays.

Sick Days

  • All employees are entitled to statutory holidays. Most employers however extend entitlement to all general holidays. There are 12 statutory holidays and 5 general holidays.
  • Accumulation of paid sickness days. An employee can accumulate paid sickness days after having been employed under a continuous contract. Paid sickness days are accumulated at the rate of two paid sickness days for each completed month during the first 12 months, and four paid sickness days for each completed month thereafter.

    Paid sickness days can be accumulated throughout the whole employment period but shall not exceed 120 days at any one time
  • Sickness allowance. The daily rate of sickness allowance is a sum equivalent to 4/5 (80%) of the average daily wages earned by an employee in the 12-month period preceding the sickness day.

Maternity Leave

Length

14 weeks and can begin at any time between two and four weeks before the expected date of birth of the child.

Payment by employer

The employee is eligible for maternity leave pay if she has been employed under a continuous contract for not less than 40 weeks immediately before the commencement of scheduled maternity leave.

The daily rate of maternity leave pay is a sum equivalent to 4/5 (80%) of the average daily wages earned by an employee in the 12-month period preceding the first day of maternity leave.

Paternity Leave

Length

Male employees are entitled to 5 days’ paternity leave.

Payment by employer

The employee is eligible for paternity leave pay if he has been employed under a continuous contract for not less than 40 weeks immediately before the day of paternity leave.

Payment by employer

The daily rate of paternity leave pay is a sum equivalent to 4/5 (80%) of the average daily wages earned by an employee in the 12-month period preceding the day of paternity leave.

Parental Leave

No statutory laws or regulations.

Other Leave

None.

Marriage Leave

None.

Bereavement Leave

None.

Termination

Termination Process

A contract of employment may be terminated by the employer or employee by giving the other party due notice or payment in lieu of notice.

Statutory restrictions on termination

An employer shall not dismiss an employee under the following circumstances:

  • Maternity protection
  • Paid sick leave
  • Giving evidence or information to the authorities
  • Trade Union activities
  • Employment protection

An employee may claim for remedies against an employer under the following situations:

  • Unreasonable dismissal
  • Unreasonable variation of the terms of the employment contract
  • Unreasonable and unlawful dismissal

Notice Period

During Probation Period

1. Within first month: not required
2. After the first month where a contract makes provision for the required length of notice: as per the agreement
3. After the first month where the contract doesn’t make provision: not less than 7 days notice

For continuous contract / After probation period

1.Where contract makes provision: as per the agreement, no less than 7 days.
2.Where the contract doesn’t make provision: not less than 1 month.

Severance Pay

An employee is eligible for severance payment or long service payment subject to the following conditions:

Severance Payment
Qualifying Period:
not less than 24 months under a continuous payment


Requirements:
a.) employee is dismissed by reason of redundancy
b) contract expires without being renewed by reason of redundancy
c) The employee is laid off

Long Service Payment
Qualifying Period:
not less than 5 years under a continuous contract

Requirements:
a) employee is dismissed but not due to serious misconduct
b) dismissal is not due to the reason of redundancy
c) employment contract expired without being renewed
d) employee dies
e) employee reigns on ill-health
f) employee resigns on grounds of old age

An employee will not be simultaneously entitled to both long service payment and severance payment.

Amount of payment

(last month wages* x 2/3)# x reckonable years of services
* An employee may also elect to use his average wages in the 12 months immediately preceding the termination of the employment contract
# The sum should not exceed 2/3 of HK$ 22,500 (i.e. HK$ 15,000)

Maximum Amount
The maximum amount of severance payment or long service payment is HK$ 390,000.

Probation Period

None.