Mandatory Employer Burden in Hongkong SAR

General

The employer burden in Hong Kong mainly includes the following aspects: 

1. Mandatory Provident Fund (MPF):  This is a retirement protection system established by the Hong Kong government, which requires both employers and employees to contribute funds to provide basic economic security for employees after retirement.  The Employment Ordinance, Cap. 57

2. Employees' Compensation Insurance:  According to the Employment Ordinance in Hong Kong, employers must purchase employees' compensation insurance to deal with work-related accidents. Otherwise, employers may face substantial fines and compensation." Employees' Compensation Ordinance, Chapter 282

Q: Who is entitled to those Employer Burdens

A:

The Mandatory Provident Fund Scheme requires the participation of all employees and self-employed individuals aged between 18 and 65, unless exempted by relevant laws and regulations in Hong Kong. Upon reaching the age of 65, the contributions can be withdrawn as retirement funds. Employers have a legal obligation to register their employees for the scheme; failure to do so may result in criminal liability and fines.

Employee's compensation is applicable to all full-time or part-time employees hired under employment contracts or apprenticeship training contracts, including domestic assistants, agricultural workers, seafarers working on registered vessels in Hong Kong and employees engaged in other work on such vessels.

Q: How much is the monthly contribution to MFP?

A:

The Mandatory Provident Fund (MPF) comprises mandatory contributions and voluntary contributions. 

1）In terms of mandatory contributions, employees and temporary staff are obligated to contribute 5% of their relevant income to their MPF accounts, subject to minimum and maximum limits on the income. 

Presently, for monthly salaried employees, the minimum threshold is HK$7,100 while the maximum limit is HK$30,000. 

This implies that the employer's monthly 

    HK$ 355≤ Employer contribution to MPF ≤ HK$1,500. 

2）In terms of voluntary contributions, the mandatory contribution limit of 5% of monthly income may be perceived as inadequate by certain employees and employers for retirement planning purposes. 

As a result, they may wish to make additional voluntary contributions. The discretionary portion of MPF is contributed by both employers and employees through mutual agreement on employment agreement. It will be paid in regular based on a predetermined percentage corresponding to an employee's income alongside the mandatory contribution into the MPF scheme without any upper constraint. This provides employees with enhanced autonomy and flexibility.

Q: Any other details Horizons would like to share about the MPF liability and Contributions Deposit?

A:

According to the Hong Kong MPFA, there is a provision called "Contribution Holiday" that applies only to employees for Mandatory contribution (MC)n to MPF (EE VC to MPF)

There's no "contribution holiday" for Voluneteery Contribution to MPF ( EE VC to MPF).

However, due to the setup of this contribution holiday, the first contribution deposit after onboarding will be included in the payroll report in the calendar month following 30 days of employment. 

For example, if Employee Jacky CHEUNG's employment agreement commenced on June 5th, he is entitled to a 30-day contribution holiday for EE MC to MFP from June 5th to July 4th. 

Nevertheless, EOR Horizons are still obligated to make MPF contributions starting from June 5th. 

Horizons will withhold Employee Jacky's contributions (MC) from July 5th to August 31st and VC(from June 5th to August 31s)  and include them in his August payslip.

Horizons will also file the both VC and MC ontribution by Employer from June 5th to August 31st into the August actual payroll. 

Additionally, both employee and employer contributions (June 5th and August 31st) must be deposited before the due date required by the MPFA.

Q: What is the premium of employee's compensation insurance per year:

A:

The premiums are calculated based on approximately 0.422% of the employee's income earnings, which will be invoiced in advance upon enrolment, and any necessary refunds or additional payments will be made based on the actual circumstances.