Employment Contracts (Full – time: Fixed – term or Open – ended Contracts; Part – time/Interns)
Contracts can be written in Chinese or English, mainly in English. They must be in writing and signed by both parties.
Contracts must include:
The position offered
The contract term
The work location
The basic salary and payment date
Working hours and working days
Other benefits (if any)
Annual leave and sick leave
Termination clauses
Sick leave
Probation period
Notice period
Duties and responsibilities
Part – time Employees: IC Contracts
Contracts can be written in Chinese or English, mainly in English. They must be in writing and signed by both parties.
Contracts need to include:
Information of all parties, including the full names, addresses, and contact details of the service provider (individual or company) and the employer (company).
The purpose of the contract
The specific services and scope to be provided by the service provider.
The time frame of the services (start date, completion date, or the validity period of the contract)
Fees, payment methods, and payment terms
Service standards and deliverables
Responsibilities and obligations of both parties to the contract
Responsibilities and obligations of the service provider and the employer respectively. For example, the service provider needs to provide services as required, while the employer needs to pay the fees on time.
Termination clauses
Confidentiality clauses
Intellectual property clauses
Breach of contract clauses
Independent contractor relationship (clearly stating that the relationship between the service provider and the employer is an independent contractor relationship, not an employment relationship, and the service provider will not enjoy employee benefits or privileges)
1.2 Overview of Local Statutory Welfare Systems
Salary Payment
Once a month
Monthly Minimum Wage
The minimum wage is HK$6,300 per month.
Note: The minimum wage is HK$40 per hour, and it will be reviewed in mid – 2025.
Probation Period
The probation period is not mandatory. There is no minimum or maximum term. However, the standard practice is 90 days/3 months.
Employer Costs
Employer costs are usually estimated to be 5% of the employee’s salary.
Mandatory Provident Fund (MPF) – 5%
Note: The cancellation of the “offsetting” arrangement will be implemented on May 1, 2025.
1.3 Salary Payment and Statutory Holiday Responsibilities
Personal Income Tax
Personal income tax rates range from 0% to 17%. Income tax is calculated on a progressive basis. Multiple other factors may affect the comprehensive tax rate, such as family status and the number of children.
Overtime Pay and Maximum Working Hours
The standard working hours are 8 hours a day and 40 hours a week. The standard working week is from Monday to Friday.
Overtime pay is not mandatory. Overtime pay can be negotiated in the employment agreement between the employer and the employee.
Statutory Holidays
Both full – time and part – time employees are entitled to 8 – 16 paid working days of leave per year. The paid leave and accrual rate vary according to the length of service. In the first year of employment, employees cannot exceed the number of days accrued during their work.
Treatment or Conversion Logic of Unused Annual Leave at the End of the Year
Statutory requirement: Unused annual leave at the end of the year can be taken by employees within 12 months of the following year. However, most companies only allow employees to carry forward unused annual leave to the first or second quarter of the following year.
Statutory Public Holidays
There are 16 public holidays in Hong Kong, including: the first day of the Lunar New Year; the second day of the Lunar New Year; the third day of the Lunar New Year; the fourth day of the Lunar New Year; Tomb – Sweeping Festival; Good Friday; the day after Good Friday; Easter Monday; the day after Labour Day; the day after Buddha’s Birthday; Dragon Boat Festival; the Establishment Day of the Hong Kong Special Administrative Region; the day after the Mid – Autumn Festival.
Note: January 1st; National Day (October 1st); Double Ninth Festival; Christmas Day; the day after Christmas Day
Other Types of Leave
Maternity Leave
Under Hong Kong’s maternity leave system, pregnant women who have been employed under a continuous contract for 40 weeks before the scheduled start of maternity leave are entitled to 14 weeks of paid maternity leave. They must take 2 weeks of leave before the birth of the child.
Employees will receive 80% of their average monthly salary in the past 12 months, and the employer is responsible for paying at least this amount.
Paternity Leave
Employees who have worked continuously for 40 weeks are entitled to 5 days of paid paternity leave. The leave can be allocated according to the employee’s wishes.
Employees will receive 80% of their average monthly salary in the past 12 months, and the employer is responsible for paying at least this amount.
Sick Leave
According to the Employment Ordinance – sickness allowance, employees who have accumulated and are eligible for sickness allowance can enjoy up to 120 days of paid sick leave.
The sick – leave pay is accrued based on the length of service. In the first year of employment, employees can get 2 days of paid sick leave per month, and thereafter, 4 days per month, with a maximum accumulation of 120 days of paid sick leave.
Calculation Logic of Salary for Incomplete Attendance (including Absence or Unpaid Leave)
Deductions are calculated based on the employee’s average daily salary in the past 12 months or the daily salary of the current month.
Expatriate Employees
Local Minimum Wage Required for Split Payroll Work Permit
It should meet the salary level of local talents in the same position in Hong Kong.
Whether Local Social Welfare Can Be Withdrawn (e.g., Provident Fund)
Employees can receive it upon retirement at the age of 65 according to the Mandatory Provident Fund Ordinance.
1.4 Dismissal Rules and Compensation Arrangements
Dismissal (Legal Requirements and Best Practices)
Notice Period
The shortest notice period is 7 days, and it will be extended according to the employment contract.
If the service period exceeds 1 month and is within the probation period, it is 7 days.
If it is beyond the probation period, it is 30 days/1 month.
Voluntary Resignation
Employees are allowed to resign at any time according to the employment agreement.
Reason: There is no legal requirement.
Compliance requirement: Employees must provide a hand – signed resignation letter in ink at least 30 days/1 month before their last day of work.
Statutory notice period: 1 month or as stipulated in the employment agreement.
Dismissal during Probation
Employers are allowed to terminate the employment relationship at any time during the probation period.
Reason: There is no legal requirement, but it is recommended to dismiss employees during the probation period only based on the following situations:
Poor performance; bad behavior; frequent lateness or absence; compliance requirements.
Termination of employment must not be based on prohibited reasons, such as discrimination based on gender, race, pregnancy, marital status, family status, or disability.
Statutory notice period:
No notice is required if it is within the first month.
7 days’ notice is required if it is after the first month.
Negotiated Dismissal
Employers and employees are allowed to mutually agree to terminate the employee’s employment relationship for any reason.
Common reasons:
Business reasons (e.g., lay – offs, restructuring)
There may be disputes or lawsuits involving the employee.
Employees cannot be dismissed without cause.
The employee has negotiated the termination of the labor contract with the client.
Dismissal for Cause
Employers are allowed to immediately terminate the employment relationship due to willful misconduct without notice.
Reason: Serious performance problems; attendance problems; theft of company money or property; improper behavior or violation of the employment agreement or law; forgery of records; harassment; violence.
Compliance requirements:
The employer must provide the employee with a written notice of the reason for dismissal, set up a special team to investigate the matter, and give the employee an opportunity to explain. Thereafter, if the special team is satisfied with the reason for dismissal, the dismissal for cause can proceed.
The company handbook must emphasize the proof of the reason.
Conversion of Unused Annual Leave for Departing Employees
Calculation of remaining days: (Annual entitled annual leave/365) * Number of working days in the current year – Number of used annual leave days.
At the time of departure, over – payment will be deducted and under – payment will be supplemented, calculated based on the employee’s average daily salary in the past 12 months or the daily salary of the current month * Remaining annual leave days.
Follow the local labor market practices in Hong Kong.
1.7 Cultural Adaptation in Different Regions
Language
Both Chinese and English are official languages in Hong Kong. English is widely used in government agencies, the legal profession, the professional sector, and the business community.
Religious Customs
Hong Kong is a diverse society that combines Eastern and Western cultures, with a diverse religious landscape. There are more than 3 million religious believers. The major religions include Buddhism, Taoism, Christianity, Roman Catholicism, and Islam. Confucianism, Hinduism, Sikhism, and Judaism also have many followers.
