Hong Kong Employee Benefits

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What are the Employee Benefits in Hong Kong?

Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Hong Kong might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labor contracts for employees in Hong Kong including local benefits. 

When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Hong Kong, benefits are mainly guaranteed by labor law and national legislation but may also include the influence of trade unions. 

Our guide will explain what benefits and employee compensation are guaranteed, and what can be modified, for any employer who wishes to expand their business into Asia.

What Hong Kong Compensation Laws Exist?

In Hong Kong, compensation is regulated by The Employment Ordinance, and depends on the employee’s contract category. A continuous contract entitles an employee to more benefits, whereas an employment contract only guarantees basic protection (medical insurance, pension scheme payments, public holiday pay, overtime), and is valid for a shorter period of time.

Once an employee has worked for more than 4 weeks, they are considered to be in the continuous contract category and are subject to different compensation laws.

Employee compensation is due at the end of the last day of the wage period – and employees must be paid before or on the due date, or no later than 7 days afterward.

Also, is it best practice for employers to provide a 13th month salary payment as an end of year or Lunar New Year bonus payment. Other bonuses, commissions, awards, and other compensation can be included by employers in the employment contracts.

It is also important to note that there is no law in the Employment Ordinance that prescribes the maximum number of working hours in a workday, or the length of a work week – this is based on an agreement between the employer and employee. This is also the case for overtime payments.

Common practice, however, is 5 days a week of work, between 40-50 hours.

There are other benefits/compensation that are guaranteed by national legislation:

  • National Minimum Wage: All employees must be paid at least the National Minimum Wage amount for their work, which currently stands at HK$37.50 an hour – the wage amount will vary according to the employee’s experience, qualifications, and sector.

  • Rest Days: Even though there is no law for a standard work week, there is a law that employees must have at least one rest day in a seven-day period. In cases where the employee will need to be called in, the rest day will be granted after the work is done, and the work will be compensated.

  • Social Insurance Contributions: There is only one social security contribution that must be paid by both employers and employees – a pension scheme known as a Mandatory Provident Fund.

  • Redundancy, Termination and Severance: For termination, it is common practice for the employer or the employee to send in a one month’s notice. In the case of the employer enabling the termination contract, employees are entitled to a severance payment.

    There are two kinds of severance payments – a severance payment, and a long service severance payment. However, both types only apply if a certain amount of time has passed. Employees are entitled to a severance payment after 24 months of work and are entitled to a long service payment after at least 5 years of work.

    Other factors for eligibility include:

    - Severance – the employee is dismissed due to redundancy, employment contract expires without being called for renewal either employer or employee, or the employee is laid off.

    - Long Service – the employee is dismissed for reasons other than serious misconduct or redundancy, employment contract expires without being called for renewal either employer or employee, the employee dies, the employee resigns due to ill health, or the employee resigns due to old age.

  • Sick Leave: Employees in Hong are entitled to both sick days, as well as a bonus sickness allowance (eligible under certain conditions). The amount of paid sick leave days an employee is entitled starts at 2 days for the first month of employment, and progressively increases according to the length of employment.

    The sickness allowance is granted according to an employees’ eligibility under certain conditions and must be compensated no later than the employee’s pay day.

  • Holiday/Vacation Leave: Employees are granted 12 days of statutory holidays with full day pay, as well as paid annual leave. Annual leave starts at 7 days for the first year and increases progressively.

  • Maternity/Paternity Leave: Female employees are entitled to a continuous period of 14 weeks of maternity leave, which also applies to miscarriages occurring at or before 24 weeks of pregnancy.

    Employees on maternity leave are also entitled to maternity leave pay which amounts to about 80% of the average daily wages earned by the employee in the last 12 months. The 4 extra weeks of maternity leave (which were added from 10 weeks in late 2020) will be paid at the same rate as maternity leave but will be reimbursed by the government in an administrative scheme.

    Paternity Leave is also granted to male employees for 5 days and is paid at the same rate as maternity leave – 80% of the average daily wages of the employee.

Social Security in Hong Kong

In Hong Kong, the only social security contributions that both the employer and employee must pay monthly are pension schemes, which is known as the Mandatory Provident Fund. The employer must withhold 5% of the employee’s wages, as well as make their own contributions of 5% of the employee’s wages, which is to be paid directly to the appropriate pension fund.

Employers are in charge of setting up funds for themselves and their employees to contribute to. Employees automatically join your company’s scheme after 60 days of work.

Contributors & Mandatory Provident Fund Percentages (%)

  • Employee - 5%
  • Employer - 5%

Statutory Costs in Hong Kong

Most benefits and compensation depend on the type of contract an employee has – an employment contract only covers basic protection, whereas a continuous contract includes additional benefits and is subject to different compensation laws. Most employee benefits (besides pensions, holiday pay, and medical insurance) are only applicable if the employee is listed under a continuous contract.

Statutory costs concerning employment in Hong Kong include:

  • the minimum wage requirements
  • the Mandatory Provident Fund payments 
  • Income Tax 

However, in case of employee benefits, it is common practice to add an additional 20% on top of an employee’s gross salary.

What Benefits Are Guaranteed in the Hong Kong?

Healthcare: All employees have access to a public healthcare system in Hong Kong and there are no pay deductions.

Public Holidays: There are 12 statutory public holidays in Hong Kong, which are all guaranteed to employees at full pay.

Vacation Leave: Annual leave is guaranteed to their employees after working for a year at a company. Paid annual leave begins at 7 days and increases progressively.

Maternity and Paternity Leave & Pay: Both maternity and paternity leave and pay are guaranteed to employees that have worked with the employer under a continuous employment contract for over 40 weeks.

Sick Leave: Paid sick leave is also a guaranteed benefit for employees in Hong Kong under a continuous employment contract, and if certain conditions are met, may also benefit from a sickness allowance.

Rest Days: Rest Days are guaranteed by law, and compensation for work on rest days (if needed), is also guaranteed.

What Restrictions Exist for Benefits and Compensation in Hong Kong?

Most benefits and compensation depend on the type of contract an employee has – an employment contract only covers basic protection, whereas a continuous contract includes additional benefits and is subject to different compensation laws. Most employee benefits (besides pensions, holiday pay, and medical insurance) are only applicable if the employee is listed under a continuous contract.

Mandatory Provident Fund: Fund payments (for both the employer and employer) must be at least HK$7,100 per month and cannot exceed HK$30,000 a month.

Sickness Allowance: Sickness Allowance is only granted if the employee has been on leave for no less than 4 consecutive days, and if sick leave is supported with a medical certificate.

Severance and Long Service Severance Payments: Eligibility for these payments depend on the length of an employee’s service. For severance payments, it is 24 months, and for long service payments, they must have worked in a company for at least 5 years.

Maternity and Paternity Leave: Are both granted after at least 40 weeks of service before the leave dates.

Health Insurance and other Benefits in Hong Kong

All employees in Hong Kong are entitled to health insurance – public healthcare in Hong Kong is delivered through a universal system which entitles citizens to free or low-cost healthcare which is funded by the government.

However, private health insurance options are also available and can be acquired on the employee’s or company’s initiative.

Company benefits, however, may vary according to the industry and sector, but can normally include private healthcare, and life insurance.

Contact us to see how we can benefit your plans in Hong Kong

Employment law in Hong Kong can be complicated – The Employment Ordinance is the guiding legislation relating to employment and labor issues but does not apply for every employment relationship – which only adds to the hurdles of business expansion and establishment.

Employment compensation, benefits, social security contributions, and health insurance must be attended to swiftly and efficiently to ensure a smooth transition of your new venture into Hong Kong. Get ahead of these issues by working with Bradford Jacobs’ Employer of Record (EOR) services. Contact us today to see how we can benefit your plans in Hong Kong!