Understanding HR, Payroll, and Employment Regulations in Hong Kong: A Comprehensive Guide

Kristina Coluccia
Jun 5
3 min read

Hong Kong is renowned for its business-friendly environment, straightforward tax regime, and efficient legal infrastructure, making it a prime location for companies seeking to establish a foothold in Asia. However, navigating the human resources (HR), payroll, and employment regulatory framework is essential for long-term compliance and operational success. This article provides a clear overview of the key HR and payroll requirements in Hong Kong, along with employment rules every employer must understand.

Employment Laws and Employee Rights

Hong Kong’s employment framework is primarily governed by the Employment Ordinance (Cap. 57), which provides a baseline of protection for all employees, regardless of their nationality or position.

Key statutory rights include:

Minimum Wage: As of 2025, the statutory minimum wage is HK$40 per hour. Employers must ensure this rate is met or exceeded for all applicable employees.
Working Hours and Rest Days: While there is no statutory cap on working hours, employees are entitled to at least one rest day in every seven-day period.
Paid Leave: Employees are entitled to paid annual leave (starting at 7 days and increasing with service), statutory holidays, sick leave, and maternity/paternity leave based on qualifying criteria.
Termination and Severance: Specific notice periods or payment in lieu of notice must be adhered to. Employees may be entitled to severance or long service payments under certain conditions.

It is important for employers to maintain clear written contracts that outline terms of employment, benefits, and responsibilities to avoid ambiguity and future disputes.

Payroll Compliance in Hong Kong

Payroll processing in Hong Kong is relatively streamlined but must be handled diligently to ensure compliance with local legislation.

Key considerations include:

Salary Payments: Employers must pay wages no later than seven days after the end of the wage period.
Mandatory Provident Fund (MPF): All employees aged 18–64, who are employed for 60 days or more, must be enrolled in an MPF scheme. Employers and employees each contribute 5% of relevant income, capped at HK$1,500 per month.
Tax Reporting: Employers are responsible for filing annual Employer’s Returns (Form BIR56A and IR56B) with the Inland Revenue Department and issuing income statements to employees. Accurate records must be kept for at least seven years.

HR Management Practices

In addition to compliance, strategic HR practices are essential for attracting and retaining talent in Hong Kong’s competitive labor market.

Recruitment and Onboarding: While there are no restrictions on hiring foreign employees, proper work visa arrangements must be in place. The General Employment Policy (GEP) outlines visa requirements for foreign professionals.
Employee Benefits: Beyond statutory entitlements, many companies offer discretionary bonuses, medical insurance, and flexible work arrangements to enhance their employer brand.
Data Privacy: Employers must comply with the Personal Data (Privacy) Ordinance when collecting, storing, and processing employee information. Transparency and data security protocols are critical.

How Woodburn Can Support Your Expansion into Hong Kong

Successfully setting up and managing HR and payroll operations in Hong Kong requires localized knowledge and expert support. At Woodburn Accountants & Advisors, we specialize in guiding international companies through the complexities of employment law, payroll management, MPF administration, and HR best practices. Whether you are establishing your first entity in Asia or expanding an existing footprint, our team ensures full compliance and operational efficiency from day one.

Woodburn Accountants & Advisors is one of China and Hong Kong’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.