Table of Contents
We’re here to help you on your journey to hire, manage and pay.
Employee Benefits and Deductions
In Hong Kong, employers are obligated to provide specific statutory benefits and make certain deductions from employees’ wages. These benefits ensure that employees are adequately supported in terms of leave, healthcare, and retirement.
Statutory Holidays and Paid Leave
Under Hong Kong law, employees are entitled to 12 statutory holidays per year. If an employee has been continuously employed for at least three months, they are entitled to receive holiday pay, which is equivalent to their average daily wages over the previous 12-month period.
In addition to holidays, employees are also entitled to paid annual leave, which increases with the length of service. For example, after one year of employment, an employee is entitled to seven days of paid leave, increasing by one day per year up to a maximum of 14 days.
Social Security and Other Mandatory Deductions
Although Hong Kong does not have a comprehensive social security system like other countries, employers must contribute to employees’ MPF accounts and withhold taxes as part of their payroll responsibilities. Some employers may also offer additional benefits such as health insurance, though this is not a statutory requirement.
Deductions for income tax, MPF contributions, and any other agreed-upon benefits must be made accurately and reported to both the employee and relevant authorities to ensure compliance.
When Non-Compliance May Occur
Non-compliance with payroll regulations in Hong Kong can have significant consequences for employers. Some common areas where non-compliance may occur include:
Late Salary Payments
Employers are required to pay wages within seven days after the end of the wage period. Failure to meet this deadline can result in fines and legal disputes with employees. Employers should ensure that payroll processes are efficient and timely to avoid such issues.
Missed MPF Contribution Deadlines
As mentioned earlier, MPF contributions must be made by the 10th of the following month. Late or missed contributions can result in interest charges, fines, and legal action. It’s crucial for employers to maintain a strict schedule for MPF submissions.
Inaccurate Tax Reporting
Employers are responsible for accurately calculating and reporting salaries tax. Underreporting or failing to report income can lead to audits by the IRD, resulting in penalties and back taxes. Employers must ensure that their payroll systems are robust enough to handle tax reporting accurately.
Failure to Comply with Leave Requirements
Non-compliance with statutory leave policies, such as failing to provide paid annual leave or holiday pay, can lead to legal claims from employees. Employers should be aware of their obligations regarding leave entitlements and ensure that they are providing the appropriate benefits.
How AYP Can Help
Managing payroll in Hong Kong requires expertise and careful attention to compliance. AYP provides a comprehensive suite of services to ensure that your payroll processes are smooth and compliant with local regulations.
Professional Employer Organisation (PEO) Services
With AYP’s PEO services, we take care of all employer responsibilities, including MPF contributions, tax reporting, and managing employee benefits. Our team of experts ensures that your business stays compliant with Hong Kong’s labor laws and payroll regulations, allowing you to focus on growing your business.
Employer of Record (EOR) Services
As an EOR provider, AYP serves as the legal employer for your workforce, handling all payroll and administrative tasks. This is particularly useful for companies expanding into Hong Kong, as it simplifies the process of hiring and managing employees in a new market.
Payroll Outsourcing Management (POM) Services
Our Payroll Outsourcing Management (POM) services allow you to outsource your entire payroll function to AYP. We manage salary payments, MPF contributions, tax withholdings, and employee benefits, ensuring that your payroll is accurate, compliant, and timely.
With AYP handling your payroll, you can be confident that your business is fully compliant with Hong Kong’s regulations, helping you avoid costly penalties and disputes.
