Hong Kong is one of the most employer-friendly jurisdictions in the world, but that doesn’t mean there’s nothing to manage. If you’re hiring employees in Hong Kong, you need to understand your obligations around the Mandatory Provident Fund, salaries tax filings, minimum wage, and the rules that determine which workers qualify for statutory protections. This guide covers each of these areas so you know exactly where your compliance responsibilities sit.
Mandatory provident fund
The Mandatory Provident Fund (MPF) is Hong Kong’s retirement savings scheme. Both employers and employees contribute, and it’s your responsibility as the employer to enrol staff, collect contributions, and remit them to a registered MPF trustee. Here’s what the scheme requires.
Contribution rates and cap
Both you and your employee each contribute 5% of the employee’s monthly relevant income. Contributions are calculated on income between HKD 7,100 and HKD 30,000 per month, so the maximum mandatory contribution from each party is HKD 1,500 per month.
Employees earning below HKD 7,100 per month are exempt from making their own contributions, but you as the employer still contribute 5% of their income. There’s no exemption on the employer side for low earners.
A proposed increase to the HKD 30,000 cap is currently under government review and was submitted for consideration by mid-2026. It hasn’t taken effect yet, so your current obligations are calculated on the existing HKD 30,000 ceiling.
The mpf offsetting change
From May 1, 2025, you can no longer use your MPF employer contributions to offset severance payments or long service payments for service your employees accrue after that date. This is a significant change from the previous rules, which allowed employers to reduce these statutory payments using accumulated MPF contributions.
The transition rules include a grandfathering provision. For employees whose employment spans the May 1, 2025 cutoff, service accrued before that date can still be offset using the old method. Service accrued on or after May 1, 2025 can’t be offset. If you haven’t already recalculated your potential liabilities with this split in mind, now is the time to do so.
Enrolment obligations
You must enrol a new employee in an MPF scheme within 60 days of their employment start date. This applies to full-time and part-time employees who meet the continuous contract threshold, which the next section covers in more detail. Missing the enrolment window creates regulatory exposure, so build this into your onboarding process rather than treating it as an afterthought.
Salaries tax: your filing obligations
Hong Kong doesn’t operate a Pay As You Earn (PAYE) system, so you don’t withhold income tax from your employees’ salaries and remit it to the government. Employees are responsible for paying their own salaries tax directly to the Inland Revenue Department (IRD). Your role is different: you have reporting obligations, not withholding ones.
Ir56b: the annual employer’s return
Each year, you must file an IR56B with the IRD. This is the annual employer’s return and it reports the remuneration you’ve paid to each employee during the tax year. The IRD uses it to issue tax demand notes to your employees. File it accurately and on time; errors or omissions create problems for both you and your workforce.
Ir56e: new hire notification
When you hire a new employee, you must file an IR56E with the IRD within three months of their start date. This is how the IRD learns about new employment relationships. It’s a straightforward form, but it’s a legal requirement, and the three-month window runs from day one of employment.
How salaries tax works (for context)
While you don’t calculate or remit salaries tax, it helps to understand the rates your employees face, since their tax position can come up in compensation negotiations. For the 2025/26 and 2026/27 tax years, salaries tax applies at progressive rates: 2% on the first HKD 50,000 of net chargeable income, 6% on the next HKD 50,000, 10% on the next HKD 50,000, 14% on the next HKD 50,000, and 17% on the remainder. Alternatively, employees can elect to pay at the standard rate of 15% on net income up to HKD 5,000,000, with 16% applying to any income above that threshold. The IRD applies whichever method results in a lower tax bill.
Hong Kong has no value-added tax or goods and services tax, which keeps the overall tax compliance burden relatively light for businesses operating here.
Minimum wage from may 2026
Hong Kong’s statutory minimum wage increases periodically. From May 1, 2026, the rate rises to HKD 43.1 per hour, up from HKD 42.1 per hour, which took effect on May 1, 2025.
You must pay every employee at least the applicable minimum wage rate for all hours worked. To support enforcement, there’s a monthly monetary cap on the record-keeping requirement: if an employee’s monthly wages exceed HKD 17,600, you’re not required to keep records of their daily hours worked, since it’s presumed they’re well above the minimum. For employees earning at or below that threshold, you must maintain detailed hourly records.
Keep all payroll records for at least seven years. That retention period applies regardless of whether an employee is still with you.
The continuous contract and the 468 rule
Many of Hong Kong’s statutory employment protections only apply to employees employed under a “continuous contract.” Getting this definition right matters because it determines who qualifies for annual leave, sick leave, severance pay, and other statutory benefits.
As of January 18, 2026, the continuous contract threshold operates under an updated “468 rule.” An employee is under continuous employment if they work 17 or more hours per week, or 68 or more hours over any rolling four-week period. This replaces the previous “418 rule,” which used a lower threshold of 18 hours over four weeks.
If you employ part-time workers or anyone on a reduced schedule, check their hours against the 468 rule. Workers who consistently meet or exceed the threshold are entitled to the full range of statutory protections under Hong Kong employment law, and treating them otherwise is a compliance risk.
Hiring in hong kong through an Employer of Record
If you don’t have a legal entity in Hong Kong, you can still hire there through an Employer of Record (EOR). The EOR acts as the legal employer on your behalf, handling MPF enrolment and contributions, IR56B and IR56E filings, payroll processing, and compliance with minimum wage and continuous contract rules. You retain day-to-day management of the worker while the EOR absorbs the compliance infrastructure.
This arrangement is particularly useful for companies testing the Hong Kong market before committing to entity setup, or for those who want to hire a small number of staff without building out a local HR and payroll function. If you’d like to understand more about how the model works, this guide to what is an Employer of Record explains the structure in detail.
RemotePass offers EOR services across Hong Kong and a wide range of other markets, with built-in MPF administration and payroll compliance handled end-to-end.
Book a demo to see how RemotePass handles Hong Kong payroll and MPF compliance.
Frequently asked questions
Do I have to withhold income tax from my hong kong employees’ salaries?
No. Hong Kong doesn’t have a PAYE withholding system. Your employees pay their own salaries tax directly to the Inland Revenue Department. Your obligations are to file the IR56B annual return and to submit an IR56E within three months of each new hire’s start date.
What happens if I miss the 60-day mpf enrolment window?
Failing to enrol an employee in an MPF scheme within 60 days of their start date is a breach of the Mandatory Provident Fund Schemes Ordinance. You can face penalties and be required to make up any contributions that should have been made. Build enrolment into your standard onboarding checklist to avoid this.
Can I still offset severance payments against mpf contributions?
Only for service accrued before May 1, 2025. For any service your employees accrue after that date, you can no longer use your MPF employer contributions to reduce severance or long service payments. If an employee’s tenure spans the cutover date, the two periods are calculated separately under the transitional rules.
Does the continuous contract threshold apply to part-time workers?
Yes. Part-time employees who meet the 468 rule threshold, 17 or more hours per week or 68 or more hours over any four-week period, qualify as employees under a continuous contract. They’re entitled to the same statutory protections as full-time staff, including annual leave, sick leave, and severance pay.
