Hire employees in Hong Kong
What a foreign company needs to know before employing people in Hong Kong: whether you need a Hong Kong company, what an employee costs once MPF, insurance and customary benefits are added, why employers report pay but do not withhold income tax, how the 2026 minimum wage, 468 rule and holiday changes work, and what severance costs now that MPF offsetting has ended. Written for CHROs, CFOs, General Counsel and founders.
Quick answers
The questions leadership teams ask first.
Do I need a Hong Kong company to hire?
No. There are three routes:
- Employer of Record. Dryft Global employs the person through a compliant Hong Kong employer, enrols them in MPF, holds employees' compensation insurance, files the IR56 returns and manages leave, notice and severance. You direct the work.
- Direct Hong Kong company. Incorporation is fast, often within an hour online, but you also need business registration, an MPF scheme, employees' compensation insurance and a bank account before first payroll.
- Independent contractor. Lawful only for a genuinely independent business delivering a result. If the person works like an employee, the Labour Tribunal will treat them as one.
When should I use an EOR instead of setting up a Hong Kong company?
Use an EOR for your first Hong Kong hires, where setting up a company, MPF scheme, insurance and bank account would hold up the start. Your own company earns its keep for a regional headquarters, a larger team, regular visa sponsorship, or a business contracting with Hong Kong customers.
What does an employee actually cost beyond salary?
About 3.5% in mandatory costs on a typical professional salary: the employer's 5% MPF contribution, capped at HKD 1,500 a month, plus compulsory employees' compensation insurance. There are no other payroll levies. With group medical cover and a customary 13th month, the total is about 14%.
How difficult is termination in Hong Kong?
Employment can end on contractual notice of at least 7 days, or 1 month if the contract is silent, or with pay in lieu. Employees with 24 months' service can claim unreasonable dismissal if there is no valid reason. Severance is due on redundancy after 24 months, and long service pay on most other dismissals after 5 years, capped at HKD 390,000. From 1 May 2025, MPF can no longer offset the part earned for later service.
Can Dryft Global legally employ my team in Hong Kong?
Yes. Dryft Global acts as the legal employer through a compliant Hong Kong employer, enrols staff in MPF, holds employees' compensation insurance, files the IR56 returns and manages leave, notice and severance. Employment agency licensing and visa sponsorship for an EOR model are structuring points we confirm for each engagement before the hire.
Hiring routes compared
Speed, set-up and liability differ by route.
| Factor | Direct Hong Kong company | Dryft Global EOR | Independent contractor |
|---|---|---|---|
| Time to first payroll | Incorporation is fast; bank account and set-up take weeks | Days to 2 weeks | Days |
| MPF, insurance and IR56 filings | Your registrations | Handled by Dryft Global | Contractor arranges own |
| Visa sponsorship | Sponsor on your entity | Structured case by case | Not available |
| Severance and long service pay | Yours | Managed by Dryft Global | High if reclassified |
| Best fit | Regional headquarters, larger team | First hires, regional sales and support | Short independent projects |
What an employee costs in Hong Kong
Hong Kong's mandatory burden is among the lowest of any major hub, because MPF is the only retirement contribution and it stops at HKD 30,000 a month. Benefits such as group medical cover and a 13th month make up most of the cost above salary. The model below is a software engineer on HKD 50,000 a month in 2026.
| Component | Employer share | Notes |
|---|---|---|
| MPF | 5%, capped | HKD 1,500 a month on salaries above HKD 30,000 |
| Employees' compensation insurance | ~0.5% | Compulsory; typical budget for office staff |
| Mandatory subtotal | ~3.5% | On the model salary |
| Group medical insurance | ~2% | Customary; typical budget of HKD 1,000 a month |
| 13th month | ~8.3% | Customary, enforceable only if in the contract |
| Total with typical benefits | ~13.8% | Above base salary |
On the model salary, annual employer cost is about HKD 621,000 (USD 79,600) with mandatory costs only, and about HKD 683,000 (USD 87,600) with medical cover and a 13th month, at HKD 7.80 to the dollar, before the EOR fee. Severance and long service pay are not included. Ask us for a cost model for your salary band and benefits.
Payroll and tax
Monthly pay in HKD is standard. Wages are due at the end of the wage period and must be paid within 7 days. MPF enrolment is due within 60 days of the start date through the eMPF Platform, and contributions by the 10th of the following month. Employers keep payroll records for 7 years.
No income tax withholding
Employers do not deduct salaries tax from pay. Employees file their own returns and pay provisional tax. The employer reports: IR56E within 3 months of a start, BIR56A with an IR56B for each employee once a year, IR56F at least a month before someone leaves, and IR56G at least a month before someone leaves Hong Kong, holding all money due for one month.
Salaries tax
Tax is charged on Hong Kong-source employment income at 2% to 17% on net chargeable income, capped at a standard rate of 15% on the first HKD 5 million of net income and 16% above. For 2026/27 the basic allowance is HKD 145,000. Employee MPF contributions are deductible up to HKD 18,000 a year.
Minimum wage
The statutory minimum wage is HKD 43.1 an hour from 1 May 2026, reviewed every year. It rarely binds a professional hire, but employers must record hours for anyone earning below HKD 17,600 a month.
Leave and mandatory benefits
- Annual leave. 7 days after 12 months' continuous contract, rising by one day a year from the third year to 14 days after 9 years.
- Statutory holidays. 15 in 2026, including Easter Monday for the first time, rising to 16 in 2028 and 17 in 2030. The employer must give the day off, not pay instead.
- Rest days. At least one in every 7 days for continuous contract employees.
- Sickness allowance. 4/5 of average daily wages for sick leave of at least 4 consecutive days, accruing 2 days a month in the first year and 4 a month after, up to 120 days.
- Maternity. 14 weeks at 4/5 of wages with 40 weeks' service; pay for weeks 11 to 14 is capped at HKD 80,000 and reimbursed by the government.
- Paternity. 5 days per birth at 4/5 of wages.
- Working time. No statutory standard hours or overtime pay, so set them in the contract.
- Continuous contract. Since 18 January 2026, the 468 rule decides who qualifies: 17 hours a week, or 68 hours over 4 weeks.
Termination and notice periods
Notice is set by contract within statutory minimums, and either side can pay wages in lieu.
| Stage | Notice |
|---|---|
| First month of probation | None |
| Rest of probation | As agreed, at least 7 days |
| After probation | As agreed, at least 7 days; 1 month if not stated |
- Severance pay. After 24 months' service, on redundancy or lay-off: 2/3 of a month's wages (wage ceiling HKD 22,500) per year of service, capped at HKD 390,000.
- Long service pay. After 5 years, on most dismissals other than serious misconduct or redundancy, on the same formula and cap.
- No more MPF offset. From 1 May 2025, MPF contributions cannot reduce the part earned for later service, so budget it in cash.
- Unreasonable dismissal. After 24 months, dismissal needs a valid reason; compensation can reach HKD 150,000 where the dismissal is also unlawful.
- Protected situations. Pregnancy, paid sick leave, union activity, giving evidence and work injury.
- Timing. Termination payments within 7 days, and IR56F or IR56G filed a month ahead.
Can I use independent contractors?
Only where the person delivers a result as a genuinely independent business: their own clients, their own schedule, their own tools and their own business risk. Hong Kong courts look at the whole relationship, including control, integration, who bears the risk of loss and who supplies the equipment, and the contract label does not decide it. A full-time contractor embedded in your team is likely an employee. Reclassification brings back holiday pay, annual leave, sickness allowance, severance and long service pay, MPF arrears with surcharge, and offences for working without employees' compensation insurance. Anyone supplying staff to employers may also need an employment agency licence. For anyone who works like an employee, a properly structured EOR or your own entity is the compliant route.
The legal framework in brief
Hong Kong is a Special Administrative Region with its own common law system and statute book. The instruments you will hear most:
- Employment Ordinance (Cap. 57). Contracts, wages, holidays, leave, notice, severance, long service pay and unreasonable dismissal, with the 468 rule from January 2026.
- Minimum Wage Ordinance. HKD 43.1 an hour, reviewed every year.
- Mandatory Provident Fund Schemes Ordinance. 5% from each side, capped, with offsetting abolished from May 2025.
- Employees' Compensation Ordinance. Compulsory work injury insurance from day one.
- Inland Revenue Ordinance. Salaries tax, profits tax and the IR56 reporting duties.
- Personal Data (Privacy) Ordinance. Six data protection principles; the section 33 transfer rule is not in force, and mandatory breach notification has been proposed but not enacted.
- Tax and treaties. Profits tax of 8.25% and 16.5% on a territorial basis; about 60 tax treaties, but none with the United States.
- Authorities. Labour Department, MPFA, Inland Revenue Department, Immigration Department and PCPD.
Where the talent is
About 7.52 million people and a labour force of about 3.8 million, with unemployment of 3.9% in July to September 2026. Hong Kong is a regional base for finance, professional services, trade and logistics, with a growing innovation and technology cluster. English is widely used in business, Cantonese is the main spoken language, and Putonghua is increasingly common. Hong Kong runs on UTC+8 with no daylight saving. Foreign hires typically come in on the General Employment Policy, the Top Talent Pass Scheme or TechTAS, with processing of about 2 to 4 weeks.
| Area | Talent and industry concentration |
|---|---|
| Central and Admiralty | Finance, regional headquarters and professional services |
| Kowloon East | Second core business district, corporate and back-office functions |
| Hong Kong Science Park | Deep technology and research and development |
| Cyberport | Fintech and digital start-ups |
Hong Kong Implementation Kit
This page tells you the rules. The kit tells you what to do, in what order, and what goes wrong when you skip a step.
- Step-by-step checklist, from route selection to first payroll
- Contract checklist covering hours, notice and the 13th month
- MPF, insurance and IR56 filing calendar
- 2026 minimum wage, holidays and MPF caps at a glance
- Severance and long service pay after the end of MPF offsetting
- Work visa routes and sponsorship points
- Every official Hong Kong authority with direct links
This guide is general information, not legal, tax or immigration advice. The minimum wage, statutory holidays, MPF rules and data protection law change, and several were revised in 2025 and 2026. Confirm current figures with a qualified adviser or with Dryft. Last reviewed November 2026.
Ready to hire in Hong Kong?
Tell us who you want to hire and where they sit. You will get a cost model and a compliant route within a day, from a person who has done this before.