Hong Kong Employer Compliance Hub: Employment Regulations & Payroll & Tax
Key Law Terms Overview in Hong Kong
Employment Ordinance (Cap. 57) – Key Employment Standards
Part I – Preliminary
Section 1 – Short title
“This Ordinance may be cited as the Employment Ordinance.”
Section 2 – Interpretation (Wages)
“ ‘Wages’ means all remuneration, earnings, allowances, commissions, bonuses, overtime pay, tips and service charges, however designated or calculated, payable to an employee in respect of work done.”
Section 2 – Interpretation (Wage Period)
“ ‘Wage period’ means the period in respect of which wages are payable.”
Section 2 – Interpretation (Month)
“ ‘Month’ means a calendar month.”
Part II – Contracts of Employment
Section 3 – Presumption of Employment
“A person shall be presumed to be an employee unless the contrary is proved.”
Section 6 – Form of Contract
“A contract of employment may be made orally or in writing and may be express or implied.”
Section 7 – Termination by Notice
“Either party may terminate the contract by giving notice or by payment in lieu of notice.”
Section 8 – Minimum Notice Period
“The minimum notice period shall be not less than that prescribed under this Ordinance.”
Section 9 – Summary Dismissal
“An employer may summarily dismiss an employee without notice if the employee wilfully disobeys lawful orders, is guilty of misconduct, fraud or dishonesty, or habitually neglects duties.”
Section 10 – Wages in Lieu of Notice
“Payment in lieu of notice shall be calculated on the basis of wages.”
Section 11 – Restriction on Termination
“No employer shall terminate a contract of employment except in accordance with this Ordinance.”
Part III – Wages
Section 22 – Wage Period
“The wage period shall not exceed one month.”
Section 23 – Time of Payment
“Wages shall be paid not later than 7 days after the end of the wage period.”
Section 24 – Failure to Pay Wages
“An employer who fails to pay wages in accordance with section 23 commits an offence.”
Section 25 – Wages on Termination
“All wages and other sums due shall be paid not later than 7 days after termination.”
Section 26 – Wage Records
“Every employer shall keep a record of wages, employment history and other prescribed particulars.”
Section 27 – Inspection of Records
“Wage records shall be produced for inspection by a labour inspector.”
Section 28 – Retention of Records
“Wage records shall be kept for at least 12 months after termination.”
Part IIIA – Deductions from Wages
Section 32 – General Restriction
“No deduction shall be made from wages except as permitted by this Ordinance.”
Section 32A – Recovery of Overpayment
“An employer may recover overpaid wages subject to prescribed limits.”
Section 32B – Damage or Loss
“Deductions for damage or loss shall not exceed one-quarter of wages payable in one wage period.”
Part IV – Rest Days
Section 17 – Entitlement to Rest Days
“Every employee shall be entitled to at least one rest day in every period of 7 days.”
Section 18 – Granting of Rest Days
“Rest days may be granted regularly or by agreement.”
Section 19 – Substitution of Rest Days
“A rest day may be substituted with the consent of the employee.”
Section 20 – Compulsory Work on Rest Day
“An employee may be required to work on a rest day only in emergency situations.”
Section 21 – Offence
“Failure to grant rest days constitutes an offence.”
Part V – Statutory Holidays
Section 39 – Entitlement
“An employee employed under a continuous contract shall be entitled to statutory holidays.”
Section 40 – Holiday on Rest Day
“If a statutory holiday falls on a rest day, another day shall be granted.”
Section 41 – Holiday Pay
“Holiday pay shall be equivalent to wages for a normal working day.”
Section 41A – Average Daily Wages
“Holiday pay shall be calculated on the basis of average daily wages.”
Section 41C – Holiday Pay on Termination
“Outstanding holiday pay shall be paid upon termination.”
Part VII – Annual Leave with Pay
Section 41AA – Entitlement
“An employee employed under a continuous contract for 12 months shall be entitled to paid annual leave.”
Section 41AB – Leave Entitlement Scale
“Annual leave entitlement increases progressively according to length of service.”
Section 41AC – Granting of Leave
“Annual leave shall be granted within the period specified.”
Section 41B – Continuous Leave
“Annual leave shall be granted in one continuous period unless otherwise agreed.”
Section 41D – Annual Leave Pay on Termination
“Unused annual leave shall be compensated upon termination.”
Part VIIIA – Sickness Allowance
Section 33 – Accumulation of Sickness Days
“An employee shall accumulate paid sickness days during employment.”
Section 34 – Eligibility
“Sickness allowance shall be payable if supported by a medical certificate.”
Section 35 – Time of Payment
“Sickness allowance shall be paid on the normal payday.”
Section 36 – Rate
“Sickness allowance shall be paid at four-fifths of average daily wages.”
Section 37 – Protection from Dismissal
“No employer shall dismiss an employee while on paid sickness leave.”
Part VIIIB – Maternity Protection
Section 12 – Maternity Leave
“A female employee shall be entitled to maternity leave of not less than 14 weeks.”
Section 12AA – Maternity Leave Pay
“Maternity leave pay shall be paid at four-fifths of average daily wages.”
Section 12B – Protection
“No employer shall dismiss a pregnant employee except in prescribed circumstances.”
Part VIIIC – Paternity Leave
Section 15 – Entitlement
“A male employee shall be entitled to paternity leave.”
Section 15A – Paternity Leave Pay
“Paternity leave pay shall be paid at four-fifths of average daily wages.”
Part VIA – Severance Payment
Section 31B – Entitlement
“An employee employed for not less than 24 months and dismissed by reason of redundancy shall be entitled to severance payment.”
Section 31C – Calculation
“Severance payment shall be calculated in accordance with the statutory formula.”
Section 31Q – Time of Payment
“Severance payment shall be paid within the prescribed period.”
Part VIB – Long Service Payment
Section 31R – Entitlement
“An employee employed for not less than 5 years shall be entitled to long service payment.”
Section 31Y – Employer Liability
“The employer shall be liable to make long service payment.”
Part VIVA – Employment Protection
Section 32A – Unreasonable Dismissal
“An employee employed for not less than 24 months may seek remedies for unreasonable dismissal.”
Section 32G – Unreasonable Variation
“Unilateral variation of contract terms may give rise to remedies.”
Section 32K – Remedies
“Remedies include reinstatement, re-engagement or compensation.”
Part IX – Enforcement
Section 63 – General Offences
“An employer who contravenes a provision of this Ordinance commits an offence.”
Section 64 – Liability of Officers
“Directors and officers may be personally liable.”
Section 66 – Powers of Inspectors
“Labour inspectors may enter premises and inspect records.”
Section 68 – False Statements
“Any person who knowingly provides false information commits an offence.”
Section 69 – Obstruction
“Any person who obstructs an inspector commits an offence.”
Official legal source:
https://www.elegislation.gov.hk/hk/cap57
Disclaimer: This content is provided for general informational purposes only and does not constitute legal advice.
Mandatory Provident Fund Ordinance (Cap. 485) – Employer Obligations
Part I – Preliminary
Section 1 – Short title
“This Ordinance may be cited as the Mandatory Provident Fund Schemes Ordinance.”
Section 2 – Interpretation (Employee)
“ ‘Employee’ means a person employed under a contract of employment or apprenticeship.”
Section 2 – Interpretation (Employer)
“ ‘Employer’ means any person who has entered into a contract of employment to employ another person.”
Section 2 – Interpretation (Relevant Income)
“ ‘Relevant income’ means wages, salary, leave pay, fee, commission, bonus or gratuity paid or payable in respect of employment.”
Section 2 – Interpretation (Contribution Period)
“ ‘Contribution period’ means the period in respect of which mandatory contributions are payable.”
Part II – Application of the Ordinance
Section 7 – Persons Covered
“This Ordinance applies to every employee and self-employed person except those exempted.”
Section 8 – Exempt Persons
“Exempt persons include domestic employees, employees covered by statutory pension schemes, and certain overseas employees.”
Section 9 – Overseas Employees
“An overseas employee who enters Hong Kong for employment for not more than 13 months may be exempt.”
Part III – Mandatory Contributions
Section 13 – Employer’s Duty to Contribute
“An employer shall make mandatory contributions for each relevant employee.”
Section 14 – Employee’s Mandatory Contributions
“An employee shall be required to make mandatory contributions from relevant income.”
Section 15 – Calculation of Contributions
“Mandatory contributions shall be calculated as a percentage of relevant income subject to minimum and maximum levels.”
Section 16 – Income Thresholds
“No mandatory contribution is required where relevant income is below the minimum relevant income level.”
Section 17 – Maximum Relevant Income
“Mandatory contributions shall not exceed the prescribed maximum relevant income level.”
Part IV – Payment of Contributions
Section 18 – Time for Payment
“Mandatory contributions shall be paid not later than the 10th day after the contribution period.”
Section 19 – First Contributions
“An employer shall make the first mandatory contribution within the prescribed time after employment commences.”
Section 20 – Remittance Statements
“An employer shall provide a remittance statement together with the payment of contributions.”
Section 21 – Records
“An employer shall keep records of relevant income and contributions for each employee.”
Section 22 – Inspection of Records
“Records shall be produced for inspection upon request by the Authority.”
Part V – Default & Surcharge
Section 23 – Default in Payment
“An employer who fails to pay mandatory contributions commits a default.”
Section 24 – Surcharge
“A surcharge of 5% of the amount in default shall be imposed.”
Section 25 – Recovery of Contributions
“The Authority may recover unpaid contributions and surcharge as a civil debt.”
Section 26 – Liability of Employer
“An employer remains liable for contributions even if deductions were not made from the employee.”
Part VI – Registered Schemes & Trustees (Employer Interface)
Section 33 – Participation in Registered Scheme
“An employer shall ensure participation in a registered MPF scheme.”
Section 34 – Choice of Scheme
“An employer shall enroll employees in a registered scheme unless exempt.”
Section 35 – Enrollment of Employees
“An employer shall enroll an employee within the prescribed period after employment commences.”
Section 36 – Notice to Employees
“An employer shall provide scheme information to employees.”
Part VII – Vesting & Preservation
Section 37 – Vesting of Contributions
“Mandatory contributions are fully and immediately vested in the employee.”
Section 38 – Preservation Requirement
“MPF benefits shall be preserved until the employee reaches retirement age or meets statutory conditions.”
Part VIII – Termination of Employment
Section 40 – Cessation of Employment
“An employer shall notify the trustee upon termination of employment.”
Section 41 – Final Contributions
“Final mandatory contributions shall be paid within the prescribed time after termination.”
Section 42 – Transfer of Benefits
“MPF benefits shall be transferred in accordance with statutory requirements.”
Part IX – Enforcement & Offences
Section 43 – Offence for Failure to Enroll
“An employer who fails to enroll an employee commits an offence.”
Section 44 – False or Misleading Information
“Any person who provides false or misleading information commits an offence.”
Section 45 – Penalties
“An employer convicted of an offence is liable to a fine or imprisonment.”
Section 46 – Liability of Directors
“Where an offence is committed by a body corporate, directors and officers may be personally liable.”
Part X – Powers of the Authority
Section 47 – Investigation Powers
“The Authority may conduct investigations into compliance.”
Section 48 – Inspection
“The Authority may require production of records and information.”
Section 49 – Prosecution
“The Authority may institute proceedings for offences.”
Part XI – Civil Remedies
Section 50 – Recovery as Civil Debt
“Unpaid contributions and surcharges may be recovered as a civil debt.”
Section 51 – Priority of Claims
“MPF contributions shall have priority in insolvency proceedings.”
Part XII – Miscellaneous
Section 52 – Protection from Contracting Out
“Any agreement purporting to exclude the operation of this Ordinance is void.”
Section 53 – Regulations
“The Chief Executive in Council may make regulations for carrying out this Ordinance.”
Official legal source:
https://www.elegislation.gov.hk/hk/cap485
Disclaimer: This content is provided for general informational purposes only and does not constitute legal advice.
Employees’ Compensation Ordinance (Cap. 282)
The Employees’ Compensation Ordinance (ECO) establishes a statutory, no-fault compensation system for employees who suffer work-related injuries or prescribed occupational diseases in Hong Kong.
Mandatory Employer Liability:
Employers are legally required to compensate employees for injuries, death, or occupational diseases arising out of and in the course of employment, regardless of fault or negligence.Compulsory Insurance Requirement:
Employers must maintain valid employees’ compensation insurance covering all employees. Failure to obtain insurance is a criminal offence, even if no accident has occurred.Scope of Coverage:
Compensation applies to full-time, part-time, and contract employees, including injuries occurring during work duties, business travel, or employer-directed activities.Statutory Compensation Items:
Compensation may include medical expenses, periodical payments for temporary incapacity, lump-sum payments for permanent incapacity, and death benefits payable to dependants.Accident Reporting Obligations:
Employers must notify the Labour Department of work injuries within prescribed time limits, depending on injury severity, and cooperate with investigations if required.Non-Contractable Statutory Rights:
Employee entitlements under the Ordinance are statutory and cannot be waived or reduced by contract or internal policies.Penalties for Non-Compliance:
Employers who fail to insure or comply with compensation obligations may face substantial fines and imprisonment.
Official legal source:
https://www.elegislation.gov.hk/hk/cap282
Inland Revenue Ordinance (Cap. 112) – Employer Tax Responsibilities
The Inland Revenue Ordinance (Cap. 112) governs salaries tax and outlines employers’ reporting and withholding obligations in Hong Kong.
Employer Registration:
Employers must register with the Inland Revenue Department (IRD) and obtain an employer file number before commencing payroll operations.Annual Employer’s Return:
Employers are required to file Employer’s Return of Remuneration and Pensions (Form BIR56A) annually, reporting remuneration paid to employees during the assessment year.Employee Income Reporting:
Employers must submit IR56B forms for existing employees, detailing income, benefits, allowances, and other taxable remuneration.Commencement & Cessation Notifications:
Employers must notify the IRD when an employee commences (IR56E) or ceases employment (IR56F) within the statutory timeframe.Departure from Hong Kong:
Where an employee is about to leave Hong Kong permanently or for an extended period, employers must file IR56G and withhold further payments until tax clearance is obtained.Tax Withholding & Accuracy:
While Hong Kong generally operates under a self-assessment system, employers are responsible for ensuring income information provided to the IRD is accurate and complete.Record Retention:
Payroll and employment income records must be retained for at least 7 years and made available for inspection upon request by the IRD.
Official legal source:
https://www.elegislation.gov.hk/hk/cap112
Disclaimer: This content is provided for general informational purposes only and does not constitute legal advice.
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Regulation Updates in Hong Kong
Discover the latest employment and compliance updates in Hong Kong — helping you stay ahead in a changing regulatory landscape.
Guidance Notes on Prevention of Heat Stroke at Work
What it is: Guidance Notes on Prevention of Heat Stroke at Work update requires employers to manage heat-related risks by conducting heat-risk assessments and arranging hourly rest breaks and other control measures when heat stress conditions apply.
What it changes: The change creates employer obligations to perform heat-risk assessments and to provide hourly rest breaks plus additional control measures during heat stress at work.
Who is affected:
- Employers
- Workers
What employers should do:
- Carry out heat-risk assessments
- Schedule hourly rest breaks
- Implement other control measures as part of heat-stress management
Notes: Effective month: 2026-05. Manual verification recommended.
LCQ5: Enhanced Supplementary Labour Scheme
What it is: This policy update reports that the Labour Department is reviewing the Enhanced Supplementary Labour Scheme (ESLS) covering its coverage, operation and implementation arrangements, with the review to be completed in the first half of 2026.
What it changes: The review may result in changes to labour importation arrangements under the Enhanced Supplementary Labour Scheme.
Who is affected:
- Employers
What employers should do:
- Monitor for updates on ESLS coverage, operation and implementation arrangements during the first half of 2026.
Notes: Effective month: 2026-01. Manual verification recommended.
Employment (Amendment) Ordinance 2025
What it is: Employment (Amendment) Ordinance 2025
What it changes: The Employment (Amendment) Ordinance revises the "continuous contract" requirement under the Employment Ordinance by lowering the weekly-hours threshold to 17 hours and adding an alternative four-week aggregate 68-hour test (the "468 rule"), broadening eligibility for statutory benefits for part-time and irregular-hours workers.
Notes: Effective month: 2026-01. Manual verification recommended.