How to use an Employer of Record in Hong Kong

Hong Kong boasts one of the world's highest levels of GDP per capita, personal wealth, and citizen literacy (99%) in the Asia-Pacific region. The country is also a thriving free-market economy that is one of the world’s largest financial and tech hubs, with a highly skilled labor market to boot. Think developers, writers, marketers, data scientists, and customer success professionals.

As more and more companies embrace remote working, Hong Kong is an ideal spot for businesses looking to build functional remote teams. And while Hong Kong has fewer employment regulations than economic giants like China and the United States, you can still get bogged down filing permits and applying for licenses before you even make your first hire. This can be expensive and take several months.

An employer of record will help you cut to the chase and help you start hiring talent in Hong Kong faster and for significantly less. This article explains the key benefits of using an EOR, how to choose an EOR for your business needs, and how you can use an EOR to help you navigate labor laws in Hong Kong.

Six steps to hiring employees in Hong Kong using an employer of record

An employer of record can set you up to hire employees quickly and for a fraction of what it'd cost to do the work yourself. That is if you choose a well-positioned and reliable partner that can help you grow your remote team.

Step 1: Weigh up the pros and cons of each potential partner

The aim of using an EOR is to reduce the legal legwork required to hire remote employees so that you can focus on finding the best people for your team. To achieve that, you need to shortlist the features or services you want from an EOR provider, such as:

• An easy, intuitive onboarding experience

• Comprehensive benefits management for your remote employees

• Managing payroll and ensuring workers get paid on time

• Assistance with distributing stock options, vesting schedules, etc.

• A network of legal experts that’ll help you navigate local labor laws

• Provisions for securing your intellectual property and your internal data

Using this checklist of features and pain points you’re trying to solve as you grow your international team will help you assess potential EOR partners to determine which provider offers the best value for your needs.

Step 2: Take the time to select the most appropriate EOR service provider (making sure your partner owns its local entity in Hong Kong)

Some EOR providers often offer their services through a network of partner agencies. It’s faster and costs less than setting up their own local entities. However, these third-party partners have no direct relationship with your business and can change prices at will.  And worse, since you can’t verify their data management practices, you might be putting your company’s sensitive financial information at risk.

EOR providers that own their local entities like Remote can guarantee better security and consistent pricing, which is why you should make sure that your partner owns its local entity in Hong Kong. Learn more about the difference between owned-entity vs. partner-dependent global employment solutions.

Step 3: Check the reviews, testimonials, and coverage of your shortlist of providers

Reviews and testimonials on sites like G2 and Trustpilot will help you understand the quality of service an EOR can offer. Check the company website, online press coverage, and client testimonials to gain insight into the EOR’s operations and how they treat past and existing customers. Particularly, focus on customers in your niche who’ll probably have similar needs and experiences using an EOR service.

Step 4: Ensure that the EOR solution for Hong Kong will provide a best-in-class employee experience

A potential employer of record partner should demonstrate their commitment to offering your employees a seamless experience by paying salaries on time, resolving queries, and providing detailed explanations for payroll deductions and withholding taxes. Since the EOR hires on your behalf, ensure that they have the capability to provide a positive and engaging experience for your employees.

Step 5: Work with your partner to make sure you always provide a fair and equitable compensation package to your employees

Finding and retaining top talent is essential — which is why you have to make sure you offer competitive benefits that factor in local labor laws, as well as the potential employees’ roles and skills. EOR partners can help you figure out ideal salary ranges by considering your budget, local cost of living, and prevailing market rates. 

Step 6: Make sure your partner will guard your intellectual property and maintain data security for your business

Intellectual property rights can help your company retain a favorable market position that you can convert to a financial windfall when you go public, get acquired, etc. But if they’re not spelled out in detail, IP rights can lead to nasty litigation with employees and contractors.

Ensure your EOR partner works in clauses into the agreement ceding rights to any intellectual property employees and partners produce with your company’s resources to ensure entanglements in the future. Likewise, the EOR provider should have relevant data security certifications like GDPR and SOC 2 that promote high levels of security and compliance.

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What are the benefits of using an employer of record in Hong Kong?

While advancements in communications and technology have made it possible for companies to hire talent beyond borders, the process of hiring international employees is still complicated. Opening a local entity, filing legal documents, handling the HR and admin work of managing employees, offering benefits, making payroll deductions, and complying with local rules and regulations — this is a lot to manage.

This is where an EOR can help. A trusted EOR can handle the legal and administrative aspects of global hiring, making it simple for you to hire employees in Hong Kong.

An employer of record in Hong Kong can help you grow your remote team quickly without you having to worry about functions like:

• Onboarding employees and getting them set up to work quickly

• Managing benefits and entitlements

• Paying salaries and bonuses on time

• Benchmarking salaries to ensure you’re paying a competitive rate

• Securing rights to your intellectual property and inventions produced by your employees

• Protecting your financial and HR data with GDPR and SOC 2 protocols

• Staying compliant with local labor rules as they change, and

• Terminating employees without breaking labor laws

An employer of record takes charge of all the tiny details so that you can focus on finding the best candidates and retaining your remote team for the long term.

How much does it cost to use an EOR in Hong Kong?

EOR costs depend on the kind of services required, the number of workers you'd like to hire, and their location. Generally, you can expect to pay anywhere between $599 to upwards of $2,000 per employee per month.

Typically, legacy EOR providers support a network of countries and tend to charge enterprise rates. On the other hand, smaller EORs charge lower rates. However, they may not offer the same services as the traditional providers. So, you might end up paying additionally for other services such as payroll, benefits, and legal assistance.

Remote offers a comprehensive employer of record experience that offers the full stack of services that allows you to hire and manage your employees abroad. For an affordable, flat fee, Remote gives you everything you need to start building your international team: payroll, benefits, unrivaled IP and data security, and access to our team of legal advisers that’ll help you stay compliant with labor laws in Hong Kong.

Learn how Remote compares to other EORs and how you can start hiring a global team without breaking the bank.

Hiring in Hong Kong

Hong Kong is a special administrative region of the People’s Republic of China that exercises some autonomy in its internal legal operations.

As such, the city’s labor standards are defined in the Employment Ordinance of 1968 which spells out terms guiding employment contracts, salaries, benefits, leave entitlements, and provisions for termination, severance benefits, etc.

Much of Hong Kong’s reputation as an economic hub has been built on business-friendly policies balanced with initiatives designed to protect workers from abuses.

Employment contracts and agreements in Hong Kong

Written and verbal contracts are equally valid in Hong Kong and must state the terms of employment, such as:

• Effective wages, rates, overtime pay, and any allowances

• Wage period (daily, weekly, monthly, etc.)

• The notice period that’s required to terminate the contract, and

• If the employee is entitled to an end-of-year remuneration, how much it’ll be, and when exactly the payment will be made

Labor compliance in Hong Kong

Hong Kong’s Employment Ordinance of 1968 lays out several labor standards employers are required to meet to provide a conducive working environment where employees can dispense their duties without physical, psychological, or financial harm.

These include:

• Protecting employees from discrimination or harassment due to their age, sex, political affiliation, union membership, disability, national origin, union membership, etc.

• Providing a safe and healthy working environment that meets the standards defined in the Occupational Health and Safety Ordinance and its subsidiary regulations

• Protection from unreasonable dismissal and variations of the terms laid out in the employment contract

• Prompt payment of salaries, wages, and benefits

Payroll and payroll taxes in Hong Kong

Tax rates are progressive in Hong Kong, and range from 2% to 17% based on income. For 2022/23, the maximum tax will be limited to a standard rate of 15% on net income after deductions.

Employee benefits and compensation in Hong Kong

As remote work heats the global talent market, you’ll need a strong compensation strategy to help you attract and retain the best employees in Hong Kong.

Whether you’re a CEO hiring an engineer, or a lead recruiter hunting for a product marketer, your benefits package and compensation strategy should be competitive and include bonuses and supplementary benefits in addition to statutory benefits.

Maternity and paternity leave

Expectant mothers are entitled to 14 weeks of paid leave at 80% of their average salary. Fathers get five days of paternity leave that can be taken between four weeks before and 14 weeks after their partner’s delivery.

Vacation and Holidays

Employees are entitled to seven paid days time off after their first year of employment, which increases until it reaches 14 days off annually after nine years of service. Additionally, they can take 13 public holidays off. Employees are only required to put in overtime if they’re notified at least 48 hours prior.

Health insurance and sickness benefits

Hong Kong maintains a universal healthcare system that all residents can access for minimal payment. Remote can help you launch a supplementary health insurance program for your employees in Hong Kong.

Pensions

Hong Kong’s state pension system guarantees aged 65+ benefits ranging from €61 to €69 monthly. Alongside our customizable pension plans, Remote can help design pension programs that’ll supplement your employees’ state pension after they’re retired.

Other benefits Remote can help you roll out

As you scale your remote team, the right benefits will help you attract skilled workers who’re looking for a healthy work-life balance and an employee-first workplace, both in Hong Kong and across the globe.

Remote can help you launch unique, customized benefits such as home office budgets for ergonomic work devices and accessories, paid parental leave, equity and stock options, and physical and mental healthcare insurance.

Remote can help your business benefit by building a remote-first workplace that can attract and keep standout employees.

Severance pay and employee terminations in Hong Kong

Terminations are only valid if an employee is dismissed because of:

• Their conduct

• Insufficient capability or skill level

• Redundancy or a non-negotiable business requirement

• Statutory reasons — if required by law, or

• Some other substantial reason

If stated in an employment contract, a notice period mustn't be less than seven days long and must be at least a month long if the employment contract doesn’t specify.

Severance payments are equal to two-thirds of an employee’s last month’s salary (or HKD 22,500, whichever is larger) multiplied by the number of years of employment.

An employee cannot be terminated for pregnancy, taking maternity leave, getting injured at work, joining a union, exercising their sick leave, or taking time off work to fulfill civil responsibilities like jury duty, etc. 

Employees can be awarded up to $150,000 in compensation if a Labor Tribunal determines that they’ve been unreasonably and unlawfully dismissed.

Our guide to employing in Hong Kong goes into better detail explaining the termination process, notice periods, and severance payments for employees in Hong Kong.

According to Chapter 2 of Hong Kong’s Employment Ordinance, employers are required to keep a record of the wages and employment history of each employee. An employer who fails to keep detailed records of their employees’ attendance, leave, wages, etc. is liable to prosecution and, if convicted, will pay a fine of $10,000.

As you can see, navigating employment laws in Hong Kong is not easy. A reliable EOR like Remote has a team of experts who have an in-depth understanding of employment laws in Hong Kong. Partner with Remote and hire, onboard, pay, and manage your employees in Hong Kong (and beyond) without the fear of non-compliance.

What are the risks of employee misclassification in Hong Kong?

Despite being a business-friendly economic hub, Hong Kong takes employee misclassification and labor compliance seriously. If your company is found to be guilty of classifying workers incorrectly, the authorities can impose punitive sanctions that can cause you to pay hefty fines and penalties or complicate your international hiring plans. If you’ve found to categorize your worker falsely, you may be required to pay back statutory benefits to the employee. Additionally, if you fail to prescribe statutory benefits to employees, you may be convicted and forced to pay a maximum penalty of HKD 50,000 for each offense. 

Working with an EOR like Remote can help you mitigate misclassify risks and ensure compliance so that you can hire from Hong Kong with confidence.

Get started with an employer of record in Hong Kong

Remote makes it simple to build a remote team by doing all the legwork you need to hire talent in Hong Kong without bleeding cash and spending months going back and forth with the authorities.

Remote is the all-in-one operating system for businesses looking to hire international employees without breaking the bank, or worse, the law. We offer the best value by providing everything you need to scale your international team — payroll, benefits, legal support, compliance, and security — at an affordable cost. Remote can help you:

• Open and maintain a local entity to hire employees in Hong Kong

• Onboard employees quickly

• Roll out and manage compliant benefits and perks

• Process payroll to ensure your employees are paid on time

• Figure out major changes to your international hiring strategy by providing legal support

• Protect your intellectual property and invention rights 

• Secure data management

It's a no-brainer. See how Remote compares to other EOR providers. If you’re ready to start onboarding talent in Hong Kong, get started with Remote and learn how to scale your remote team today!