Hong Kong Payroll & Employment Law Cheat Sheet — 2025 Edition
7:38
Hong Kong Payroll & Employment Law Cheat Sheet — 2025 Edition
Your practical map through Hong Kong’s payroll and HR compliance landscape
Payroll in Hong Kong isn’t exactly a light jog — it’s a relay between the Inland Revenue Department (IRD), the Mandatory Provident Fund (MPF), and the Employment Ordinance (EO). But don’t worry — this guide keeps it clean, current, and human.
Whether you’re hiring your first employee or managing hundreds across Asia, this 2025 cheat sheet gives you a full overview of the latest laws, rates, and deadlines — minus the legal jargon.
1. Registration & Setup
Employees’ Compensation Insurance (ECI)
Mandatory for all employers under the Employees’ Compensation Ordinance (Cap 282).
Covers liabilities for work injuries or occupational diseases suffered by employees under contract of service.
Employers must maintain valid insurance at all times.
Employer’s Tax File Number (IRD)
Every employer is issued an Employer’s File Number from the Inland Revenue Department (IRD).
Used for filing Form IR56E/F/G/B/A.
If not automatically issued, apply by writing to the IRD with your Business Registration Certificate.
Registration of New Employees
Employers must file Form IR56E (Commencement of Employment) within 3 months of an employee’s start date.
Maintain updated employment records including wages, benefits, and contract terms for at least 12 months after employment ends.
2. Ongoing Compliance & Annual Reporting
Employer’s Tax Filing Obligations
Report remuneration via Form IR56A & IR56B within 1 month after the tax year ends (31 March).
For employees leaving service, submit IR56F (termination) or IR56G (departure from Hong Kong).
Hold final payment for tax clearance if an employee is leaving Hong Kong permanently.
Employees’ Compensation Insurance (ECI)
Employers must report any work injury or occupational disease to the Labour Department within the prescribed period based on severity.
Maintain incident records and insurance coverage certificates for inspection.
3. Mandatory Provident Fund (MPF)
Registration
Employers must enrol employees into an MPF scheme within 60 days of employment.
Governed by the Mandatory Provident Fund Schemes Ordinance (Cap 485).
New employees enjoy a 30-day contribution holiday — contributions start the following month after reaching 60 days’ service.
Contribution Rates (Unchanged 2025)
Party
Rate
Minimum Relevant Income
Maximum Relevant Income
Employer
5 %
HK $ 7,100
HK $ 30,000
Employee
5 %
HK $ 7,100
HK $ 30,000
Contributions are due by the 10th of each month following the pay period.
🆕 Key Reform: MPF Offset Abolition (1 May 2025)
From 1 May 2025, employers can no longer offset severance pay or long-service payments against accrued MPF contributions for service periods after this date. Plan ahead — your severance liability will rise.
4. Payroll Tax – Salaries Tax (Employees)
Employees in Hong Kong are taxed under the Salaries Tax system. Employers withhold and report via the IRD, but do not deduct tax at source unless directed.
2025 Tax Bands:
Taxable Income (HK $)
Rate
0 – 50,000
2 %
50,001 – 100,000
6 %
100,001 – 150,000
10 %
150,001 – 200,000
14 %
Above 200,000
17 %
(Standard rate 15 % of net chargeable income)
5. Employment Ordinance Essentials
Continuous Contract
A “continuous contract” currently means an employee works 18 hours/week for 4 consecutive weeks (“4-18 rule”).
🆕 From 18 Jan 2026 → becomes “4-68 rule” = 68 aggregate hours over 4 weeks or ≥ 17 hours/week. This broadens eligibility for statutory benefits.
Minimum Wage (Effective 1 May 2025)
HK $ 42.10/hour.
Employers must keep hourly records if monthly pay ≤ HK $ 17,200.
Working Hours & Leave
Standard hours: 8 hours/day, 48 hours/week.
Annual leave: Minimum 7 days after 1 year; + 1 day/year until 14 days max (after 9 years).
Statutory holidays increasing progressively to 17 days by 2030.
Weekly rest: 1 day (usually Sunday).
Sick, Maternity & Paternity Leave
Sick Leave: Earn 2 paid days/month in first year, then 4 days/month to max 120.
Maternity Leave: 14 weeks paid (80 % of average wages) if ≥ 40 weeks continuous employment.
Paternity Leave: 5 days paid for employees with ≥ 40 weeks continuous employment.
Termination & Final Pay
Final payment (excluding severance) must be made within 7 days of termination.
Severance / Long Service Pay = ⅔ × Last Month’s Wages × Years of Service (under EO Cap 57).
6. Payroll Requirements & Timing
Wages to be paid on the last day of each period or within 7 days after.
Maintain itemised payslips (showing base salary, allowances, deductions).
Keep employment records for 12 months after employment ends.
For departing employees leaving Hong Kong — file Form IR56G ≥ 1 month before departure and withhold final payment until IRD clearance received.
7. Payment & Banking
Wages can be paid by cash, cheque or bank transfer.
If cash payment → employee must sign to acknowledge receipt.
MPF trustees may require local HK bank transfers — check with your provider.
Employers must not charge employees for bank account setup or fees.
8. Penalties & Common Mistakes
Mistake
Penalty / Impact
Late ECI renewal
Fine up to HK $ 100,000 + imprisonment
Failing to enrol in MPF
Fine HK $ 350,000 + 3 years imprisonment
Late IR filings
Penalty and interest
Underpaying minimum wage
Criminal offence — fine HK $ 350,000 + imprisonment
Missing final payment deadlines
Civil claim by employee + interest charges
9. Bonus Tips from HR Forte
Plan for the MPF offset abolition: Budget for higher severance liabilities starting May 2025.
Audit your part-time workforce: The new “4-68 rule” means more workers may qualify for EO benefits.
Digitalise your payroll records: Use e-payslips and time tracking to stay SMW compliant.
Stay alert on holiday increases: 17 statutory days by 2030 = plan staffing and budgets.
Confirm tax clearance timelines: Hold final pay until IRD issues clearance for departing expats.
Don’t forget ECI: Every employer — even 1-person entities — needs coverage.
10. Stay Ahead with HR Forte & AskGenie
HR Forte simplifies Hong Kong payroll compliance — from IRD reporting to MPF to e-payslips — with full automation and real-time updates.
AskGenie, our AI compliance assistant, answers your HR and payroll questions instantly more than 10+ APAC countries (in any language).
Tune into TaxTok by HR Forte for bite-sized payroll cheat sheets and monthly updates.
Listen to our podcast on 'WTF Payroll' in Spotify, new episode monthly to get you updated on Asia compliance even if you are on the move.
Visit hrforte.com to learn more and get your free 2025 Asia Payroll Toolkit.