Payroll and HR obligations for Hong Kong employers

Although Hong Kong is very business-friendly and constantly ranked among the top countries for its ease of doing business, when it comes to HR and payroll compliance, most foreign owned companies and start-up businesses find employer and employee compliance burdensome. This is often due to the limited resources available in time and funds. Hiring an employee early on solely for the administration of personnel matters for a small team can rarely justify the expense. However, the consequences of an oversight and the resulting potential non-compliance with labour laws and related regulations can be severe. In this short guide, we will highlight the most common issues business owners and directors should keep in mind.

Hong Kong Budget 2023-24

Hong Kong’s Financial Secretary, Paul Chan, outlined his budget for 2023-24 in his Budget Address on 22 February 2023. Highlights of some measures of particular interest to Hong Kong companies and those with business interests in Asia, are set out below.

Employment Support Scheme 2022 (ESS 2022)

The Hong Kong Government has launched a third round of financial support to aid employers retain their current employees, or even employ more staff, as part of its continued Anti-epidemic Fund measures. Eligible employers can receive subsidies of up to HKD8,000 per employee for three months whilst eligible self-employed applicants can receive a one-off payment. The Employment Support Scheme 2022 eligibility criteria and application process are largely the same as for the initial scheme launched in 2020. The application process opens today, 29 April, and runs until 12 May 2022. Eligibility Employer: must have participated in Mandatory Provident Fund (MPF) or set-up Occupational Retirement (ORSO) Schemes on or before 31 December 2021; is not listed in Part 1 of the Exclusion List (including Government organisations, consulates, universities); is not involved in winding up, deregistration or striking-off process, or has not become dormant; and has fully settled all clawback/penalty payments relating to the 2020 ESS by 10 May 2022.  Self-employed person: should apply in an individual capacity as a self-employed person; must have successfully created an MPF ‘self-employed person’ account on or before 31 December 2021, and have not terminated the account at the time of application; and where an eligible self-employed person has more than one MPF ‘self-employed person’ account, only one application can be made. Subsidy structure and calculations Employers can choose the reference month against which the MPF/ORSO wage records are referenced to calculate the subsidies. Where employers successfully applied for ESS 2020 subsidies, the same reference month can be used, or if preferred, a month between October to December 2021 can be chosen if it provides a higher wage subsidy. New applicants must select a reference month

Employment Support Scheme (ESS)

The Hong Kong Government has announced the application details for the second payment instalment of its Employment Support Scheme (ESS). Eligible employers may submit their applications for the second tranche wage subsidies from 31 August to 13 September 2020. Employers who have previously applied for the first tranche of the wage subsidies (for wages paid from June to August 2020) must submit a new application (whether the first application was successful or not).