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.
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