Hiring guide in Hong Kong

Legal framework

Types of employment contracts

In Hong Kong, employment contracts are classified into two main types under the Employment Ordinance: continuous employment contracts and non-continuous employment contracts, rather than “indefinite” or “definite” terms as seen in other jurisdictions. All contracts must comply with the Ordinance, and any clauses attempting to diminish statutory rights are unenforceable.

Continuous employment contracts are characterised by regular work arrangements where the employee has worked for the same employer for at least four weeks, with a minimum of 18 hours per week. These contracts provide employees with extensive statutory benefits, such as rest days, paid annual leave, sickness allowances, and severance payments. If a contract does not specify a time frame, it is deemed a month-to-month contract that renews automatically under the same conditions. In disputes over whether a contract qualifies as continuous, the employer bears the burden of proof to demonstrate otherwise.

Non-continuous contracts, by contrast, apply to arrangements that do not meet the minimum thresholds of continuous employment. As a result, employees under these contracts may not be entitled to the same range of statutory protections.

Understanding these distinctions is essential to ensure compliance with Hong Kong’s employment laws and to uphold the rights and protections of employees.

Content of an employment contract

An employment contract in Hong Kong must clearly outline essential terms before an employee begins work. These include details about wages, such as the wage rate, overtime compensation, and any additional allowances. Employers can decide on salary calculations based on criteria such as hours worked, tasks completed, or other relevant factors. The contract should also specify the wage period, defining how frequently wages will be paid.

The contract must also address employee benefits, including holiday pay, annual leave, sickness allowances, and maternity or paternity leave, which are determined in accordance with the agreed wage structure. Ensuring these elements are clearly defined helps both employers and employees meet their legal obligations and expectations.

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Oral, written or electronic employment contracts

In Hong Kong, employment contracts can be oral, written, or electronic, and employees’ rights and benefits are protected under the Employment Ordinance regardless of the format. However, written contracts are strongly recommended as they provide a clear record of agreed terms, helping to prevent disputes. Contracts can include both explicitly stated terms and those implicitly understood, ensuring clarity on the rights and responsibilities of both parties. Employers must ensure any changes to the terms of employment are communicated clearly, with written documentation provided if requested by the employee.

If the employment contract is written, employers are required to give the employee a copy for retention. For verbal agreements, employees can request written details of the contract before starting employment. Any revisions to the contract, whether made at the employer’s initiative or at the employee’s request, must also be documented and shared. Maintaining transparency through clear communication of contract terms fosters a positive and trustful work relationship while reducing the risk of legal disputes.

Employers are also obligated to maintain detailed employment records, including key information such as the employee’s personal details, employment commencement date, year-end payments, and notice periods for termination. These records ensure compliance with labour laws and provide a framework for resolving potential conflicts.

Probationary period

The probationary period in Hong Kong typically lasts between one and three months, with the possibility of extending up to six months, depending on the employer’s policies and the nature of the role. It serves as a trial phase for both parties, allowing employers to evaluate an employee’s performance and integration within the company while giving employees a chance to assess their role’s suitability for their career goals and personal needs. This period is a standard feature in employment contracts and must comply with statutory requirements to ensure fairness and legal adherence.

During probation, either party may terminate the employment without notice within the first month. After the initial month, a minimum notice period of seven days is required. Employers commonly assess performance using criteria such as work standards, adherence to company policies, and teamwork. Regular feedback sessions are recommended to review progress, highlight strengths, and address areas for improvement.

Working hours

Hong Kong offers considerable flexibility in determining working hours, as there are no statutory limits for adult employees or mandatory rules for overtime compensation. Standard working hours typically fall between 40 and 48 hours per week, with research indicating an average of 42 hours. Employers and employees can negotiate work schedules and overtime arrangements as part of their employment agreements or company policies, ensuring adaptability to different industries and roles.

The typical working week runs from Monday to Friday, although Saturday work is common in certain businesses. Sunday work, however, remains rare in most sectors.

Breaks and night work

Hong Kong’s labour regulations offer significant flexibility regarding night work for adults, as there is no specific legislation restricting night shifts. This flexibility allows businesses to tailor operations to industry needs while enabling employees to align their schedules with personal and professional commitments. However, arrangements for night and weekend work must be outlined in the employment contract, which serves as the primary governing document for such provisions. Employers and employees are encouraged to engage in open dialogue to establish mutually agreeable terms, ensuring compliance with statutory requirements.

The Employment Ordinance provides specific guidance regarding rest periods and breaks. Employees employed under a continuous contract are entitled to at least one rest day of no less than 24 hours within every seven-day period. Rest days can be regular or irregular, with advance notification required for the former and prior communication (oral or written) for the latter.

While break times are not explicitly legislated for adults, industry practices generally include a one-hour meal break. For minors, the Employment Ordinance imposes stricter requirements. Children under 15 must receive a one-hour rest break after five continuous hours of work, while young persons aged 15 to 18 are entitled to a half-hour break under the same conditions. These provisions aim to safeguard the well-being of younger workers and prevent exploitation.

Annual leave

Under the Employment Ordinance, employees are entitled to paid annual leave after completing one year of continuous employment with the same employer. The entitlement increases progressively based on the employee’s length of service, starting at seven days for one year of service and capping at 14 days after eight years.

Annual Leave Entitlement

• 1 year of service: 7 days of annual leave.
• 8 years or more of service: 14 days of annual leave.

Holidays

Here is a list of statutory holidays observed in Hong Kong:

• 1 January: New Year’s Day
• Lunar New Year: First three days of the Lunar New Year
• Ching Ming Festival: Typically on 4 or 5 April
• Good Friday: The date varies (Friday before Easter Sunday)
• The Day Following Good Friday: The date varies (Saturday after Good Friday)
• Easter Monday: The date varies (Monday after Easter Sunday)
• Labour Day: 1 May
• Buddha’s Birthday: The date varies (8th day of the 4th lunar month)
• Tuen Ng Festival (Dragon Boat Festival): The date varies (5th day of the 5th lunar month)
• Hong Kong Special Administrative Region Establishment Day: 1 July
• The Day Following the Mid-Autumn Festival: The date varies (15th day of the 8th lunar month)
• National Day: 1 October
• Chung Yeung Festival: The date varies (9th day of the 9th lunar month)
• Christmas Day: 25 December
• The First Weekday After Christmas Day: 26 December

Employers are required to observe these statutory holidays, and employees under continuous contracts are entitled to paid leave on these days.

Wages and contributions

Employees in Hong Kong are entitled to receive a salary for their work, with the minimum wage guaranteed by law. The base salary, a fundamental part of the employment contract, is agreed upon by the employer and employee and influenced by the employee’s role, educational background, and industry standards. While bonuses are not mandatory, it is common for employers to offer end-of-year payments, such as a 13th or 14th salary, typically disbursed before the Lunar New Year. 

Employees under continuous contracts are eligible for these bonuses, which, if not defined in the contract, must equal the average monthly salary over the preceding 12 months. Pro-rata bonuses apply to those with at least three months of service in a payment period. Employers failing to comply may face fines of up to HK$50,000 (US$6,386). 

Allowances, such as travel and attendance, are part of wages under the Employment Ordinance, but items like employer-provided goods, retirement contributions, and discretionary bonuses are excluded. Although overtime pay is not legally required, it must be honoured if specified in the employment contract. The hourly minimum wage in Hong Kong is HK$40 (US$5.11), with a monthly threshold of HK$16,300 (US$2,085) for full-time employees. Employers are obligated to maintain records of hours worked for employees earning minimum wage or falling below this threshold. Unlike many countries, employers are not required to withhold income tax; employees are responsible for managing their salaries tax obligations. Adhering to these wage regulations is crucial for employers to avoid penalties and foster a compliant workplace.

To calculate the salary and taxes in Hong Kong, click here. 

Sick leave

Employees in Hong Kong are entitled to accumulate paid sick leave based on their length of service, with entitlements increasing over time and capped at 120 days throughout their employment. During the first 12 months of employment, employees accrue two paid sick days for each completed month, amounting to 24 days by the end of the first year. 

After the initial year, the accumulation rate increases to four paid sick days per month, allowing employees to build their sick leave entitlement more rapidly. To qualify for paid sick leave, employees must have sufficient accrued sick days and provide a valid medical certificate. Generally, sick leave must span at least four consecutive days to be eligible for payment, except in specific circumstances such as pregnancy check-ups, post-confinement treatment, or miscarriage. This framework ensures that employees have adequate support during illness while balancing employer obligations.

Parental and maternity leave

Employees in Hong Kong are entitled to maternity and paternity leave, reflecting a commitment to supporting family responsibilities in the workplace. Female employees are eligible for 14 weeks of maternity leave under the Employment (Amendment) Ordinance 2020, which extended the duration from the previous 10 weeks. 

Maternity leave typically starts two to four weeks before the expected delivery date, or earlier if the childbirth occurs prematurely, and can be extended by up to four additional weeks in cases of childbirth-related illness or disability. Maternity leave pay is calculated at four-fifths of the employee’s average daily wage over the preceding 12 months, with a cap of HK$80,000 for the additional leave between the 11th and 14th weeks. To qualify, employees must have worked under a continuous contract for at least 40 weeks and provide the required documentation to their employer.

Male employees are entitled to five days of paternity leave, which can be taken consecutively or separately within the period from four weeks before the expected delivery date to 14 weeks after the actual birth. To qualify for paternity leave pay, male employees must be continuously employed for at least 40 weeks and provide a birth certificate listing them as the father. Paternity leave pay is also set at four-fifths of the average daily wage over the preceding 12 months.

Termination of the employment relationship

In Hong Kong, an employment contract may be terminated by either the employer or the employee, provided the required notice period is served or a payment in lieu of notice is made to compensate the other party for the unserved notice period. Employers also have the right to dismiss an employee without notice or payment (known as summary dismissal) in cases of serious misconduct, including wilful disobedience of lawful orders, fraud, dishonesty, or habitual neglect of duties. However, summary dismissal is a severe measure that should only be taken for significant infractions and typically requires prior warnings or documented attempts to address the misconduct.

Employees may also terminate their contracts without notice under specific conditions, such as facing physical danger, ill-treatment, or being certified as permanently unfit for their job after at least five years of service. In such cases, maintaining clear records and obtaining appropriate documentation is crucial to justify the decision.

Ordinary dismissal by employer

In Hong Kong, employment termination can occur through notice or immediate dismissal. Termination by notice requires the employer to provide the agreed-upon notice period, during which the employee continues working. If no notice is given, the employer must pay the equivalent wages. Immediate dismissal is allowed for serious misconduct, such as willful disobedience, fraud, or habitual neglect of duties, and also during the first month of a probation period.

There are legal protections against dismissal in specific situations, including:

• Maternity protection: Pregnant employees cannot be dismissed.
• Paid sick leave: Employees on sick leave are protected from dismissal.
• Legal proceedings: Employees cannot be terminated for providing evidence in legal matters.
• Trade union activities: Dismissal for union membership or activities is prohibited.
• Workplace injuries: Employees injured at work cannot be dismissed before compensation is agreed.

Employers who violate these restrictions may face fines of up to HK$100,000.

Notice period and challenging the dismissal

In Hong Kong, the notice period for termination is usually specified in the employment contract. If no notice period is mentioned, the Employment Ordinance provides default periods depending on the employee’s length of service and probation status. During the first month of probation, no notice is required, but after the first month, at least seven days’ notice is needed unless otherwise agreed. After the probation period, if the contract does not specify a notice period, the default is one month.

Both employers and employees can agree on a payment in lieu of notice, calculated based on the employee’s average daily or monthly wages over the last 12 months.

When terminating employment, employees may be entitled to outstanding wages, wages in lieu of notice, unused leave, pro-rata end-of-year payment, severance or long service payments, and any additional contractual payments.

Employees can challenge unfair dismissals by filing claims with the Labour Tribunal within nine months of termination. Possible remedies include reinstatement or re-engagement, which may be ordered even without the employer’s consent in cases of unreasonable dismissal.

Rights and obligations of unemployed individuals

Currently, there is no dedicated unemployment insurance or means-tested unemployment assistance (UA) scheme in Hong Kong. The Comprehensive Social Security Assistance (CSSA) scheme provides financial support to individuals in need, offering cash assistance to those whose household income falls below a certain threshold. To qualify for CSSA, applicants must have lived in Hong Kong for at least one year and meet income and asset requirements. Additionally, they must participate in the Support for Self-reliance Scheme, which encourages job-seeking and self-sufficiency.

Advocates have called for reforms to create a more robust safety net for unemployed individuals, including a contributory unemployment insurance system and a more comprehensive assistance program. During COVID-19, eligibility for CSSA was temporarily relaxed to provide additional support.

If an employer becomes insolvent, employees can claim owed wages, leave pay, and severance through the Protection of Wages on Insolvency Fund (PWIF). To qualify, employees must submit documentation, including contracts and wage receipts, and may need to provide a statutory declaration.

Severance pay

Severance pay financially supports employees dismissed under specific circumstances, such as redundancy or layoffs. Employees who have worked for at least 24 months with a continuous contract are eligible for severance payment if they are laid off, their employment contract is not renewed, or redundancy occurs. Redundancy is defined as the closure of the business, cessation of operations in a specific area, or a reduction in work.

Severance pay is capped at 2/3 of HK$22,500 (US$2,879), with a maximum limit of HK$15,000 (US$1,919). The payment is calculated on a pro-rata basis for incomplete years of service. Any gratuity or contributions from the employer’s Provident Fund (PF) or Mandatory Provident Fund (MPF) schemes can be deducted.

The severance payment must be issued within two months of the notice of claim.

In addition, employees with a minimum of five years of continuous employment may be eligible for long-service payment. This applies if the employee is terminated for reasons other than serious misconduct or redundancy, the employment contract expires and is not renewed, or in other specific cases, such as the employee’s death or permanent unfitness for the job. The long service payment is calculated similarly to severance pay, with a maximum entitlement of HK$390,000 (US$49,908). It must be paid within seven days of termination.

These structured payment policies ensure financial support and fairness during employment transitions.

Probationary period

The probationary period, typically lasting one to three months (up to six months), allows employers to assess an employee’s performance and fit, while the employee evaluates the job. The period must be specified in the contract, including duration, termination conditions, and notice requirements.

During the first month, either party can terminate the contract without notice. After that, a minimum of seven days’ notice is required. Employers assess performance through regular feedback, and termination during probation requires clear documentation. Probation periods are not included in end-of-year payments. The standard duration is one to three months, subject to legal compliance.

Prohibition of competition

Post-employment restrictive covenants, which limit an employee’s activities after leaving a job, are enforceable only if they protect legitimate business interests and are deemed reasonable. These interests typically include trade secrets, goodwill, and workforce stability.

Courts assess the reasonableness of these clauses by considering the employer’s needs versus the employee’s right to seek employment. Restrictions must be proportionate to the employer’s legitimate interests, such as protecting client relationships or confidential information. Senior employees or those with access to sensitive data may face stricter covenants.

The clarity of the covenant is crucial, and ambiguous terms may lead to unenforceability. Courts may also invalidate overly broad clauses but uphold others.

Remote working policy

As remote and hybrid work arrangements become more common, employers must address key considerations for HR policies, legal compliance, and employee safety.

There is no law requiring employers to mandate remote work; this depends on the employment contract. If the contract allows flexibility, remote work can be implemented, but changes must be agreed upon in writing if the contract doesn’t provide for it.

For remote work from overseas, employers must clarify the work arrangements in the contract, addressing legal, tax, and jurisdictional concerns. Additionally, compliance with local employment laws is necessary, and employers are still responsible for mandatory provident fund (MPF) contributions and other contractual obligations.

Employers must also ensure insurance coverage for workplace accidents during remote work and require employees to report any injuries promptly.

Responsibilities within a remote work arrangement

Responsibilities within a remote work arrangement focus on clear expectations for communication, productivity, and adherence to company policies, ensuring accountability and collaboration despite physical distance.

Employers are not legally obligated to cover remote workers’ expenses like electricity or internet, but they may choose to provide stipends or reimbursements. Any such arrangement should be clearly outlined in employment contracts or remote work policies. Additionally, employers must safeguard data security and confidentiality, particularly in regulated sectors.

To support remote workers, employers should foster a sense of community through team-building activities and ensure mental health resources are available.

Under the Employees’ Compensation Ordinance, employers must maintain valid insurance covering work-related injuries, including those incurred by remote workers. This insurance is mandatory for all employees, whether they are working in Hong Kong or abroad. The Ordinance ensures employees are compensated for injuries sustained during work without needing to prove fault, covering medical expenses, rehabilitation, and lost earnings. Employers are required to report serious accidents within 24 hours, ensuring timely claims processing and investigations.

Health and safety at home

Health and safety at home during remote work arrangements require careful planning and adherence to legal requirements, ensuring both productivity and employee well-being.

Employers should develop clear remote work policies, specifying when and how remote work will be implemented, including break times and work expectations. It’s essential to avoid contacting employees outside working hours to respect their rest. Communication channels should be established for regular check-ins and performance monitoring, focusing on results rather than hours worked.

Employers must provide the necessary equipment, such as computers and software, and offer training to ensure employees use these tools effectively. Security measures, such as anti-virus software and encryption, should be implemented to protect sensitive information.

Employers must comply with Hong Kong laws, including the Employment Ordinance, Occupational Safety and Health Ordinance, and Employees’ Compensation Ordinance, to ensure employee safety and compensation for work-related injuries. Policies should be clear, address role-specific needs, and ensure fairness and transparency in implementation.

Before introducing remote work, employers should consult with employees to address concerns and document any changes in contracts and handbooks to ensure clarity and mutual understanding.

Intellectual property rights

Intellectual property (IP) rights in the workplace are generally governed by the principle that the employer owns any IP created by employees during their employment. This includes inventions, copyrights, and designs. The Patents Ordinance states that inventions made during the execution of an employee’s duties or assigned tasks belong to the employer, fostering innovation while protecting the employer’s interests. If an invention significantly benefits the employer’s business, the employee may receive additional financial compensation.

The Copyright Ordinance similarly assigns ownership of creative works, such as software, written content, and designs, to the employer. If the use of the work exceeds initial expectations, the employee may be entitled to further compensation.

For designs and layout-designs, the employer automatically owns the IP unless otherwise specified in the contract. It is important to have clearly defined contracts to avoid disputes over ownership.

For consultants and contractors, written agreements are essential, as these typically outline IP ownership. Without specific terms, the consultant or contractor retains ownership of the created IP. Both employers and employees should ensure that contracts clearly address IP ownership to safeguard the rights of all parties and encourage collaboration and innovation.

Employee data privacy

The Personal Data (Privacy) Ordinance (PDPO) governs personal data handling in Hong Kong, establishing a framework to protect individuals’ privacy rights. It clearly defines the responsibilities of both data users and data processors.

Data Protection Principles (DPPs) require that personal data be collected fairly, for specific purposes, and not be excessive. Data must be accurate and retained only as long as necessary. It can only be used for its original purpose unless explicit consent is obtained for a new purpose. Data users must take practical steps to safeguard personal data from unauthorised access or misuse and disclose their data policies publicly. Data subjects have the right to access and correct their personal data.

Under the PDPO, data users control personal data handling (e.g., a financial institution collecting data from clients) and must comply with these principles. Data processors, like cloud service providers, process data on behalf of data users but are not directly regulated by the PDPO. However, data users remain liable for ensuring their processors comply with data protection standards. Written contracts are recommended, specifying data protection obligations.Regarding cloud services, the PDPO does not impose specific rules but offers guidance on ensuring compliance. Cloud service providers should disclose where data is stored, subcontracting arrangements, and customise security terms as needed. Data users should have the right to audit data protection practices and verify compliance.

What are the advantages of hiring employees from Hong Kong vs other countries?

Hiring employees from Hong Kong offers several advantages, particularly for businesses looking to expand in Asia or tap into the region’s economic potential. The city serves as a gateway to mainland China and other key Asian markets, providing access to a dynamic, interconnected business environment. Hong Kong boasts a highly educated and skilled workforce, particularly in sectors like finance, technology, and international business. 

Many employees are multilingual and proficient in English, Cantonese, and Mandarin, making communication with international clients and partners easier. The city is known for its business-friendly regulatory environment, low taxes, and minimal bureaucracy, which makes it attractive for companies. 

Additionally, Hong Kong’s strong financial sector and legal framework, based on common law, offer a solid foundation for employment contracts. The government’s pro-business policies foster entrepreneurship and innovation, while its cultural and economic ties with China serve as a valuable bridge for companies looking to engage with the Chinese market. The work culture in Hong Kong is highly productive and efficient, contributing to strong performance. Furthermore, the city’s competitive tax regime, modern infrastructure, and excellent connectivity make it an appealing location for businesses to hire local talent.

Why use Native Teams for hiring in Hong Kong?

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• Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
• Local support: We can assist you in understanding and complying with the relevant local laws.

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