As Hong Kong continues to emerge as one of the most rapidly growing markets in the APAC region and a global financial center, it has garnered increased attention from multinational corporations. The companies that expand their operations to Hong Kong experience numerous benefits – a highly educated, English-speaking population, an open and fast-growing economy and a business environment highly receptive to international investment. But Hong Kong’s payroll policies and regulations, as outlined in its extensive Employment Ordinance, can make hiring employees pretty complicated.

Perhaps the main reason for the confusion is a result of Hong Kong’s history. Hong Kong was under British control until 1997, and is now considered a Special Administrative Region of China. While its labor policies initially were influenced by Great Britain, they are gradually being revised to be more similar to those of China. As these employment laws continue to change, employers can be hard pressed to ensure they meet compliance when leveraging the Hong Kong workforce.

Fortunately, CloudPay’s team of worldwide experts stays up to date with all of these changing regulations, helping companies to comply with Hong Kong’s unique laws and regulations in the following areas:

Wage Protection

Employers in Hong Kong must ensure that they keep proper records for each employee’s wage and employment history, and all accounting and payroll records must be kept for at least seven years. In addition, all payments must be made on the last day of the wage period, with the potential of imprisonment if payments are missed.

Paid Leave

All employees are entitled to rest days, statutory holidays and paid annual leave. They also receive sickness allowance, equal to four-fifths of their average daily wages. Similarly, employees are entitled to maternity leave pay, which is also four-fifths of their average daily wages. Hong Kong’s maternity protection laws also make it illegal to dismiss a pregnant employee from the time she informs her employer of her pregnancy until she returns to work.

Severance Payments

Employees in Hong Kong who are dismissed due to redundancy or layoffs are eligible for severance payment, as long as they have been working for the employer for a minimum of 24 months. Long service severance payments are given to employees who have worked at least five years under a continuous contract and are dismissed due to reasons besides serious misconduct or redundancy, or if they resign due to grave illness or old age.

Protection against Anti-Union Discrimination

According to Hong Kong’s Employment Ordinance, each employee has the right to join a trade union and take part in associated activities. Employers are prohibited from dismissing or penalizing employees who join a trade union.

While there are severe consequences for employers who violate the above regulations, working with the right payroll provider can help avoid noncompliance when compensating employees in Hong Kong. But the Employment Ordinance is only one aspect of payroll – there are still several other areas that employers must understand when compensating their Hong Kong employees. Check back soon for our next installment to learn more about Hong Kong’s complicated payroll regulations.