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How to Manage Your Payroll and Other Hong Kong Employer Obligations
FastLane Group I How to Manage your Payroll and Other Hong Kong Employer Obligations
About FastLane The Fastlane Group was founded in 2013 as an accountancy and advisory firm that combines innovation and technology to expert professional services within the SME market, with a particular focus on Entrepreneurs, Startups, Fast Growing Technology Companies, Startup Angel Investors and Venture Capitalists. The Fastlane Group provides best in class service for businesses wishing to launch and operate in Hong Kong, ensuring they maintain that financial and compliance needs as regulated in Hong Kong. Offering a diverse range of professional services including accountancy, auditing, company formation and payroll management and HR advisory assistance, the Fastlane Group is able to provide a holistic and comprehensive suite of services for our clients.
The Fastlane Group currently supports over 500 companies and is experiencing rapid growth with business partners and supporting networks.
Our Mission We strive to establish a secure and rewarding partnership with our customers to enable successful business operations within the SME market in Hong Kong. We facilitate and introduce our customers to cutting edge technologies across a suite of professional services, allowing the autonomy to build efficient and effective organizations. We are a business builder, professional advisor and accountant.
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This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
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FastLane Group I How to Manage your Payroll and Other Hong Kong Employer Obligations
Contents 1
Payroll
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What is Payroll? How is Hong Kong Payroll Performed? Mandatory Provident Fund (”MPF”) Online Payroll Software Payroll Outsourcing Services
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Employer Obligations
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Reporting Obligations Liability for Compensation for Work Injury and Occupational Disease
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Employment Contracts
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Leave Entitlements
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11-14
Rest Days Statutory Holidays Paid Annual Leave Sick Leave Maternity / Paternity Leave
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Professional Employer Organisations
15-16
What is a PEO? How Do PEO’s Work? What Are The enefits of Using a PEO
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FAQ
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FastLane Group I How to Manage your Payroll and Other Hong Kong Employer Obligations
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Payroll
Payroll
Business owners, regardless of the size of their business, must know how to manage their payroll process and records. Proper management of a payroll process will not only ensure that their employee wages are accurate, but will also help maintain compliance with Hong Kong’s various employment regulations. In this eBook, we look to provide guidance on the Hong Kong payroll process and other employer obligations, and how a Hong Kong company can best manage these matters.
1.0 What is Payroll? Payroll refers to the list of employees that receive compensation from their employer for their services rendered. It also refers to the total compensation that employees are entitled to receive during their employment.
1.1 How is Hong Kong Payroll Performed? In Hong Kong, payroll is typically processed on a monthly basis according to the terms set in the employees employment contract. To determine an employee’s total compensation, various factors are often taken into consideration. This includes the number of hours an employee has worked in a set time period, their benefits or payment arrangements.
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An average payroll takes more than a few days to process. Utilizing accurate and current payroll data can significantly reduce the payroll processing time, especially for large and complex payrolls. To help facilitate efficiency, organizations may benefit from engaging a professional service firm to assist in their monthly payroll calculations.
Click here or scan the code below for our blog “ Cloud Payroll: How Cloud Strategy Helps Businesses”
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Payroll
1.2 Mandatory Provident Fund (“MPF”)
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MPF’s are compulsory retirement schemes / pension funds that are created by the Hong Kong government and are provided by approved private organisations. MPF’s are a key aspect of Hong Kong payroll calculations and are guided by the Mandatory Provident Fund Schemes Ordinance (“MPFSO”) In accordance with the MPFSO, Hong Kong employees and their employers are required to make monthly contributions to the employee’s MPF scheme, making MPF calculations a key component of payroll calculations. MPF payments are made in accordance to an individual’s salary and period of employment.
MPF’s are only intended to cover individuals who are either employed in or are from Hong Kong. To the extent that an employee is working outside of Hong Kong, they may be covered under the MPF system if they can provide sufficient evidence of a connection between themselves and Hong Kong. What is Considered a Sufficient Connection to Hong Kong? A Hong Kong resident employed in Hong Kong by a company engaging in business in Hong Kong to conduct work outside Hong Kong for a limited period should generally be considered as having a sufficient connection to the city. Such examples include aircraft crews and pilots, cross-boundary lorry drivers and professionals on overseas assignments.
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FastLane Group I How to Manage your Payroll and Other Hong Kong Employer Obligations
Payroll
What are Employers Obligations Under the MPF Scheme? Employers have a range of obligations they must meet to ensure that they are properly supporting their employees MPF schemes. Firstly, they must complete the one-time obligation of assisting their employees in opening MPF accounts. After, they must meet ongoing obligations of remitting contributions to their employees MPF schemes once every contribution period (generally the wage period).
To make payments to their employees, employers are required to calculate their employee’s relevant income and the amount of mandatory contribution that must be made for each contribution period. The employer must then deduct the calculated amount from their employee’s income and remit that sum to their MPF account.
Employers and employees are each required
ted amount does not exceed 15% of their employees’ total emoluments.
to make regular mandatory contributions of 5% of the employee’s relevant income to an MPF scheme, subject to relevant income levels. For a monthly-paid employee, the minimum and maximum relevant income levels are HKD 7,100 and HKD 30,000 respectively. ‘Relevant income’, as defined by Hong Kong’s Mandatory Provident Fund Schemes Authority (“MPFA”), refers to all monetary payments paid or payable by an employer to an employee. Such payments include wages, salary, leave pay, fees, commissions, bonuses, gratuities, perquisites or allowances as outlined under Chapter 57 of the Hong Kong Employment Ordinance.
Employers can claim tax deductions on their mandatory MPF contributions if the contribu-
Employee obligations Employees do not face as many compliance obligations as their employers do. However, it is vital for employees to ensure that they make the regular mandatory contribution of 5% of their relevant income to their relevant scheme as mentioned above.
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Payroll
Are There Exemptions Under an MPF Scheme? Not all employees working in Hong Kong must be enrolled under an MPF scheme. Expatriates residing in Hong Kong for employment purposes can obtain permission to be exempted by the Hong Kong Government. Permission can only be granted if the employee in question is either a member of an overseas retirement scheme, or will reside in Hong Kong for a period of 13 months or less. Non-compliance In the event an employer fails to adhere to their MPF obligations, the Mandatory Provident Fund Schemes Authority (“MPFA”) will issue the employer with a “surcharge notice”. This notice will impose a 5% surcharge on default contributions and the surcharge received will go entirely to the employee’s MPF account. Defaulting on contributions is a criminal offence and the defaulter is liable to a maximum penalty of a HKD 450,000 fine and imprisonment for four years. The MPFA can also impose a financial penalty of HKD 5,000 or 10% of the default amount, whichever is greater, on the defaulting employer.
Click here or Scan the code for our blog “Hong Kong MPF Contribution Rules and Regulations”
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FastLane Group I How to Manage your Payroll and Other Hong Kong Employer Obligations
Payroll
1.3 Online Payroll Software Many businesses typically utilize manual payroll processes whereby manual payroll calculations are performed each day. Unfortunately, this traditional approach is no longer the most efficient way for a company to manage their payroll as the process is time consuming and susceptible to calculation errors. As with any business, the penalty for incurring such mistakes can be very costly.
4. Payroll records and slips are made as instructed and specified by the users 5. Payroll reports and tax filing information calculated will become available for the users
Online payroll software introduces an efficient alternative to traditional manual processes. Utilizing cloud-based technology, third party softwares are made available to their users over the internet. In recent years, such software has seen increased adoption and has become the foundation for how businesses operate. Such applications can range from accounting tools like Xero to payroll focused tools such as Talenox and Gpayroll. Because of developments in cloud strategy, businesses are now able to access IT infrastructure that they previously would not be able to afford. How Does an Online Payroll Software Work? Regardless of the application, online payroll softwares will follow the below process: 1. Users will visit the website of the online payroll software and will log into their secure portal
Check out FastLane’s partners of online payroll tools, Gpayroll and Talenox!
2. Users will enter their employee’s work hours and leave information for the relevant time period 3. Payroll and MPF is calculated automatically in the portal and quickly processed
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Payroll
How Online Payroll Software can Improve the Payroll Process As previously mentioned, cloud-based online payroll tools such as Talenox and GPayroll grant users the ability to move their payroll process online. Transitioning to an online payroll tool allows businesses to enjoy the following benefits: Cost Advantages
Greater Focus on Core Areas of Business Online payroll software lets companies automate their payroll calculations and the payments made to their employees, tax authorities and any third parties and reduce processing manpower. Improved Financial Control
Greater control over costs can also be achieved because users can subscribe to varying pricing plans to suit their business needs. By considering the number of users and employees who will utilize the online payroll software, businesses can adjust the functionality of the software as their businesses further develop.
As dictated by Hong Kong Company Law, it is the employers responsibility to ensure that their statutory filings, such as MPF and year-end tax filings, are submitted punctually and without error. Companies who discover errors in their statutory filings must dedicate additional resources to remedy these inaccuracies. Fortunately, online payroll softwares provides auto-regulatory compliance features. Such features provide users with frequent compliance updates and also automatically implemented during payroll processing. These systems can simplify the steps employers must take to ensure that they are aware of, and can act accordingly to, any new legislative developments in respect of compliance matters.
Increased Efficiency
What to Look for in an Online Payroll Software?
Users who subscribe to an online payroll software will enjoy up-to-date versions of the software at all times and will not be required to incur the extra costs commonly associated with system upgrades commonly found in traditional payroll softwares.
Online payroll tools typically provide their users with the ability to utilize electronic payslips, allowing employers the luxury of saving time and money usually associated with managing and distributing hard-copy payslips. Manual data entry is a payroll related task notorious for being a time-consuming endeavor. However, online payroll tools allow users to download templates where they can upload and consolidate all of their company’s employee and payroll related information. These templates have been designed around the concept of efficiency and ease of use. The consolidated
When identifying an online payroll software to use, careful consideration must be made on the key features provided. Typically, an online software must provide payroll calculation functions and statutory reporting features. Popular online payroll softwares such as Talenox and Gpayroll allow users to enjoy additional useful functions such as different types of leave entitlement settings, online leave request and approval and company wide leave calendar.
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FastLane Group I How to Manage your Payroll and Other Hong Kong Employer Obligations
Payroll
1.4 Payroll Outsourcing Services Payroll outsourcing services have gained popularity in recent years as it allows companies to enjoy quality services by professional payroll firms at competitive rates and allows the in-house HR personnel to focus on activities such as recruitment, compensation reviewand training. Benefits to Outsourcing Payroll Much like online payroll tools, outsourcing a payroll process to a professional payroll firm can allow a business to concentrate on their core business activities. This frees up human resources and accounting personnel to work more on strategic tasks that could ultimately affect your bottom line. Repetitive tasks will no longer require hours being taken away from a company’s key management. Employers only need to make contact with their outsourced payroll specialist by approving the pay-run for each pay period. According to Talenox, an online payroll software company, your staffs knowledge on local tax and labour laws are one of the key considerations to be made when deciding whether to utilize a professional payroll firm. Outsourcing to a professional payroll specialist well versed in local regulations can reduce the risk of non-compliance and provide a greater peace of mind. Confidentiality may also play a role when it is preferred that personal records, salary and other payroll details not be disclosed to internal staff members.
Click here or Scan the code for our blog “How HR Software Systems Can Improve Your Payroll Process”
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FastLane Group I How to Manage your Payroll and Other Hong Kong Employer Obligations
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Employer Obligations
Employer Obligations
When building a team and managing staff, Hong Kong companies have various employer obligations that they must adhere to. These obligations are dictated and governed by various ordinances and can broadly be categorized into the categories below.
According to the Hong Kong Labour Department, employers should follow the minimum insurance cover when taking out employees’ compensation insurance:
2.1 Reporting Obligations When a Hong Kong company has hired an employee, they must notify the Hong Kong Inland Revenue Department (“IRD”) within three months of the staff’s employment. Upon termination of a staff, sufficient notice per the employment contract must be given (though no less than seven days is common). Hong Kong employers are also required to maintain proper records of their employee’s wage and employment history, and all relevant accounting and payroll records must be maintained for at least seven years. In addition, employers must report remuneration paid to employees on an annual basis.
2.2 Liability for Compensation for Work Injury and Occupational Disease Under Hong Kong’s Employees’ Compensation Ordinance (“ECO”), no employer shall employ any employee unless the company has an insurance policy in place to cover any potential injuries or liabilities incurred in respect of all their employees. Employers who fail to comply with the ECO to secure an insurance cover are liable to a maximum fine of HKD 100,000 and imprisonment for two years.
As it is the employer’s responsibility to ensure that adequate coverage is available for their employees’, it is recommended to notify an insurer when developments or issues arise. Unlike ECI which is mandatory in Hong Kong, health insurance is not. The decision on whether or not to provide employees with health insurance lies with the employer. Despite not being mandatory, the vast majority of Hong Kong businesses provide health insurance to their employees, though the level and extent of the coverage varies greatly. Health insurance plans can be purchased for a group of individuals from providers. Hong Kong health insurance schemes generally provide coverage for the following categories: Hospital / Inpatient Outpatient Dental Worldwide evacuation
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FastLane Group I How to Manage your Payroll and Other Hong Kong Employer Obligations
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Emloyment Contracts
Employment Contracts
Employment in Hong Kong follows the rules set by Hong Kong’s Employment Ordinance. Generally, the terms set in employment contracts must satisfy the minimum entitlements stated in the Employment Ordinance regarding statutory holidays, MPF, sick and maternity leave, and severance. In addition, when drafting the terms of an employment contract, while there are no explicit legal guidelines pertaining to probationary periods, Hong Kong’s Labour Department suggests a maximum probationary period of three months. In the event that a firm hires a foreigner, that individual must have a valid work visa to be able to work in Hong Kong. It is the employers’ responsibility to apply for a valid work visa on the employee’s behalf before he or she can commence their employment in Hong Kong.
Click here or Scan the code below for our blog “Hong Kong Visa: Obtaining Employment in Hong Kong”
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Leave Entitlement
Leave Entitlement
In accordance with Chapter 4 of Hong Kong’s Employment Ordinance, “an employee shall enjoy rest days, statutory holidays and paid annual leave during employment”. Employees are entitled to various forms of leave, with each variation of leave structured around factors concerning eligibility. Although not all forms of leave provide payment, many do. As such, leave entitlement is a vital consideration which must be made during the payroll management process.
4.1 Rest Days
4.2 Statutory Holidays Employees of a Hong Kong company, regardless of their length of employment, are entitled to the following 12 statutory holidays: 1) The first day of anuary 2) Lunar New Year’s Day 3) The second day of Lunar New Year 4) The third day of Lunar New Year 5) Ching Ming Festival
Rest Days, as defined by the Employment Ordinance, is a continuous period of not less than 24 hours during which an employee is entitled to abstain from working for their employer. In the event that an employer fails to grant rest days to their employees, they will be liable to possible prosecution and a fine of HKD 50,000. Similar penalties can also be presented to employers who compel their employees to work on their designated Rest Days.
6) Labour Day, being the first day of May 7) Tuen Ng Festival 8) Hong Kong Special Administrative Region Establishment Day, being the first day of anuary 9) The day following the Chinese Mid-Autumn Festival 10) Chung Yeung festival 11) ational Day, being the first day of October 12) Chinese Winter Solstice Festival or Christmas Day (at the option of the employer) Please note that the Hong Kong government may change the dates of Hong Kong’ statutory holidays.
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FastLane Group How to Manage your Payroll and Other Hong Kong Employer Obligations
4.3 Paid Annual Leave In accordance with the Employment Ordinance, “an employee is entitled to annual leave with pay after having been employed under a continuous contract for every 12 months”. As an employee extends their length of service with their employer, they will also become entitled to progressively increasing amounts of paid annual leave, up to a maximum of 14 days in accordance with the below scheme.
Leave Entitlement
In the event that any rest day or statutory holiday falls within a period of paid annual leave, the employee, those days shall be counted as annual leave. In such situations, the employer must provide their respective employee with another rest day or holiday. In addition, as the name suggests, employees will be entitled to receive pay during their annual leave entitlements. The daily rate of annual leave pay is equivalent to their average daily wages earned. If the respective employee has been employed for a period of less than 12 months, then their annual pay leave shall be the equivalent of their first day of employment. There may be instances where an employee may choose not to utilize their annual pay leave, and instead receive payment. If an employee has utilized leave entitlement which exceeds 10 days, then they may receive payment.
4.4 Sick Leave Employees looking to utilize their paid annual leave should consult their employers prior to claiming their entitled paid annual leave for a period of no less than at least 14 days in advance. However, such a time period can be waived if mutually agreed upon by both the employer and employee. When an employer grants their employees paid annual leave, the manner in which the paid annual leave is utilized is determined by how many days the employee requests to utilize. For the utilization of paid annual leave not exceeding 10 days, the employee may claim up to 3 days separately. However, if the employee requests for paid annual leave exceeding 10 days, then at least 7 of those days should be granted consecutively to each other. ©FastLane Group November 2019
A sick employee is entitled to claim Sick Leave if they are employed under a continuous contract. An employee is considered to be employed continuously if they have been employed by the same employer for a period of four weeks or more. In addition, the employer must have worked at least 18 hours each week in respect to their employment. Upon meeting the eligibility requirements to be entitled to Sick Leave, employers and their employees should familiarize themselves with the circumstances around the utilization of sick leave allowances. Paid Sick Leave can be divided into two categories - utilization of up to 36 days of Paid Sick Leave (Category 1) and then 84 days (Category 2).
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Leave Entitlement
Paid Sick Leave which falls under the first category must be supported by recognized medical certificates. Such certificates can be issued by a registered medical practitioner, registered Chinese medical practitioner or a registered dentist. For individuals who utilize more than 36 days of paid sick leave, their subsequent paid sick leaves will fall under Category 2. In this situation, such individuals are also required to prepare medical certificates. However, brief investigations of the employee’s treatment may be conducted upon the employer’s request. Generally, the daily rate of sickness allowance is determined by calculating the sum equivalent of four-fifths of the average daily wages of the employee for a 12 month period preceding their day of sickness. In situations where an employee is employed for a period of less than 12 months, then the sickness allowance should be calculated based on their current length of employment. Employees who do not fully utilize their allocation of sick leaves are able to accumulate paid sickness days if they are employed under a continuous contract. Additional paid sick leaves are accumulated at a rate of two paid sick leaves for each completed month of the employee’s first 12 months of employment. Subsequent time spent employment will see employees accumulate additional paid sick leaves at a rate of four paid sick leaves for each additional completed month. However, an employee cannot accumulate more than 120 days of paid sick leave at any one time during their employment.
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FastLane Group How to Manage your Payroll and Other Hong Kong Employer Obligations
4.5 Maternity / Paternity Leave New parents or parents-to-be are entitled to the maternity and paternity leave under the below circumstances. Maternity Leave Female employees under a continuous contract are entitled to maternity leave if they provide notice to their employer regarding their pregnancy, and their intention to take maternity leave. Female employees will thus be entitled to the following periods of leave: A continuous period of 10 weeks’ maternity leave If confinement occurs later than the expected date of confinement (the delivery of a child), a further period equal to the number of days from the day after the expected date of confinement to the actual date of confinement An additional period of leave for not more than four weeks on the rounds of illness or disability due to the pregnancy or confinement In accordance with Chapter 6 of the Employment Ordinance, a pregnant employee may commence their maternity leave from two to four weeks before the expected date of confinement upon discussion with their employer. Pregnant employees are also eligible for paid maternity leave if they meet the following conditions: She has been employed under a continuous contract for not less than 40 weeks immediately before the commencement of their scheduled maternity leave She has given notice to her employer of her pregnancy and intention to take maternity leave after her pregnancy has been confirmed
Leave Entitlement
She has produced a medical certificate specifying the expected date of confinement (if required by her employer) Paid maternity leave should cover a period of 10 weeks, at the same rate of normal pay for the employee. Paternity Leave Male employees are entitled to 5 days of paternity leave for each confinement of their spouse/partner. Paternity leave can only be granted if the following conditions have been met: The male employee is the father of a new-born child, or is a father-to-be; The male employee is employed under a continuous contract; and The male employee has given the required notification to their employer. The terms surrounding how a male employee may utilize their paternity leave is similar to that of a female employee with their respective maternity leave. Soon to be fathers must notify their employer of their intention to take paternity leave at least 3 months before the expected due date of delivery of the child. They must also notify their employer of the dates that he wishes to take paternity leave. If a male employee fails to give the above mentioned 3 months’ advance notice to their employer, he must notify his employer at least 5 days before the date of his paternity leave. Male employees will be entitled to payment during their paternity leave if they have been employed under a continuous contract for no less than 40 weeks, immediately before the start date of their paternity leave. In addition, they must provide required documents to their employer within either (i) 12 months after the first day of paternity leave taken; or (ii) within 6 months after cessation of employment if the male employee ceases to be employed). The
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Professional Employer Organizations
Professional Employer Organizations
To achieve and sustain growth, companies must remain lean and efficient. Oftentimes, this entails minimizing the costs associated with hiring and the administration of the staff. To address these issues, companies could utilize the services of professional employer organisations (“PEO”) to handle their business operations.
5.1 What is a PEO?
As a result of the service contract, a PEO will assume greater employer responsibilities than what is typically achieved through general HR outsourcing. For instance, the staff contracted out by a Hong Kong PEO can ensure that a client is compliant with all Hong Kong employer obligations as dictated by Hong Kong Company Law. Furthermore, they can provide monthly services such as salary and tax calculations, payroll calculation and management in addition to handling aspects regarding leave entitlement.
A PEO is an entity that provides employee management services to companies. A PEO essentially serves as an outsourced functional team supported by an external professional HR solution provider under a specific service agreement. Such services can include all aspects of employee administration, payroll processing, work permit, worker compensation insurance, benefits management and recruitment.
5.2 How Do PEO’s Work? A PEO will contract out staff to clients to perform designated tasks and are often recruited under the client's instructions. The client and PEO essentially enter into a service contract whereby the PEO will assume responsibilities for the client’s HR-related employer responsibilities whereas the client will continue to control their operations and employee functions.
©FastLane Group November 2019
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FastLane Group How to Manage your Payroll and Other Hong Kong Employer Obligations
Professional Employer Organization
5.3 What Are The Benefits of Using a PEO? A PEO can help companies regardless of whether they are undergoing expansion into a new market, or are trying to provide their staff with competitive benefits and flexibility without having to build a full HR infrastructure. In addition, these are the typical reasons for why a company will engage a PEO are as follows: Support company’s operations in a new market within a few days
The benefits are most evident during a global business expansion into a new country or when pursuing the rapid staff hiring within a short timeframe. As PEO’s can assist in all aspects related to HR, they can help formulate procedures and strategies for an effective and quick setup process and can utilize staff already contracted by the PEO. For example, the contracted staff of a Hong Kong PEO will be knowledgeable on local regulations, they can also advise clients on their employer obligations and will minimize potential risks associated with non-compliance.
Hire local and overseas employees quickly with minimal obstruction Reduce time spent processing HR and administrative tasks Become compliant with the various employer and compliance obligations Provide clients access to cost-effective, comprehensive benefits Enjoy the HR infrastructure established by the external professional HR solution provider
Click here or Scan the code below for our blog “What is a PEO and How Does a PEO Model Help Your Business?”
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FAQ
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FAQ
FastLane can provide our experience and expertise to ensure that businesses do not need to dedicate excessive resources to handle their administrative and HR tasks. Below are the most frequent asked questions FastLane has encountered.
6.1 When should you outsource your payroll process? Outsourcing payroll processes lets professional payroll service providers handle all your payroll, and even possibly HR related tasks. Doing so frees up resources for more strategic tasks that can ultimately affect a company’s bottom line as repetitive tasks will no longer require hours of attention from a company’s key management. When considering outsourcing a payroll process, companies should examine their internal resources. What is my in-house capability Is my HR staff familiar with local tax and labour laws? Does my payroll contain confidential information that I’d rather my internal teammates in HR not be privy to? If any of these questions make you consider outsourcing your payroll, then perhaps it is time to do so!
6.2 What are the benefits of using cloud-based / online payroll software? Cloud-based / online payroll software offers a diverse range of benefits not commonly found in traditional payroll systems. Very simply, users of a cloud-based payroll software can enjoy cost advantages, increased efficiency, improved financial control and can devote more time and resources to business driving activities.
6.3 What is our fee for payroll services? FastLane charges a setup and monthly processing fee in accordance with our clients headcount. Employees will only be counted towards the headcount when they are onboarded. Payroll, MPF calculations, tax administration and related off-boarding termination filing services are included in our monthly fee. Other advisory fees are based on fixed fee quotations on a case by case basis.
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FAQ
6.4
6.6
What is an Employee’s Compensation Insurance (“ECI”)?
What is Hong Kong’s stance on health insurance and how do I enrol my employees in one?
Under Hong Kong’s Employees’ Compensation Ordinance (“ECO”), no employer shall employ any employee unless the company has an insurance policy in place to cover any potential injuries or liabilities incurred in respect of all their employees. Employers who fail to comply with the ECO to secure an insurance cover are liable to a maximum fine of HKD 100,000 and imprisonment for two years.
6.5 How do I enrol into an MPF scheme? According to the MPFA, both full-time and part-time employees are covered by the MPF system and it is the employer’s responsibility to enroll their employees in an MPF scheme within the first 60 days of their employment. To do so, employers should consult the MPFA’s List of MPF Approved Trustees for qualified MPF schemes. The employer, upon selecting one or more of the MPF schemes available on the market, should offer them to their employees. Self-employed individuals must also enrol themselves into an MPF scheme within 60 days after becoming self-employed. However, exempted persons are not required to do so.
Unlike ECI which is mandatory in Hong Kong, health insurance is not. The decision on whether or not to provide employees with health insurance lies with the employer. Despite not being mandatory, the vast majority of Hong Kong businesses provide health insurance to their employees, though the level and extent of the coverage varies greatly. Health insurance plans can be purchased for a group of individuals from providers. Hong Kong health insurance schemes generally provide coverage for the following categories: Hospital / Inpatient Outpatient Dental Worldwide evacuation
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