As an employer hiring employees in Hong Kong, it’s important to understand the local labor laws to ensure compliance and foster a supportive work environment.
One core aspect of these labor laws is employee benefits. Hong Kong has a comprehensive set of employee benefits mandated by law to protect the rights and welfare of employees. In addition to mandatory benefits, employers also offer various supplemental benefits to attract and retain the best talent in Hong Kong.
In this article, we’ll explore the key employee benefits in Hong Kong that you should offer to your employees.
Mandatory Employee Benefits in Hong Kong
Mandatory employee benefits in Hong Kong also referred to as statutory benefits, are the benefits that employers are required to offer to their employees as per the Employment Ordinance of Hong Kong.
These benefits include a mandatory provident fund, employee compensation insurance, paid time off, Severance Payment, and more. Let’s take a quick look at all these employee benefits that are required by law.
Mandatory Provident Fund (MPF)
The Mandatory Provident Fund (MPF) is a compulsory retirement savings scheme in Hong Kong designed to help employees save for their retirement. Both employers and employees contribute 5% of the employee’s relevant income to the MPF account.
However, there’s a cap on how much income is counted towards MPF which is currently HKD 30,000. So, let’s say an employee earns HKD 40,000 per month. Their MPF contributions would be calculated based on HK$30,000, making it HKD 1,500 each from both employer and employee.
Employees Compensation Insurance
As per the Employee’s Compensation Ordinance in Hong Kong, the employer is required to compensate their employees for any injury they sustain or death related to or caused by their job responsibilities.
Therefore, in addition to the MPF contributions, employers in Hong Kong are also required to have Employees Compensation Insurance (ECI). The employee’s compensation insurance generally covers medical expenses, benefits in case of permanent disablement, and death.
Annual Leave
Employees in Hong Kong are entitled to paid annual leave after being employed under a continuous contract for at least 12 months. The paid annual leave entitlement increases progressively based on the length of service with the same employer.
The number of paid annual leave days in Hong Kong is calculated as follows:
- After 1 year of service: 7 days
- After 2 years of service: 8 days
- After 3 years of service: 9 days
- And so on, up to a maximum of 14 days
The daily rate of annual leave pay is equal to the employee’s average daily wage.
Sick Leave
Employees under continuous contract in Hong Kong Employees are entitled to paid sick leave once they have completed at least one month.
The paid sick leave entitlement is as follows:
- During the first 12 months of employment: 2 paid sick days for each completed month of service.
- After the first 12 months of employment: 4 paid sick days for each completed month of service.
In Hong Kong, sick leave pay is calculated at 4/5 or 80% of the employee’s average daily wages
Maternity Leave
To support working mothers, Hong Kong laws allow continuous 14 weeks of maternity leave that can be taken both before and after the birth. This increase from the previous 10-week standard aims to provide additional support and recovery time for mothers.
By law, the rate of pay for maternity leave is currently set at ⅘ (80%) of the average daily wages of the employee for the first 10 weeks. From the 11th to the 14th week, the maximum pay is capped at HK $80,000.
However, to be eligible for paid maternity leave, the employee must have worked with the company for at least 40 weeks before the start of maternity leave. Moreover, employees should give notice of pregnancy and intention to take maternity leave to the employer in advance.
Paternity Leave
Paternity leave in Hong Kong is meant for a male employee who is or is to be a father of a newborn child to celebrate the birth of their child and provide support to their spouse. Under to Employment Ordinance, eligible male employees can take 5 days off work for each childbirth. Paternity leave is also paid at the rate of 80% of the employee’s regular pay.
To qualify, the employee must have worked with the company for at least 40 weeks before the start of paternity leave and provide a notification to the employer at least 3 months before the expected delivery date.
Statutory Holidays
Effective from January 1, 2024, all employees in Hong Kong are entitled to 14 statutory holidays throughout the year. Starting with the first day of January, these statutory holidays include 3 days of the Lunar New Year, Ching Ming Festival, Tuen Ng Festival, National Day, and so on.
Rest Days
Other than statutory holidays, all employees on continuous contracts in Hong Kong are entitled to at least one rest day out of every seven. This rest day is generally fixed. However, employers can swap it for another date if the employee agrees and given that the new rest day is before the original date, or within 30 days after.
The only time an employer can ask employees to work on their rest day is if there’s an unexpected emergency, such as machinery breaking down.
Severance Payment
If a company lays off employees not because of the employees’ own fault and they have worked with the company for 24 months or more, the employees are entitled to severance pay following Hong Kong law.
To calculate the amount of severance pay in Hong Kong:
Employees average monthly salary * ⅔ * Years of service.
However, the average salary considered for severance payment cannot exceed HKD 22,500. For example, if your average salary is HKD 36,000 per month, severance pay calculation will only consider two-thirds of $22,500.
Long Service Payment
In addition to severance pay, the employment ordinance also requires employers to pay long-service payments to employees who have dedicated over 5 years to a company.
To be eligible for long-service pay, an employee must meet the following conditions:
- Must have worked for the employer for at least 5 years under a continuous contract AND
- Their employment contract expires without being renewed by the employer OR
- Resign at age 65 or above OR
- Resign due to ill health before the contract ends. OR
- In the case of the employee’s death
However, If the employee’s contract was terminated because of serious misconduct or reasons of redundancy, they are not eligible for the long service payment.
Common Market Practices for Supplemental Employee Benefits in Hong Kong
Supplemental employee benefits are additional benefits offered by employers to make employment more attractive and retain employees for longer periods. In addition to the mandatory employee benefits mentioned above, here are some of the most common supplemental benefits that companies offer.
13th Month Pay
The End of Year Payment, also known as the 13th-month pay, is a year-end bonus payment given to employees in Hong Kong. The end of end-of-year payment is calculated as the average employee’s pay over the last 12 months unless the amount is specified in the job contract.
As an employer, you are not required to offer an End of Year Payment to your employees by law. However, if the employment contract explicitly or implicitly states that, you are liable to pay it as per Chapter 8 of the Employment Ordinance.
Flexible Work Arrangements
According to SCMP, almost 90% of employees in Hong Kong prefer to work remotely. Therefore, in addition to the 13th-month pay, many employers in Hong Kong now offer flexible work schedules and hybrid work options.
Penalties for Non-Compliance with Employment Ordinance in Hong Kong
The Employment Ordinance provides guidelines to employers regarding rights and benefits for employees in Hong Kong. It is crucial to follow the Employment Ordinance to maintain lawful employment practices.
Employers who fail to comply with the provisions of the ordinance can face severe penalties and legal consequences upon conviction.
The table below outlines the penalties for different violations of the Employment Ordinance in Hong Kong.
| Violation | Penalty |
| Illegal deduction from wages | A fine of $100,000 and imprisonment for 1 year |
| Willful failure to pay wages without reasonable excuse | A fine of $350,000 and imprisonment for 3 years |
| Failure to pay interest on outstanding wages | A fine of $10,000 |
| Failure to grant rest days, statutory holidays, annual leave, or pay for these or sick leave allowance | A fine of $50,000 |
| Failure to grant or pay for maternity leave | A fine of $50,000 |
| Wrongful dismissal of a pregnant employee | A fine of $100,000 |
| Failure to comply with safe work assignments for pregnant employees | A fine of $50,000 |
| Failure to pay end-of-year payment | A fine of $50,000 |
| Wilful and unreasonable failure to pay termination payments | A fine of $350,000 and imprisonment for 3 years |
Design a Comprehensive Employee Benefits Plan with RecruitGo
RecruitGo helps entrepreneurs hire and manage talent in Hong Kong by offering comprehensive services from recruitment to employee benefits while staying compliant with local laws. If you plan to hire talent in Hong Kong, our experts will assist you in designing competitive benefits packages based on your company’s objectives.
For more details, fill out the form below.
