top of page

Minimum Wage in Hong Kong

Hong Kong has increased the minimum hourly wage rate from HK$37.5 (US$4.8) to HK$40 (US$5.11). Employers must record the total number of hours worked by an employee in a wage period if:

  • The employee is paid the minimum wage; and

  • The wages payable to the employee for the period are less than the monetary cap specified in the Ninth Schedule to the Employment Ordinance (or a proportionate amount if the wage period is less than a month).

According to the Ninth Schedule, the monetary cap has been increased from HK$15,300 (US$1,957) per month to HK$16,300 (US$2,085) per month.

Calculating Minimum Monthly Wage

The minimum wage in Hong Kong can be calculated using the Labor Department’s Minimum Wage Reference Calculator. The calculator provides the monthly minimum wage payable based on input information, such as the number of days worked in a month and hours worked per day. It assumes a consistent wage rate for each working day of the month and that the employee has not taken any statutory holidays.

Penalties for Paying Below Minimum Wage

Under the Employment Ordinance, employers who willfully or without a reasonable excuse fail to pay minimum wage are liable to prosecution, which may lead to a fine of HK$350,000 (US$44,781) and up to three years of imprisonment.

Salary Components

Base Salary and Bonuses

The base salary serves as part of the salary structure in Hong Kong. It should be mutually agreed upon between the employer and the employee, usually paid monthly, and must be stipulated in writing, typically in the service contract. Factors influencing the base salary include the employee's position, educational level, and industry standards.

Wages in Hong Kong refer to all types of remuneration, including earnings, allowances, tips, and service charges payable to an employee concerning work done or to be done. Companies may also choose to offer bonuses or other benefits, either fixed or performance-dependent. While there are no legal obligations to pay bonuses, it is customary to provide an end-of-year payment, usually paid before the Lunar New Year.

If stipulated in the contract, end-of-year payments are subject to the Employment Ordinance provisions. An employee is eligible for an end-of-year payment if employed under a continuous contract for a whole period. If not specified, the amount must be equivalent to the employee's average monthly salary in the 12 months preceding the due date.

Allowances

Allowances, including traveling allowances, attendance allowances, commission, and overtime pay, are considered types of wages under Hong Kong’s Employment Ordinance. They do not include:

  • The value of any commodities or services provided to the employee at the expense of the employer.

  • Contributions to retirement schemes.

  • Gratuitous bonuses, end-of-year payments, commissions, or allowances payable at the discretion of the employer.

  • Non-recurrent travel allowances or the value of travel concessions.

  • Any sum payable to the employee to defray extraordinary expenses incurred by the nature of their employment.

  • Gratuity payable on completion or termination of a contract.

Overtime Pay

There are no statutory limits on work hours for adults in Hong Kong. Employers are not obligated to pay for overtime, but they may choose to provide it by stipulating terms in the employment contract. Overtime pay, if included in the contract, is considered a type of allowance and falls under the definition of wages under the Employment Ordinance.


Other Payroll Obligations

Unlike most countries, the employer does not withhold individual income tax or salaries tax in Hong Kong. Instead, individuals are responsible for paying their taxes.

Employers have two primary administrative requirements:

Keeping Payroll Records

Employers need to keep records of the following information concerning their employees:

Required Payroll Records

Personal details

Nature of employment: full-time or part-time

Position

Amount of cash remuneration, non-cash remuneration, and other fringe benefits

Contributions to the Mandatory Provident Fund or its equivalent

Amendments to the terms of the employment contract

Period of employment

Reporting Remuneration Paid to an Employee

The IRD issued the Employer’s Return to Companies every year. Within one month of receiving the Employer’s Return, the company must complete it and lodge it with the IRD even if it does not hire any employee, the business has not commenced, or the business has ceased.

Employer's Reporting Obligations to IRD

Employment Condition

Tax Form to Complete

Statutory Period for Notification

Notes

Commencement of employment

IR56E

Within 3 months

Both IR56E & IR56B are required for the commencement year

Still employed as of March 31

IR56B

Within 1 month

Must be submitted annually together with a BIR56A

Cessation of employment

IR56F

Not later than 1 month before cessation

IR56B for the cessation year is not required

Departure from Hong Kong

IR56G

Not later than 1 month before departure and withhold money from tax clearance

IR56B for the cessation year is not required

Employers must report the following:

  • Changes in the employee’s particulars (e.g., change of residential address, marital status).

  • Changes in the terms of employment.

  • The Hong Kong Identity Card number of the employee.

When an employee is terminated: The company must file the Employer’s Return one month before the date of termination.

When an employee leaves Hong Kong permanently or for a substantial period: The employer must:

  • Ascertain the employee's expected date of departure.

  • File duplicate copies of the Employer’s Return one month before the expected date of departure.

  • Withhold all amounts due to be paid to the employee (including salaries, commission, bonus, reimbursement of rent/expense) from the date of filing the Employer’s Return until the employee has made tax clearance and can produce a “letter of release” from the Inland Revenue Department.

Penalties for Non-Compliance:

Employers who willfully fail to pay an end-of-year payment to an eligible employee or without a reasonable excuse may be liable to prosecution and a fine of up to HK$50,000 (US$6,386).

Statutory Obligation of an Employer to Report Remuneration Paid to an Employee

Employment Condition

Tax Form to Complete

Statutory Period for Notification

Notes

Commencement of employment

IR56E

Within 3 months

Both IR56E & IR56B are required for the commencement year

Still employed as of March 31

IR56B

Within 1 month

Must be submitted annually together with a BIR56A

Cessation of employment

IR56F

Not later than 1 month before cessation

IR56B for the cessation year is not required

Departure from Hong Kong

IR56G

Not later than 1 month before departure and withhold money from tax clearance

IR56B for the cessation year is not required

Employers must ensure compliance with these statutory obligations to avoid legal penalties and ensure smooth operations within Hong Kong’s regulatory framework.


Can Woodburn help you?

 

Woodburn Accountants & Advisors is one of China’s most trusted business setup advisory firms.


Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.

 

Talk to an expert


Schedule a 30-mins complimentary, no-obligation call to see how Woodburn can help you. Book a call with our Head of Business Advisory - Kristina Koehler-Coluccia.

Topics we can advise on include:

  • Company Registration

  • Cloud Accounting & Financial Reporting

  • Cloud Payroll Services

  • Tax & Audit Services

  • Recruitment

  • Employer-of-Record

  • Visa Application

  • Trademark Registration

  • Switch to Woodburn

  • Partner with Woodburn (cross referral) 

Our calls are automatically scheduled via Zoom - or via Teams, WeChat or WhatsApp upon direct request. 

Our advisory calls are available from Monday-Friday from 8am to 5pm CEST and Wednesday until 9pm CEST.

 



Comments


Woodburn Accountants & Advisors is one of China and Hong Kong’s
most trusted business setup advisory firms

bottom of page