Hire Employees in Hong Kong

Your own entity is a private limited company, registrable in days with no meaningful capital requirement and no restriction on foreign ownership. For a team of any permanence it is usually the right answer.

An Employer of Record inverts the sequence: the Hong Kong entity signs the contract, enrols the employee in an MPF scheme, files the IR56 series and manages the departure clearance process, while you direct the day-to-day work.

The EOR case here is narrower than in most markets and worth stating honestly: speed for a single hire, and risk transfer during a market test. It is not a cost argument, because employer cost is already low.

Hong Kong is the lowest-friction market in this guide to incorporate in, so the EOR case is narrower than usual and worth stating plainly. A private limited company can be registered in days, there is no meaningful capital requirement, and employer cost is 5% of relevant income capped at HK$1,500 a month. For a team of any permanence, your own entity is usually the right answer.

Where an EOR earns its place is speed for a single hire, and risk transfer during a market test. It also removes the two administrative traps that catch new employers: MPF enrolment within 60 days of the start date, backdated to day one, and the IR56G clearance obligation on departure.

That second point deserves emphasis because it is a cash-flow issue, not a filing one. Before an employee leaves Hong Kong, the employer must file IR56G and then withhold all final payments, salary, accrued leave, severance, until the Inland Revenue Department issues clearance. Releasing the money first makes the employer liable for the employee's unpaid tax.

The change most likely to be missed is the abolition of MPF offsetting on 1 May 2025. Employers could previously draw down accrued MPF to fund severance and long service payments. That mechanism is gone for service after that date, so those liabilities now need funding in cash. Models built before 2025 understate exit cost materially.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a small Hong Kong entity somewhere between 15 and 20 employees. Model both before committing, see EOR vs Entity for the full comparison, and plan any later migration so employees keep seniority.

Mandatory employer cost is 5% of relevant income capped at HK$1,500 a month, which on a professional salary is under 2%. The relevant income cap is HK$30,000 a month and the minimum level is HK$7,100, below which the employee contributes nothing but the employer still does.

There is no social security beyond MPF, no payroll tax and no employer health levy. Medical cover is market-expected rather than statutory, and for professional roles it is effectively required to compete.

The change that reshapes exit cost is the abolition of MPF offsetting on 1 May 2025. Employers could previously draw down accrued MPF to fund severance and long service payments. For service after that date the mechanism is gone, so those liabilities need funding in cash. Any model built before 2025 understates the exit position and the gap widens each year.

The single biggest change to Hong Kong employer cost in a generation landed on 1 May 2025. Until then, employers could use the accrued benefits of their mandatory MPF contributions to offset statutory severance and long service payments. That offsetting arrangement is abolished for service from that date, so termination liabilities now have to be provisioned in cash rather than assumed covered by the MPF pot. It is not retrospective, service before 1 May 2025 can still be offset, and employer voluntary contributions and service-based gratuities can offset both periods, which means long-serving staff need a split calculation across two wage bases. A government subsidy scheme shares the added cost with employers over 25 years. Note also that the 5% employer contribution applies below the HKD 7,100 floor even though the employee’s does not, and that the MPFA is consulting on lifting the ceiling to HKD 40,000, which would be the first move in over a decade.

Four representative profiles, costed with the 2026 contribution rates above. Salaries are illustrative market midpoints, not GX operating data, use them to see how the on-cost percentage behaves as pay rises, not as a salary benchmark for a specific role. For real market data on your roles, ask for a costing.

Because the main charges are capped, the on-cost percentage falls sharply above the ceiling. Model a senior hire explicitly rather than scaling the junior figure, the error runs in your favour but it distorts the comparison against uncapped markets.

Four representative profiles costed on 2026 statutory rates. Salaries are illustrative market midpoints, not GX operating data.

Payroll runs monthly in Hong Kong dollars. There is no PAYE, the employee is assessed directly and settles with the Inland Revenue Department, so the employer withholds nothing for tax in the ordinary course.

The employer’s tax duties are reporting rather than deduction: the IR56B annual return, IR56E on commencement, IR56F on cessation and IR56G where the employee is leaving Hong Kong.

Salaries tax is charged at the lower of progressive rates to 17% on net chargeable income or a standard rate on net income, with a two-tiered standard rate from 2024/25. A thirteenth month is common contractual practice, particularly around Lunar New Year, and is taxable when paid.

Thresholds and ceilings are uprated periodically, so a figure correct in January may not hold later in the year. Where a row below is flagged, published sources disagreed and the conflict is recorded rather than resolved.

Thresholds move on a local cycle that does not always fall in January, so a figure correct at the start of the year may not hold through it. Where a row below carries a flag, published sources disagreed and the conflict is recorded rather than resolved, there are 2 such rows on this page.

The sections that follow set out contracts and probation, working time, leave, termination and immigration in that order. Where an entitlement comes from a collective agreement rather than statute it is marked as such, because that distinction determines whether it is negotiable.

A written contract is not mandatory but written particulars are, and the Employment Ordinance applies to almost all employees regardless of income.

The continuous contract test is the one to understand. An employee working 18 hours or more a week for four consecutive weeks or more is on a continuous contract, which unlocks rest days, paid annual leave, sickness allowance, severance and long service payment. Structuring below that threshold to avoid the entitlements is closely scrutinised.

Probation is contractual, commonly three months. During the first month of probation either party may terminate without notice; thereafter seven days’ notice applies unless the contract provides more.

There is no statutory maximum working week and no statutory overtime premium, unusual for a developed market. Rest days are one in every seven. Overtime pay, where it exists, is entirely contractual, which makes the written terms more important than the statute.

Overtime is where payroll disputes usually start. Record hours from day one even where the role is salaried and the expectation is that overtime will not arise, reconstructing records after a complaint is far harder than keeping them.

Overtime is where payroll disputes usually begin, and the burden of proving hours worked generally sits with the employer. Record hours from the first day even for salaried roles where overtime is not expected, reconstructing a record after a complaint is considerably harder than keeping one.

Public holidays sit on top of the annual leave entitlement. Where a holiday falls at a weekend, practice varies, some markets move it, some grant a substitute day and some do neither, so check the position before assuming a day in lieu.

The 17 dates below are the statutory position. Employers in many markets grant more by policy or collective agreement, and sector agreements sometimes add local or patronal days that do not appear in a national list.

Hong Kong observes 17 paid public holidays in 2026. Dates that fall at a weekend and any substitution rules are set out below; entitlement is separate from annual leave.

Maternity: 14 weeks. Four fifths of average daily wages; the employer pays and can reclaim the portion above 10 weeks from the government. Paternity: 5 days. Four fifths of average daily wages, employer-paid. Sickness allowance: After accumulating paid sickness days. Four fifths of average daily wages, for absences of four or more consecutive days with a medical certificate. Statutory holidays: Paid after 3 months of continuous service. Full pay.

The question that matters for budgeting is who funds each entitlement. Where the state or a social insurance fund pays, the employer carries administration but not cost; where the employer pays, it is a direct charge that headcount models routinely omit. Both patterns appear above.

Hong Kong permits termination on notice without cause, which makes it unusually flexible, but two obligations survive that flexibility and both are cash items.

Long service payment and severance payment are now unfunded. Until 1 May 2025 employers could offset these against accrued MPF contributions. That mechanism was abolished for service after that date, so an employee with five years of service accruing from 2025 generates a liability that must be met in cash. Employers who modelled exit cost on the old offsetting arrangement are understating it.

Severance is payable on redundancy after two years of service; long service payment applies on other qualifying terminations after five. Both are calculated at two thirds of the last month's wages per year of service, capped, and the two are mutually exclusive.

The procedural trap is IR56G. For a departing employee leaving Hong Kong, the employer files IR56G one month before departure and must then withhold all final payments until the Inland Revenue Department gives clearance. Paying out first transfers the employee's tax liability to the employer.

A foreign national needs an employment visa, and the General Employment Policy requires the employer to show the role cannot readily be filled locally, that the candidate has relevant qualifications, and that the package is at market level.

Allow four to eight weeks. The Top Talent Pass and the Quality Migrant Admission Scheme offer routes that do not require a job offer first, and the Admission Scheme for Mainland Talents and Professionals applies to mainland Chinese candidates under separate criteria.

Dependants may accompany the principal and are generally free to work, which is a meaningful advantage over several regional alternatives when recruiting senior candidates with families.

Hong Kong is administratively light but unforgiving on timing. MPF enrolment must complete within 60 days of the start date and is backdated to day one, with a 5% surcharge on contributions paid late.

The IR56G obligation is a cash-flow trap rather than a filing one. For an employee leaving Hong Kong the employer files one month before departure and must then withhold all final payments, salary, accrued leave, severance, until the Inland Revenue Department issues clearance. Paying out first transfers the employee’s tax liability to the employer.

The substantive risk is the 2025 MPF change. Any severance or long service provision built on offsetting is now wrong, and the shortfall compounds with each year of post-2025 service.

Work backwards from the start date. For someone with the right to work, a week is realistic. An employment visa under the General Employment Policy adds four to eight weeks and is sponsored by the employer.

Confirm before making an offer: whether the candidate has the right to work or needs sponsorship; whether the role meets the GEP requirement that it cannot readily be filled locally; and whether the package structure sits sensibly against the HK$30,000 MPF relevant income cap, above which employer cost stops rising.

Enrol in an MPF scheme within 60 days. There is no PAYE in Hong Kong, the employee settles tax directly, so the employer's tax duties are the IR56 reporting cycle rather than monthly withholding.