In Hong Kong, the Employment Ordinance determines certain basic rights and protection of employees. The Employment Law protects the legal relationship between Employer and Employee. This guide aims to give you a better understanding of Hong Kong’s Payroll procedures.
1. Continuous Contract of Employment
An employee who has been employed continuously by the same employer for four or more weeks, with at least 18 hours worked each week, is regarded as being employed under a continuous contract. This employee is entitled to basic protections under the Employment Ordinance.
Wages means all renumeration, earnings, allowances, tips and service charges, however designated or calculated, payable to an employee in respect of work done or work to be done under an employment contract. Allowances including travelling allowances, attendance allowances, commission and overtime pay are within the definition of wages.
Wages will be due on the expiry of the last day of the wage period.
An employer should pay salary to an employee no later than seven days after the end of the salary period.
3. Rest Days, Holidays and Leave
An employee should enjoy rest days, statutory holidays, and paid annual leave during employment. Employees are entitled to annual leave with pay after having been employed under a continuous contract for every 12 months. An employee's entitlement to statutory paid annual leave can increase progressively according to his/her length of service within the company:
4. Calculation of Relevant Statutory (RS) Entitlements based on the 12-Month Average Wages
Relevant Statutory Entitlements:
- Holiday pay
- Annual leave pay
- Sickness allowance
- Maternity leave pay
- Paternity leave pay
- End of year payment
- Payment in lieu of notice
- Further sum of non-compliance of an order of reinstatement or re-engagement for unreasonable and unlawful dismissal
The relevant statutory entitlements shall be calculated based on the average daily (or monthly) wages earned by an employee in the 12-month period preceding the specified dates as stipulated by the E(A)O 2007. If an employee is employed for less than 12 months, the calculation will be based on a shorter period.
5. Statutory Minimum Wages (SMW)
Unless otherwise specified, the Minimum Wage Ordinance applies to every employee, his/her employer, and the contract of employment under which he/she is engaged.
The Statutory Minimum Wage (SMW) has been in force since 1st May 2011. With effect from 1st May 2019, the SMW rate was raised to $37.5 per hour. Concurrently, the monetary cap on the requirement of employers keeping records of the total number of hours worked by employees is also revised to $15,300 per month.
6. Mandatory Provident Fund (MPF) Scheme
An employer must comply with all MPF-related legal obligations under the MPF Ordinance. These include enrolment of all qualifying employees in the MPF scheme and making MPF contributions for employees. An employee and his/her employer are both required to contribute five per cent of the employee’s relevant income which is capped at a maximum of HK$1,500, as mandatory contributions for and in respect of the employee to an MPF scheme.
7. Employer’s Obligations and Statutory Reporting Requirements
An employer must keep and maintain payroll records of the employees for at least seven years and report remuneration paid to employees by submitting an annual Employer’s Return. Successful payroll services can provide HR with end-to-end business solutions. To help our customers sharpen their competitive edge, we offer comprehensive implementation services of the market’s leading business solutions.
On a Final Note
Good payroll management is key to any business and must be in line with all local compliance laws and have on-time disbursement.
Keeping up with your company's growth means that more time will need to be spent on payroll management. Outsourcing your payroll service could be more time and cost-efficient than doing this in-house and would be one less this thing for your HR department to worry about.
Looking to outsource your payroll management? Look no further.
At Hawksford we make paying your employees simple. By outsourcing your payroll services to us, we can ensure that all your compliance needs are met, and all your employees are paid accurately and on time.
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