Hire employees in Hong Kong using an Employer of Record

Hong Kong's Employment Ordinance gives workers real protections, and it sets hard rules for employers. Wages must be paid no later than seven days after the end of each wage period, statutory holidays and holiday pay must be granted, and employment records must be kept. None of this is optional, and most companies discover it only after they've already made an offer.

Add mandatory MPF (Mandatory Provident Fund) enrollment within 60 days of hire, compulsory employees' compensation insurance before day one, and monthly employer tax filings with the Inland Revenue Department, and a single Hong Kong hire suddenly looks like a compliance project. You have three ways to handle it.

Option 1: Set up your own entity

• Cost: legal, incorporation, and registration costs, plus ongoing accounting and MPF scheme administration
• Timeline: several months once you factor incorporation, tax registration, and setting up payroll and MPF
• Complexity: you own IRD employer filings, 16.5% corporate tax compliance, MPF contributions up to the HK$30,000 monthly wage cap, and employees' compensation insurance
• Makes sense when: you're building a long-term Hong Kong presence with a sizeable team

Option 2: Hire contractors

• Cost: none upfront, but you lose control over how the work gets done
• Timeline: immediate
• Risks: if the relationship looks like employment in substance (control over hours, tools, exclusivity), you're exposed to misclassification claims and back MPF contributions
• Makes sense when: short, well-defined projects or specialized one-off skills
• Note: Hire with Columbus also handles compliant contractor agreements and payments if that's the right fit

Option 3: Use an employer of record (recommended for most)

• Cost: from $179/month per employee (USD)
• Timeline: 2-3 days to hire
• Complexity: none, we handle MPF enrollment, employees' compensation insurance, payroll, and IRD filings
• Makes sense when: you're hiring 1-50 people, testing the Hong Kong market, or building a multi-country team

If you're hiring one to ten people, entity setup, MPF administration, corporate tax filings, and insurance renewals almost always cost more over a few years than an EOR fee. Three hires through Hire with Columbus runs $537/month ($6,444/year), no incorporation, no MPF scheme setup, no employer registration with the IRD. If you're also hiring in other markets, an EOR means you skip standing up a separate entity in each one.

Ready to hire in Hong Kong without setting up an entity first? Get started with Hire with Columbus.

What employment types can you use?

Before you draft an employment contract in Hong Kong, you need to decide: entity, contractor, or EOR. That choice comes first because it determines what kind of contract you're even allowed to write.

Part 1: How can you hire in Hong Kong?

You've got three real paths into the Hong Kong market. Here's how they stack up.

Setting up your own entity means incorporation, legal registration, and building out a payroll and HR system from scratch. You'll also be on the hook for ongoing accounting and compliance, and once the entity is live, Hong Kong's corporate profits tax rate of 16.5% applies to it. This route makes sense when you're committing to a real, permanent presence with a sizeable headcount, not when you're hiring your first one or two people.

Hiring contractors feels fast because it is, you can get someone working this week. The catch is that Hong Kong looks at the actual working relationship, not just the label on the contract, when deciding if someone is really an employee. Factors like control over working hours, who supplies equipment, and whether the person is integrated into your organization all matter. Get the classification wrong and you're exposed to back pay, MPF contributions, and disputes over statutory entitlements the person should have had all along. Contractors also can't be managed the way employees are, you can't dictate their hours or methods without risking that classification. Hire with Columbus handles compliant contractor agreements and payments too, so if a project genuinely calls for contractor status, you're still covered.

Using an EOR means Hire with Columbus becomes the legal employer of record in Hong Kong, handling contracts, MPF enrollment, payroll, and statutory compliance, while you run the day-to-day work. Pricing starts from $179/month per employee, so five employees runs from $895/month, with none of the incorporation or ongoing compliance overhead of the entity route. You can have someone legally employed and paid within 2-3 days instead of months.

Part 2: Employment contract types in Hong Kong

Hong Kong's Employment Ordinance doesn't actually create separate legal categories for "permanent," "temporary," or "part-time" employees. Every employee covered by the Ordinance gets baseline rights like wage protection and statutory holidays, regardless of job title or hours.

What changes their entitlements is whether they're employed under a continuous contract. This is the gateway to rest days, paid annual leave, sickness allowance, and more.

As of 18 January 2026, an employee qualifies for a continuous contract if they work at least 17 hours in each week, or, when a week falls short, at least 68 hours across that week and the three preceding weeks combined. This replaced the older "18 hours a week for four weeks" test, so if you're bringing on part-time staff, check their scheduled hours against this threshold before assuming they're excluded from continuous-contract benefits.

Permanent, open-ended contracts are the default for full-time core roles. Most companies use these because there's no fixed-term conversion risk and they align with how severance, long service payment, and notice rules are structured under the Ordinance.

Fixed-term contracts are legal but come with a wrinkle: if a fixed-term contract expires without renewal, and the reason is redundancy, the employee may still be entitled to severance payment in the same way a dismissed employee would be. A contract that's continuous but doesn't specify a term is treated as renewable month to month.

Part-time employees get the same statutory floor as full-time staff, wage protection, rest days once they qualify as continuous, and coverage under the minimum wage, which sits at HKD 7,469.08 per month (from 1 May 2026) on a full-time equivalent basis. Employers must also track hours worked for lower-paid employees to confirm minimum wage compliance.

Probation periods are set by the contract itself. Within the first month, either side can end things without notice. After the first month, notice follows whatever the contract states, but it can't be less than 7 days if the contract sets a shorter period, or not less than 7 days if the contract is silent.

Whichever contract type fits the role, Hire with Columbus drafts it to match Hong Kong's Employment Ordinance requirements, tracks continuous-contract status automatically, and keeps probation and notice terms compliant so you're not left guessing.

How does payroll and taxation work?

The minimum wage in Hong Kong is HKD 43.1 per hour, which works out to a monthly floor of about HKD 7,469 for a standard schedule. Employer contributions sit on top of that, and Hong Kong's tax system runs differently from most places you've hired before: there's no payroll withholding (PAYE) for salaries tax on ordinary employees. Instead, employees settle their own salaries tax with the Inland Revenue Department, and your job as employer is mostly about filing the right returns and making Mandatory Provident Fund (MPF) contributions on time.

Salaries tax: how it actually works

Hong Kong's salaries tax is progressive, calculated on net chargeable income after allowances:

There's a safety valve: if the progressive ladder produces a bigger bill than a flat standard rate applied to income before allowances, the employee pays the lower amount. That standard rate tops out around 16%. Either way, this is the employee's liability, not something you withhold from payroll each month.

The tax year runs 1 April to 31 March. You don't do monthly withholding, but you do have filing obligations: report new hires to IRD within three months, file on termination, and file (and withhold pay for up to a month) if an employee is leaving Hong Kong for good.

Minimum wage and average wage

The statutory minimum is HKD 43.1 per hour, translating to roughly HKD 7,469 a month at the monthly floor. Average monthly wages have historically sat around HKD 15,000, though more recent government wage data puts the median monthly wage closer to HKD 21,200, so treat the lower figure as a floor-level benchmark rather than what a typical hire costs today.

Social contributions: MPF

Hong Kong's only mandatory payroll contribution is the Mandatory Provident Fund (MPF), split 5% employer and 5% employee, with a monthly income cap of HKD 30,000 for calculating the old-age/invalidity/survivors contribution.

Separately, employers must hold Employees' Compensation Insurance, a mandatory insurance policy covering workplace injury liability. It's not a percentage-based payroll deduction, it's a policy you buy and keep current, and going without it is an offense.

13th month pay and bonuses

There's no statutory 13th month salary in Hong Kong. That said, many employment contracts include a contractual "end of year payment" (sometimes called double pay), and once it's written into the contract, it stops being discretionary and becomes enforceable like any other wage entitlement.

What a HKD 30,000/month hire actually costs

Take an illustrative monthly salary of HKD 30,000:

At this salary band, MPF is the entire mandatory add-on cost, there's no separate payroll tax, and Hong Kong charges 0% VAT, so there's no consumption tax layered onto local operating costs either.

Payroll cycle

Payroll runs monthly. Wages become due at the end of the wage period and must be paid within seven days of that date, or interest starts accruing on the unpaid balance.

Common payroll mistakes

• Missing the 60-day MPF enrolment window. New employees must be enrolled in an MPF scheme within 60 days of their start date, and first contributions are due by the 10th of the month following the deadline.
• Assuming salaries tax gets withheld like PAYE. It doesn't, except when an employee is leaving Hong Kong, in which case you must file a departure notice and hold their final pay until IRD issues a release letter.
• Skipping the employer's return filings. New hires, terminations, and departures each trigger separate IRD forms (IR56E, IR56F, IR56G), and missing them creates real tax-recovery exposure for the company.
• Not keeping records long enough. Payroll records need to be retained for years after employment ends, not just for the current tax year.

Self-managed vs Hire with Columbus

Running this yourself means engaging a local accounting firm for MPF and IRD filings, buying payroll software that handles HKD wage cycles correctly, and someone in-house tracking enrolment deadlines and employer's return dates all year.

With Hire with Columbus: from $179/month per employee (USD), fully compliant. We run the monthly payroll cycle, make the MPF contributions on time, and file the employer's returns so a missed 60-day deadline never becomes your problem.

What benefits and leave are required?

Hong Kong employees can accumulate sick leave for up to 120 days over their employment, but paid sickness allowance only kicks in once they've built up enough banked days and the absence lasts four or more consecutive days. That's just one of several leave rules that catch employers off guard. Here's what you actually owe employees under the Employment Ordinance.

Annual leave

Once an employee has worked a full year under a continuous contract, they're entitled to a minimum of 7 working days of paid annual leave. That entitlement increases with tenure, not a flat number for everyone:

Leave has to be taken within 12 months of the leave year in question, and the employer sets the timing after consulting the employee, with at least 14 days' written notice. You cannot "buy out" annual leave while someone is still employed. On termination, any unused leave must be paid out, calculated on the average daily wage.

Sick leave

Paid sickness days accumulate over the employment relationship: up to 36 days in Category 1, then up to 84 more in Category 2, for a lifetime cap of 120 days. To actually get paid sickness allowance, the absence needs to be 4 or more consecutive days and backed by a medical certificate from a registered practitioner. The daily rate is four-fifths of the employee's average daily wage over the prior 12 months. This is an employer-paid benefit, there's no separate social insurance scheme covering sick pay in Hong Kong.

Parental leave

Maternity leave is 14 weeks. To qualify for paid leave, the employee needs at least 40 weeks of continuous service before the leave starts. Pay is four-fifths of average daily wage, and the 11th through 14th weeks are capped at HKD 80,000, an amount employers can apply to have reimbursed by the government after paying it. You cannot dismiss a pregnant employee once she's confirmed her pregnancy and given notice.

Paternity leave runs 1 week (5 days, which can be taken together or split up). Same eligibility rule applies: 40 weeks of continuous service, paid at four-fifths of average daily wage. There's no statutory shared parental leave scheme in Hong Kong.

Public holidays 2026

Hong Kong has 15 statutory holidays. Work on any of them means arranging an alternative holiday, you cannot simply pay employees to skip it, "buying out" a statutory holiday isn't allowed under the law.

The remaining three of the 15, including Chung Yeung Festival later in the year, follow the Labour Department's official gazette. Check the published list before locking in year-end schedules.

Mandatory benefits

Two things are non-negotiable in Hong Kong: Mandatory Provident Fund (MPF) contributions and Employees' Compensation Insurance.

MPF is a retirement savings scheme, and both employer and employee contribute based on the employee's relevant income:

New hires get a 30-day contribution holiday before deductions start, and employers must enrol eligible employees within 60 days of their start date. Miss that window and you're out of compliance from day one.

Employees' Compensation Insurance is separate: no employer can legally employ anyone in Hong Kong without an active insurance policy covering workplace injury, regardless of contract length or hours worked. There's no fixed statutory premium rate, cost depends on your insurer and the assessed risk of the role, but skipping it isn't optional.

There's no unemployment insurance and no general statutory health insurance requirement in Hong Kong, and no mandatory 13th salary either, any year-end bonus is a matter of contract, not law.

Optional benefits worth offering

Since general health coverage isn't mandated, most competitive employers add private medical insurance on top of the compulsory injury cover. Common additions include:

• Private medical and dental insurance
• Life and critical illness cover
• Extra annual leave beyond the statutory ladder
• Wellness stipends or gym allowances
• Discretionary year-end bonuses (common enough that many contracts treat them as expected, even though they're not legally required)

Common mistakes

• Treating Employees' Compensation Insurance as optional. It's required before you employ anyone, full stop, not just for higher-risk roles.
• Missing the MPF enrolment window. The 60-day deadline is calendar days, including weekends and holidays, not working days.
• "Buying out" holidays or leave. Failing to grant a statutory holiday or holiday pay carries a fine of up to HKD 50,000.
• Sloppy wage and leave records. Employers must keep 12 months of wage and employment history per employee; failing to do so risks a fine of up to HKD 10,000.
• Assuming sick pay works like unemployment benefits. It doesn't. It's an employer-funded allowance tied to accumulated days, not a government payout.

Running this correctly means tracking MPF tiers, insurance renewals, leave ladders by tenure, and reimbursement claims for maternity pay, on top of whatever else your HR team is doing. Hire with Columbus handles MPF enrolment, contribution calculations, statutory leave tracking, and compliant contractor agreements from $179/month per employee, so none of this depends on someone remembering a 60-day deadline buried in a spreadsheet.

What are the compliance requirements?

Miss one mandatory disclosure in a Hong Kong employment contract and you're already exposed to a fine and a stronger claim from the employee. The Employment Ordinance is specific about what has to be in writing, when notice runs, and what you owe on the way out. Here's what actually matters.

Employment contract requirements

Hong Kong doesn't require every employment contract to be in writing, but it does require the employer to tell the employee, in writing, before employment starts:

• wages (rate, overtime rate, any allowances, and whether pay is by piece, job, hour, day, week, or otherwise)
• the wage period
• the length of notice needed to end the contract
• any end-of-year payment entitlement, and when it's paid

If you do put the contract in writing, you have to give the employee a copy for their own records. Skip any of this and you're looking at a fine of up to HKD 10,000 on conviction.

One more thing: any clause where an employee "agrees" to give up rights or benefits under the Employment Ordinance is void. You can't contract around statutory protections, so don't try.

Probation periods

Hong Kong doesn't set a maximum probation length in the Ordinance, it's whatever you write into the contract. What is fixed is the notice required to end employment during probation:

• within the first month of probation, neither side has to give notice at all
• after the first month of probation, notice must follow the contract but can't be less than 7 days

Once probation ends and the employee is on a continuous contract, the rules tighten and you move into standard notice territory.

Working time regulations

There's no statutory cap on weekly working hours for general adult employees in Hong Kong. The Labour Department is still working with industry groups on guidelines, so for now this is contract territory, not statute.

What is fixed:

• employees on a continuous contract get at least one rest day in every 7 days, a continuous period of not less than 24 hours
• there's no statutory overtime premium, overtime pay is whatever the contract says
• if an employee's wages fall below HKD 17,600 per month, you're required to keep records of total hours worked in that wage period, on top of standard wage records

Skip the hours-record requirement for lower-paid staff and you're in breach even if you've paid correctly.

Notice periods

Notice depends on where the employee sits: still on probation, or past it on a continuous contract.

In practice, actual negotiated notice periods across Hong Kong contracts run around 4.3 weeks on average. Either side can pay in lieu of notice instead of working it out.

Termination process

There's no mandatory waiting period or government approval for termination itself in Hong Kong. Dismissal takes effect as soon as valid notice (or payment in lieu) is given, provided you have one of the five valid reasons the Ordinance recognizes:

1. the employee's conduct
2. capability or qualifications for the role
3. redundancy or genuine operational requirements
4. a statutory requirement making continued employment unlawful
5. other substantial reasons

You cannot dismiss a female employee who's confirmed her pregnancy and given notice of it, an employee on paid sick leave, or an employee for giving evidence to the authorities. Do any of these and you're exposed to prosecution.

Summary dismissal without notice or pay in lieu is allowed, but only for genuinely serious misconduct or repeated failure to improve after formal warnings, use it lightly and you're inviting a claim.

Final termination payments (other than severance) are due within 7 days of the termination date. Severance payment itself is due within 2 months of the employee's written claim.

If the employee has 24 months or more on a continuous contract and was dismissed without one of the valid reasons above, they can claim unreasonable dismissal. Remedies include reinstatement, re-engagement, or a terminal payments award, so getting the reason wrong isn't just a documentation problem.

Severance and long service payment

These two payments are mutually exclusive, an employee gets one or the other, never both.

Both are capped at a combined maximum of HKD 390,000. Since 1 May 2025, employers can no longer use the employer's MPF mandatory contributions to offset severance or long service payments for the post-transition portion, only MPF voluntary contributions and length-of-service gratuities can still be used that way. If your payroll system is still calculating offsets the old way, you're underpaying and building a liability.

Fail to pay severance without a reasonable excuse and the fine is up to HKD 50,000.

Data protection

Hong Kong's Personal Data (Privacy) Ordinance sets the rules for employee data. You need a legitimate, directly related purpose to collect it, and you can't use it for a new purpose without the employee's consent.

Retention has a practical ceiling too: employers generally shouldn't hold a former employee's personal data for more than 7 years after they leave, and unsuccessful job applicants' data shouldn't be kept longer than 2 years. If your HR system is still holding files on someone who left five years ago "just in case," that's worth cleaning up.

Common compliance mistakes

• Not disclosing terms in writing before day one. Even an oral contract needs the wage, notice, and end-of-year payment terms confirmed in writing beforehand. Fine: up to HKD 10,000.
• Not keeping wage and employment records. You need a 12-month rolling record for every employee. Fine: up to HKD 10,000.
• Denying statutory holidays or holiday pay. "Buying out" a holiday with extra cash instead of granting it isn't allowed. Fine: up to HKD 50,000.
• Wilfully not paying wages on time. Wages are due within 7 days of the end of the wage period. Fine: up to HKD 100,000 and up to 1 year's imprisonment.
• Getting the continuous contract test wrong. Since 18 January 2026, the test is 17+ hours worked each week, or 68+ hours across a rolling four-week period. Get this wrong and you'll wrongly deny (or wrongly grant) rest days, annual leave, and sickness allowance.
• Skipping compulsory employees' compensation insurance. Every employee needs to be covered, regardless of hours or contract length, before you employ them at all.

Hire with Columbus runs contracts, notice calculations, and termination payments through Hong Kong's Employment Ordinance requirements as standard, so you're not the one checking whether a dismissal reason holds up or whether the severance formula accounts for the MPF offset change.

What has changed recently?

If you last checked Hong Kong's employment rules more than a year ago, at least four things are different now. Here's what actually changed and why it matters for anyone running payroll here.

The continuous-contract test changed on 18 January 2026

Hong Kong's "continuous contract" status unlocks rest days, paid annual leave, sick leave and other statutory benefits. Since 18 January 2026, the test (known as the "468 Rule") requires an employee to work at least 17 hours in each week, or 68 hours or more across a four-week period. This replaced the older "418 Rule," which required 18 hours a week over four weeks.

For part-time and flexible-hours staff, this is a meaningful shift. Someone who didn't qualify under the old threshold might qualify now, which means you owe them benefits you may not have budgeted for. Run a fresh check on anyone working irregular or reduced hours.

Minimum wage rose to HK$43.1 an hour on 1 May 2026

The Statutory Minimum Wage increased to HK$43.1 per hour from 1 May 2026. The monthly minimum wage sits at roughly HK$7,469.08 based on this rate.

Alongside the increase, the Labour Department raised the monthly monetary cap that triggers hours-record-keeping duties to HK$17,600. If you pay someone less than HK$17,600 a month, you're now required to keep detailed records of every hour they work, whether or not you think minimum wage applies to their role.

MPF offsetting is gone for contracts ending after 1 May 2025

Employers can no longer use accrued employer MPF mandatory contributions to offset severance payments or long service payments for employment terminated on or after 1 May 2025. This is still working its way through HR budgets in 2026.

If an employee's service straddles that date, you'll need to calculate a pre-transition portion (where offsetting may still apply, using mandatory contributions) and a post-transition portion (where it doesn't). Get this wrong and you underpay a departing employee, which invites a claim.

Tax allowances went up for the 2026/27 year of assessment

This doesn't change what you owe as an employer, but it does change your employees' take-home pay conversations, especially around annual salary reviews.

Bottom line for hiring teams

None of this is optional reading. The continuous-contract change alone can flip an employee's benefit entitlements overnight. If you're managing this in-house, build a quarterly habit of checking the Labour Department's guidance pages. If that sounds like one more thing on your plate, this is exactly the kind of update an EOR tracks and applies automatically, so your contracts and payroll stay compliant without you having to monitor Hong Kong legislation yourself.