Hong Kong Fact-File Part 6:
Individual Business Employment Issues

6.1 Hong Kong Individual Business Employer Responsibilities

The duties and responsibilities of individuals in business as regards employing people

An employer must notify the Inland Revenue Department when a person is employed by him or her, either full time or part time. Each employee must be issued a pay slip at the end of the week or month for which they have received a salary, containing details of the salary paid, benefits in kind such as food, accommodation, transport and share options. An employer must retain records of remuneration for each employee for seven years. The employer must file an employer’s return to the Inland Revenue Department on an annual basis; this contains details of salaries paid to each individual employed by the business and will be used in the annual assessment to salaries tax.

Each employee must be entered into the Mandatory Provident Fund. The employer and employee are both required to contribute a minimum of 5% of the employee’s income into the fund on a monthly basis, and failure to do so will result in fines of up to HKD5,000. MPF membership certificates must be displayed at the business premises, and in the event of there being more than one office, certificates must be displayed at each location. Exemptions to the MPF include domestic workers, family members living at the same address as the employer, and overseas workers already contributing to a pension scheme outside of Hong Kong.

The employer is required to take out insurance under the Employee’s Compensation Ordinance. This is two-tiered, with the first tier covering the minimum insurance cover per event for companies with less than 200 employees, and the second tier providing cover for companies with more than 200 employees. It is recommended that employers take out more than the minimum cover, as compensation payouts could easily be higher than the amount provided for in the insurance. Employers are not permitted to deduct any of the cost of this insurance premium from the salaries of their employees.