Employer of Record & PEO in Hong Kong
Hire & manage teams remotely in Hong Kong without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.
How NNRoad Employment & PEO Services Work?
NNRoad provides professional employment organization (PEO) & employer of record (EOR) services for companies looking to hire and manage teams in Hong Kong. Registering a legal entity in Hong Kong as a means for employment is an outdated practice that takes both time (months) and money (thousands of USD). NNRoad’s employer of record and PEO services enables companies to hire and manage employees in Hong Kong in full accordance with local labor laws in under a week.
Employer of Record in Hong Kong
Employer of Record (EOR) services are for companies who do not have a legal entity in Hong Kong, but who want to hire in Hong Kong. Employment and full liability are outsourced to NNRoad.
➊ You interviews & select the candidates you want to hire in Hong Kong.
➋ NNRoad arranges a local labor contract with your new employee.
➌ NNRoad arranges a service contract between your organization & NNRoad.
➍ NNRoad organizes, manages & processes payroll in Hong Kong in full compliance with local employment laws.
➎ You maintain a normal working relationship and manage your team in Hong Kong while NNRoad manages payroll & HR liabilities.
- Acting as Employer of Record for leased employee
- Hiring of and termination of employees/local labor contracts (contract administration)
- On-boarding and off-boarding employees following local law practice
- Complete payroll solution and statutory benefit administration
- Employee management – employee record retaining, time keeping, bonus and allowance management, expense and claims, and leave employee database management accordingly to the local law
- Mandatory social insurance (Mandatory Provided Fund (“MPF”)
- Provide legal support in case of dispute
- Local individual income tax reporting, if needed
Payroll & PEO in Hong Kong
Professional Employment Organization (PEO) services are for companies who have a legal entity in Hong Kong, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.
➊ You interviews & select the candidates you want to hire in Hong Kong.
➋ NNRoad organizes, manages and processes payroll for your local employees in full compliance with local employment laws.
➌ You maintain a normal working relationship and manage your team in Hong Kong while NNRoad manages payroll & HR compliance.
- Registering the necessary company and personnel information for payroll calculation in the payroll software and system
- Raw data collection and cleaning
- Employee data maintenance: time, attendance, sickness, holiday requests and employee job tracking
- Local government bureau payroll registration
- Set up payroll policy, maintenance and update
- Maintain employee record accordingly to the requirements by local government
- Monthly Payroll Processing
- Calculation of gross salary, salary deductions, and net salary based on information provided by the Company including irregular payments such as incentive/bonus, commission, allowance, severance, retirement payment, etc
- Pro-rata calculation for people who join/resign
- Providing a monthly payroll summary to the Company
- Payroll disbursement – Issuing payment notice to the Company for payroll distribution to employees and employee’s expense claim
- Employee’s enrollment to the company’s social insurance and other benefit plans when they join the company
- Employee un-enrollment to the company’s social insurance and other benefit plans when they leave/exit the company
- Process all the required declarations with employment authorities and benefit funds
- Process all mandatory statutory and insurance contributions including but not limited to Mandatory Provident Fund, Employee’s compensation insurance, PI&PL Insurance to appropriate funds or local government authority by due dates
- Year end adjustment and annual declaration
- Adjustment of taxes owed or to be refunded to the employee based on the cumulative income of the employee for the entire year
- Prepare annual payroll related reconciliation report
- Prepare individual income tax reporting, if needed
Advantages of NNRoad's Hong Kong Employment Services
- With EOR/PEO solutions you can manage client meetings, sales, quality control, marketing, R&D and customer support without a local company in Hong Kong.
- Pay as you go
- Dedicated account manager – One point of contact for multiple locations
- Employment & termination processing
- Complete payroll solution and statutory benefit according to local laws
- With EOR/PEO solutions you can hire staff while waiting for the registration of your company in Hong Kong.
- NNRoad only works with professional locally licensed partners
- GDPR compliant
- NNRoad manages employee record timekeeping, bonus and allowance, expenses claims and personal leaves according to local law.
- NNRoad provides foreigner VISA application services, if needed
Employment Compliance in Hong Kong
Taxes & Payroll in Hong Kong
Employee Income Taxes:
Individual income tax rates in Hong Kong are based on progressive tax brackets, with higher earners paying a greater proportion of their income in tax.
There are a number of deductions and allowances that can be used to reduce the amount of income tax payable, including expenses incurred in the course of earning income.
Hong Kong has a territorial taxation system, which means that only income earned in the territory is subject to tax. This means that income earned overseas is not subject to income tax in Hong Kong.
2%: 0 – 50,000 HKD
6%: 50,000 – 100,000 HKD
10%: 100,000 – 150,000 HKD
14%: 150,000 – 200,000 HKD
17%: Over 200,000 HKD
Yearly income = 120,000 HKD
2% * 50,000 = 1,000
6% * 50,000 = 3,000
10% * 20,000 = 2,000
Total = 1,000 + 3,000 + 2,000
Yearly income tax = 6,000 HKD
Employer Costs in Hong Kong
The Mandatory Provident Fund (MPF) is a retirement savings plan that all employees are required to contribute to. Employers also have to make contributions, and the money is then invested for the future.
In Hong Kong, employers are required to contribute a portion of their employees’ salaries to a Mandatory Provident Fund (MPF) scheme. The amount of the contribution is based on a percentage of the employee’s salary, and is capped at HK$1,500 per month.
The MPF scheme was introduced in 1999, and employer contributions have been steadily increasing since then. For example, in 2009, the employer contribution rate was 5%, while in 2019, it was 10%.
Despite the rising costs for employers, the MPF scheme has been generally well-received by businesses and employees alike. It provides a safety net for employees in case of retirement or other financial difficulties, and businesses can deduct the cost of their contributions
Employee MPF (Mandatory Provident Fund): 5% of employee’s gross income calculated on a max of HKD 30,000 per month
Working Hours in Hong Kong
Working Hours per Week
In Hong Kong, the standard work week is limited to 40 hours. However, some positions may be eligible for the comprehensive or flexible work systems, which allow for longer hours. It’s worth noting that normal working hours differ by industry.
According to the Labour Department of Hong Kong, overtime pay is calculated based on an employee’s “standard hours of work”. Standard hours of work are the hours that an employee is contracted to work in a week. For example, if an employee’s standard hours of work are 40 hours per week, then any hours worked beyond those 40 hours would be considered overtime.
Overtime pay in Hong Kong is calculated at 1.5 times the employee’s hourly rate for the first 8 hours of overtime work, and 2 times the employee’s hourly rate for any overtime work beyond 8 hours.
There are a few exceptions to this rule. For example, if an employee works on a public holiday, they are entitled to 2 times their hourly rate for the entire day, regardless of how many hours they actually work.
Benefits & Insurance in Hong Kong
Mandatory Provident Fund
The Mandatory Provident Fund, abbreviated as MPF, is a mandatory savings system (pension fund) for Hong Kong residents’ retirement. According to their income and length of work, most employees and their employers are required to contribute monthly to mandated provident fund plans run by licensed private organizations.
Insurance in Hong Kong
Hong Kong has a well-developed healthcare system and social security network. Healthcare in Hong Kong is primarily delivered through the public hospital system, which is overseen by the Hospital Authority. There are also a number of private hospitals and clinics in operation.
In terms of social security, the government provides a safety net for residents who are unable to work due to illness or injury. The Social Security Allowance is available to those who meet certain eligibility criteria, and it provides financial assistance to help with living expenses.
While the public healthcare system in Hong Kong is comprehensive, it can be expensive for residents who do not have health insurance. For this reason, many people choose to take out private health insurance plans. These plans typically cover things like hospitalization, surgery, and outpatient care.
There are a number of insurance companies operating in Hong Kong, so it is important to shop around and compare plans before making a decision. It is also worth checking to see if your employer offers any health insurance benefits.
In summary, healthcare and social security are both important considerations for residents of Hong Kong. Having health insurance can help to offset the costs of medical care, and being aware of the social safety net can provide peace of mind in case of illness or injury.
Termination Laws in Hong Kong
A contract of employment can be ended for a variety of reasons, including resignation, employer dismissal, constructive dismissal, the end of a defined term, or mutual agreement.
Termination without cause is generally possible in Hong Kong. But there are reasons where it is illegal to terminate the employment contract:
- Maternity protection
- Statutory paid sick leave
- Employee gives information to authorities
- Trade union activities
- Work-related injury
Both the employer and the employee have a seven-day notice period after the first month of work.
In Hong Kong, the law provides for severance pay in cases of employment termination. The amount of severance pay is calculated based on the length of service and salary. For employees with less than 2 years of service, they are entitled to 1 month’s salary. For employees with 2-5 years of service, they are entitled to 2 months’ salary. And for employees with more than 5 years of service, they are entitled to 3 months’ salary. If an employee is terminated without cause, they are also entitled to a notice period and/or payment in lieu of notice, which is calculated based on their length of service.
There are some exceptions to these general rules. For example, if an employee is terminated due to redundancy, they are entitled to a severance payment of 4 weeks’ salary for each year of service. If an employee is terminated due to misconduct, they are not entitled to severance pay.
The law also provides for certain protections for employees who are terminated. For example, an employee cannot be terminated without cause within the first 2 years of employment unless there is a valid reason such as redundancy or Misconduct. After 2 years of employment, an employee can be terminated without cause by giving 1 month’s notice or 1 month’s salary in lieu of notice.
If you have been terminate your employment, you should check your employment contract to see if you are entitled to severance pay and/or notice period and/or payment in lieu
Public Holidays in Hong Kong
Public Holidays in Hong Kong
- New Year’s Day – January 1st
- Lunar New Year – February 1-3
- Ching Ming Festival – April 5th
- Good Friday – April 15-16
- Easter Monday – April 18th
- Labour Day – May 1-2
- Birthday of the Buddha – May 8-9
- Tuen Ng Festival – June 3rd
- Hong Kong Special Administrative Region Establishment Day – July 1st
- Chinese Mid-Autumn Festival – September 11-12
- National Day – October 1st
- Chung Yeung Festival – October 4th
- Christmas Day – December 25-26-27
Paid Leave in Hong Kong
Based on the Employment Ordinance, Cap. 57, employees under a continuous contract with at least one year of service are eligible for up to 14 days of paid annual leave, depending on their length of service. Employers frequently grant expanded contractual leave in addition to the statutory minimum.
Employment Contract in Hong Kong
Although it is not essential in Hong Kong for an employment contract to be in writing, the Labor Department highly encourages it and it is the usual practice. If an employment contract is to be in writing, the employee must be given a copy of the signed employment contract that includes the following information: wages, wage period, the notice period for termination of employment contract, and end-of-year payments, if applicable.
A continuous contract of employment is the normal contract for most employment situations, and it is described as a contract in which the employee works for the same employer for at least 4 weeks and for at least 18 hours each week. Rest days, paid annual leave, sick leave, severance compensation, long service payments, and other benefits are all available to employees.
A probationary period in Hong Kong usually lasts from 1 to 3 months. During the probation period, an employer may limit remuneration by offering a percentage of the normal salary for the position. The pay must not be less than the HK$34.5 per hour minimum wage.
Types of Leaves in Hong Kong
For each completed month in the first 12 months of work, the employee can have 2 days paid sick leave. The daily rate of sickness allowance is equal to 80% of an employee’s average daily salary in the 12-month period prior to the first day of sickness. The calculation is based on the shorter term if an employee has been hired for less than 12 months.
The maternity leave legislation in Hong Kong offer for ten weeks of paid leave if the mother has completed the following:
- Has worked for at least 40 weeks on a continuous contract prior to the planned maternity leave
- Her employer has been notified of her pregnancy and her plan to take maternity leave
- If her work requires it, she has supplied a medical certificate stating the expected date of confinement
Employees must be employed for minimum 40 weeks before having access to paternity leave. The paternity leave consists of 5 days leave paid at 80% of the salary.
Immigration Laws in Hong Kong
The General Employment Policy (GEP) requires most people travelling to Hong Kong for work to apply for a work visa.
Other common visas are:
- Technology talent admission scheme – For professionals in certain technology sectors
- Training – For individuals who are looking to learn a skill
- Quality migrant admission scheme – For expats in certain profession like IT, finance, legal
- Immigration arrangements for non-local graduates – For individuals with a degree from Hong Kong
Employees must submit a statement from you detailing the position when applying for a Hong Kong work visa under the GEP. The application will be evaluated by the Immigration Department for the following reasons:
- A graduate degree
- Necessary professional experience
- Salary and working conditions are equivalent to those in the local area
- Contribution to the local economy
- Inability to find a local to fill the role