Employers in Hong Kong must be familiar with local labour laws to ensure compliance and create a supportive work environment. Understanding employee benefits is a key part of this, as Hong Kong mandates several statutory benefits to protect employees' rights and well-being. Beyond these required benefits, employers often provide additional perks to attract and retain top talent.
Mandatory Employee Benefits in Hong Kong
In Hong Kong, mandatory employee benefits, also known as statutory benefits, are outlined in the Employment Ordinance. These include the Mandatory Provident Fund (MPF), employee compensation insurance, paid time off, severance payments, and more.
Mandatory Provident Fund (MPF)
The MPF is a compulsory retirement savings scheme where both employers and employees contribute 5% of the employee’s relevant income, up to a cap of HKD 30,000. For example, if an employee earns HKD 40,000 per month, contributions are based on HKD 30,000, resulting in HKD 1,500 each from both the employer and employee.
Employee Compensation Insurance
Employers must provide employee compensation insurance as required by the Employee’s Compensation Ordinance. This insurance covers medical expenses, benefits for permanent disablement, and death related to job duties.
Annual Leave
Employees are entitled to paid annual leave after completing 12 months of continuous service. The number of paid annual leave days increases with the length of service:
After 1 year: 7 days
After 2 years: 8 days
After 3 years: 9 days
Up to a maximum of 14 days
Annual leave pay is calculated based on the employee’s average daily wage.
Sick Leave
Employees are entitled to paid sick leave after completing one month of service. The entitlement is as follows:
First 12 months: 2 paid sick days per completed month of service
After 12 months: 4 paid sick days per completed month of service
Sick leave pay is 80% of the employee’s average daily wages.
Maternity Leave
Hong Kong offers 14 weeks of maternity leave, which can be taken before and after childbirth. The pay rate is 80% of the average daily wages for the first 10 weeks, with a maximum cap of HKD 80,000 from the 11th to the 14th week. Employees must have worked for the company for at least 40 weeks to qualify for paid maternity leave and must notify their employer in advance.
Paternity Leave
Eligible male employees can take 5 days of paternity leave per childbirth, paid at 80% of their regular pay. To qualify, the employee must have worked for the company for at least 40 weeks before the leave and notify the employer at least 3 months prior to the expected delivery date.
Statutory Holidays
From January 1, 2024, employees are entitled to 14 statutory holidays each year, including Lunar New Year, Ching Ming Festival, Tuen Ng Festival, National Day, and others.
Rest Days
Employees on continuous contracts are entitled to at least one rest day every seven days. This day is usually fixed but can be swapped with another date if agreed upon, as long as it falls before the original rest day or within 30 days after.
Severance Payment
Employees laid off for reasons beyond their control and who have worked for 24 months or more are entitled to severance pay. The calculation is based on:
Average monthly salary × ⅔ × Years of service
The average salary used for the calculation cannot exceed HKD 22,500.
Long Service Payment
Employees who have worked for a company for over 5 years and leave under specific conditions (such as resignation due to ill health, reaching retirement age, or death) are entitled to long service payments. However, if the termination is due to serious misconduct or redundancy, the employee is not eligible.
Common Market Practices for Supplemental Employee Benefits in Hong Kong
In addition to statutory benefits, many employers offer supplemental benefits to enhance employment attractiveness and retain staff. These may include:
13th Month Pay: Also known as end-of-year payment, this is a bonus equivalent to one month's salary, unless otherwise specified in the employment contract.
Flexible Work Arrangements: Many companies offer flexible work schedules and hybrid work options, reflecting employee preferences for remote work.
Penalties for Non-Compliance with Employment Ordinance in Hong Kong
Failing to comply with the Employment Ordinance can result in significant penalties. The table below details penalties for various violations:
Violation | Penalty |
Illegal deduction from wages | A fine of $100,000 and imprisonment for 1 year |
Willful failure to pay wages without reasonable excuse | A fine of $350,000 and imprisonment for 3 years |
Failure to pay interest on outstanding wages | A fine of $10,000 |
Failure to grant rest days, statutory holidays, annual leave, or pay for these or sick leave allowance | A fine of $50,000 |
Failure to grant or pay for maternity leave | A fine of $50,000 |
Wrongful dismissal of a pregnant employee | A fine of $100,000 |
Failure to comply with safe work assignments for pregnant employees | A fine of $50,000 |
Failure to pay end-of-year payment | A fine of $50,000 |
Willful and unreasonable failure to pay termination payments | A fine of $350,000 and imprisonment for 3 years |
Understanding and adhering to these regulations will help create a compliant and supportive workplace in Hong Kong.
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