When you open a company in Hong Kong and need to staff, the Employment Ordinance defines the rules for contracting both residents and non-resident workers. It is important to note that there is a strong drive to employ local staff compared to foreigners. In this post, we provide a comprehensive guide to working in Hong Kong.
Visa requirements to work in Hong Kong
To work in Hong Kong, you need to have the right authorization for entering and operating in Hong Kong. Though many people with passports from about 170 countries are allowed to enter and stay for up to 180 days, they cannot take employment. You can only work if you have the following Hong Kong visas.
The working visa is provided by the immigration department after the employer ascertains the position of employment and releases the letter of the contract. The main considerations for approval include;
- Preference for people with higher level of education.
- A lot of experience in the respective area of specialization.
- The benefits that the employee will bring to Hong Kong economy. This is tied to the anticipated salary and tax remittance.
- There is an absence of respective expertise at the local level.
The Hong Kong work visa is granted for about 6-12 months with extensions granted after the request for durations of 2 years. A staff who uses workers visa for 7 years can apply for the right of abode.
If you move to Hong Kong under a dependant visa, you are allowed to study and seek employment. Dependant visas are given to family members (spouse or children under the age of 18 years) of people with other types of visas including work visa and investment visa.
However, the validity of dependant visa is tied to the sponsor’s visa. If the sponsor’s visa expires or gets cancelled, the dependant visa equally becomes invalid.
To encourage entrepreneurs to come to Hong Kong and start businesses, the Immigration Department gives investment visa. Investment visa holders are allowed to enter Hong Kong and get employed by their own ventures. You must have a comprehensive business outline detailing the nature of business, investment capital, operational structure, and profit protection.
Tax requirements for working in Hong Kong
Once you are allowed entering and working in Hong Kong, it is important to understand all your tax obligations. IRD (Inland Revenue Department) is particularly emphatic that all people working in Hong Kong must pay taxes. Though you are liable to pay taxes on your salary, some income is not charged. You can remit taxes through PPS account, ATM, and electronic tax payment system.
By the end of every year, you must file report at IRD indicating the following types if including the following;
- Salaries and wages
- Bonuses and commissions
- Tips from your employer and other entities
- Salary tax met by the employer
- The value of your rent
- Share options and awards
- Contract gratuities, pay in arrears, and deferred remuneration
- Pensions if any
When the time to leave the employment and Hong Kong finally comes, you are required to get clearance from IRD. The target of getting clearance is to ensure that you have met all tax obligations. The employer is expected to notify the IRD of expected termination of employment about three months before and holding the salary for the last month as IRD makes its assessment.
Contribution to the Provident Fund
Provident fund is a mandatory contribution that all employers and employees must make on a monthly basis. This payment only excludes a few people including employees of EU, foreigners working for less than 13 months, and people in statutory pension schemes.
The law requires all employees to contribute 5% of their monthly salary. This deduction is only done BY those earning more than HK$ 20,000 and it is capped at HK$ 20,000. Once the payment is done, the employer has to provide the records within 7 days to the necessary authorities.
It is important to the point that because you have come to Hong Kong to a specific employer or company, the immigration department requires you to remain there. You cannot simply switch jobs.
If you want to change employment by moving to a different company while working in Hong Kong, the immigration department must be notified to change the details. You will be required to submit the current work permit and wait for a new one stating the new company you are moving to.
Employer obligation for foreigners working in Hong Kong
The role of the employer when employing a foreigner working in Hong Kong is monumental. The employer drafts the working terms and conditions as well as the contract with the respective staff under consideration.
This means that the employer has to abide by requirements of the minimum wage, draft the contractual agreement, and have the foreign staff sign it before immigrating. The employer is obligated under the law to do the following;
- Define the duration of employment
- Specific date of employment commencement
- The remuneration package
- All benefits that the staff will get
- Workplace code of conduct
- The hours of staff operation
- The rules of termination
- You are required to maintain the records of staff payroll for at least 7 years
We have the solution for you
Working in Hong Kong for foreigners requires a lot of logistics to allow you enter and work under the employment law. Because of the Immigration Department preference for local staff, your employer must proof that the skills you are bringing are not available in Hong Kong and that you will have a significant contribution to the economy.