Employer of Record Hong Kong: Your Guide to Successful Hiring

Understanding the Employer of Record (EOR) concept is essential to expanding your business into the Hong Kong market. From navigating Hong Kong labour laws to managing your monthly payroll, an EOR can help streamline the hiring process and ensure compliance with local regulations.

We will review everything you need to know about hiring in Hong Kong through an EOR, including its benefits and how it can help you navigate the complexities of local employment laws.

Understanding Employer of Record in Hong Kong

A common misconception is that an EOR is the same as a staffing agency or recruitment firm. However, there are significant differences between the two.

A staffing agency or recruitment firm simply helps you find suitable candidates and hire employees for your job openings. They do not have the legal authority or responsibility of an EOR.

Unlike a PEO, an EOR acts as your local representative and assumes the legal responsibilities of a Hong Kong employer. This includes managing payroll, handling employee benefits and health insurance, and ensuring compliance with labour laws.

If you're expanding your business into Hong Kong, an EOR can be a valuable partner in navigating the complexities of local employment regulations and ensuring compliance. 

Partnering with one also means you won't have to set up a legal entity in Hong Kong, which can be lengthy and costly. 

Benefits of Hiring through an Employer of Record in Hong Kong

Hiring through an EOR in Hong Kong offers numerous benefits for your business, including:

Simplifying employment compliance and legal requirements

An EOR acts as your local employer and handles all employment compliance and legal requirements. This includes staying up-to-date with the latest labour laws, employment ordinances, tax regulations, and employee benefits mandated by the Hong Kong government.

This relieves the burden of compliance, allowing you to focus on your business operations without worrying about breaking laws or facing penalties.

An EOR can also help you make informed decisions about hiring and managing employees in Hong Kong, using their local expertise.

Streamlining the hiring process

Hiring through an EOR can significantly streamline your hiring process. They have a thorough understanding of local labour laws and regulations and can help you find qualified candidates quickly and efficiently.

This is especially beneficial for businesses expanding into Hong Kong for the first time, as they may not be familiar with the local job market and hiring processes.

Additionally, an EOR can handle all hiring-related administrative tasks, such as drafting employment contracts and managing employee and onboarding process. This saves you time and resources to be better allocated towards growing your business.

Mitigating risks and costs

Expanding your business into a new country comes with its own set of risks and costs. You limit your liabilities by hiring through a local entity or an EOR.

As the EOR acts as the legal employer, they bear all employment-related risks, such as termination disputes or non-compliance penalties. This means you won't have to deal with any costly legal issues that may arise from managing employees in Hong Kong.

Moreover, since you won't have to establish a legal entity in Hong Kong, you can save on the expenses of establishing and maintaining one.

Managing payroll and tax obligations efficiently

Payroll management and tax compliance are crucial for hiring employees in Hong Kong. An EOR can handle these responsibilities, ensuring your employees are paid accurately and on time.

They also manage all tax obligations, such as withholding taxes from employee salaries and filing relevant reports with the government. This simplifies the often complicated payroll and income tax management process in Hong Kong.

Navigating employment contracts and agreements

As an EOR takes on the legal responsibilities of an employer, they handle all employment contracts and agreements with your employees. This includes drafting, reviewing, and updating employment ordinances to ensure they comply with local laws and regulations.

This can be particularly challenging for businesses new to Hong Kong as they may not be familiar with the country's various employment contract laws. By partnering with an EOR, you can rest assured that all employment contracts and agreements are legally binding and in compliance with local requirements.

Step-by-Step Guide to Using an Employer of Record in Hong Kong

Using an EOR in Hong Kong can seem like a daunting task at first. Follow these steps to get a head start.

Steps for selecting an EOR service provider

The following steps will help you select the right EOR service provider for your business:

1. Identify your needs: Determine what services you require from an EOR, such as payroll management, legal compliance, or employee benefits.
2. Research potential service providers: Look for EOR service providers with experience in Hong Kong and a solid understanding of local employment laws. You can also ask for referrals from other businesses or check online reviews to narrow down your options.
3. Compare costs and services: Compare the cost of services offered by different EORs and the specific services they provide. Choose one that fits your budget and offers the necessary support for your business needs.
4. Ensure compliance: Before finalising a service provider, ensure they comply with all local laws and have the necessary licenses and permits to operate as an EOR in Hong Kong.
5. Review the contract: Carefully review the selected service provider's offer, ensuring that it covers all your needs and meets your expectations.

While these steps might change based on your specific business needs, they provide a general framework for selecting an EOR service provider in Hong Kong.

Key considerations when partnering with an EOR in Hong Kong

When choosing to partner with an EOR in Hong Kong, you should keep the following factors in mind:

• Reputation and experience: Look for an EOR service provider with a good reputation and proven experience assisting businesses with local employment regulations.
• Flexibility: Make sure the EOR can accommodate your specific needs and requirements, such as managing certain employee benefits or handling specialised employment contracts.
• Communication and support: It's important to communicate openly and clearly with your EOR service provider. They should be readily available to address any queries or concerns you may have during the partnership.
• Scalability: As your business grows, it's essential to partner with an EOR that can scale its services accordingly and support your expansion into other countries if needed.
• Cost-effectiveness: While using an EOR may seem like a higher cost than hiring employees directly, it can save you money in the long run by mitigating risks and ensuring compliance with local laws.

By understanding these considerations, you can choose the most suitable EOR service provider for your business needs in Hong Kong.

Visa requirements to enter Hong Kong for employees

Several types of visas are available for foreign employees to enter Hong Kong, depending on the nature and duration of their work. Some common visa categories include:

• Hong Kong Quality Migrant Admission Scheme (QMAS) - This quota-based visa is for individuals who wish to settle and work in Hong Kong without an employment offer from a local company. Applicants are evaluated on a points-based system, considering age, education, work experience, and language proficiency. Under the QMAs, the General Points Test (GPT) measures factors such as professional qualifications and work experience. Under the Achievement based Points Test (APT, applicants can show proof of outstanding achievements such as national awards, achievements, and medals
• ‍Top Talent Pass Scheme (TTPS) - This visa is for skilled individuals with talent in their field, such as managers, investors, or entrepreneurs. Unlike visas, applicants do not need an offer of employment in the Hong Kong Special Administration Region (HKSAR) upon application. There are three categories under TTPS:
• Persons with an equivariant of HK$2.5 million or above annual income
• Graduates with degrees from eligible universities with three or more years of work experience over the past five years
• Graduates with degrees from eligible universities with less than three years of work experience. This is subject to a quota allotted on a first-come, first-served basis.‍
• General Employment Policy (GEP) - This visa type comes in two types: Professionals and Entrepreneurs. Professionals need to have secured a job related to their work qualifications, whereas entrepreneurs need to have a relevant educational background and technical skills or proven experience in the field.‍
• Admission Scheme for Mainland Talents and Professionals (ASMTP) - This visa is for Chinese nationals with special skills or specific experience not readily available in Hong Kong. The visa is also open to non-local students with an undergraduate degree (or higher) in a full-time locally accredited program in Hong Kong. GBA campus graduates are also eligible to apply.

To obtain these visas, applicants must meet specific requirements and submit supporting documents to the Hong Kong Immigration Department. It's essential to seek guidance from your chosen EOR service provider to ensure a smooth visa application process for your employees.

Employment Laws and Regulations in Hong Kong

In Hong Kong, employers must adhere to various labour laws and regulations regarding mandatory benefits when hiring employees through an EOR. Some common employee benefits include:

• Minimum wage: As of 2021, the minimum wage in Hong Kong is HK$40 per hour.‍
• Working hours and overtime: There is no statutory limit on the number of working hours per week in Hong Kong, nor is there any requirement for employers to provide employees with paid overtime. However, it is customary for companies to provide at least 1 rest day every 7 days.‍
• Paid leave: Employees are entitled to 7 days of paid annual leave after 12 consecutive months of probationary period service. This is increased on a yearly basis, up to a maximum of 14 days after nine years.

• Paid Sick leave: For full-time employees in Hong Kong, paid sick leave is split into two types:‍
• Category 1: This requires an appropriate medical certificate and is paid at four-fifths of the employee's daily average wage.‍
• Category 2: If the employee exceeds their number of accrued Category 1 sickness days, they may take Category 2 sick leave, during which the employer may request a medical certificate showing a brief record of the investigation carried out and the treatment prescribed
• Sick leave is accrued at a rate of two days for every month of continuous service in the first 12 months, increasing to four days per month after that, with a maximum accrual of 120 days.‍
• Maternity leave: Female employees are entitled to 14 weeks of paid maternity leave. However, to qualify for paid maternity leave, the employees must have been employed under a continuous contract more than 40 weeks before the commencement of their maternity leave‍
• Termination notice: Employers in Hong Kong may be required to give a notice period before terminating an employee's contract, depending on the length of service. Severance pay may also be required under certain circumstances and is based on service length.

Hong Kong's labour laws and regulations aim to protect employees and employers by providing clear guidelines for working conditions, overtime pay, and benefits. Employers must stay up-to-date with any changes in these laws to avoid potential legal issues. Your chosen EOR service provider can assist in ensuring compliance with all employment regulations in Hong Kong.

Challenges and Solutions

As with any business process, potential challenges may arise when utilising EOR services in Hong Kong. These include:

• Language barriers: While English and Chinese are the official languages of Hong Kong, a company may not always speak both, which could pose potential language challenges.‍
• Complex regulations: The labour laws and regulations in Hong Kong can be complex, especially for foreign companies unfamiliar with the local system. Understanding these laws is essential to ensuring full compliance.‍
• Hiring and retaining top talent: With high competition for skilled workers in Hong Kong, it may be challenging for companies to find and retain the best employees.‍
• Currency management: Companies may need to convert their local currency to Hong Kong dollars for payroll and other expenses, which can be time-consuming and costly.

To overcome these challenges, working with an experienced EOR service provider in Hong Kong can offer the following solutions:

• Language services: Many EOR providers offer translation and interpretation services to assist with communication between companies, employees, and local authorities.‍
• Expertise in local laws and regulations: EOR providers have extensive knowledge of Hong Kong's labour laws and regulations and can ensure their client's compliance.‍
• Recruitment services: EOR providers can assist with sourcing and hiring top talent in Hong Kong, saving the company time and resources.‍
• Currency management solutions: EOR providers may offer currency management services, allowing companies to pay employees and manage local currency expenses efficiently.

By using these solutions, companies can overcome potential challenges and enjoy a seamless and compliant hiring process in Hong Kong through an EOR. Your chosen service provider can also offer additional support and guidance throughout the employment period to ensure a positive experience for the company and its employees.

Choose Knit for your EOR services in Hong Kong

In summary, it is essential for companies with global expansion plans to be familiar with the labour laws and regulations in Hong Kong when hiring employees through an EOR. These laws cover various aspects such as minimum wage, working hours, paid leave, sick leave, maternity leave, and termination notice, and compliance with these regulations is crucial for both employers and employees.

By partnering with a reputable EOR service provider like Knit, companies can ensure adherence to these laws while enjoying other benefits such as streamlined recruitment, efficient currency management, social security, and expert guidance throughout the employment period.

With Knit's extensive experience in providing EOR services globally, companies can trust that their hiring process in Hong Kong will be smooth and compliant.