HK Guide : How to Start a Business in Hong Kong | INS Global

How to Start a Business in Hong Kong

How to Start a Business in Hong Kong

December 12, 2017


INS Global



INS Global



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Key Takeaways


INS Global’s PEO service enables you to enter the Hong Kong market within weeks, and without the need to set up costly subsidiaries. Whether you simply want to conduct preliminary market research or are ready for the next stage of expansion, our PEO is a quick and easy method of testing the Hong Kong market. When you use our service, your employee is legally employed in Hong Kong by INS Global, exclusively on your behalf. We take care of payroll management, tax compliance and adherence to Hong Kong employment law, so you can focus on running your business. Your employee, our payroll. It’s that simple.

Join hundreds of companies using INS Global’s PEO service today to get your operations up and running in Hong Kong in record time.  

Table of Contents

  • Introduction to Hong Kong
  • Hong Kong Public Holidays
  • Working hours
  • Holiday entitlement
  • Hong Kong Maternity leave
  • Sick leave in Hong Kong
  • Termination/Severance
  • Healthcare in Hong Kong
  • Hong Kong Tax
  • Why INS Global


The Hong Kong Business Opportunity

Renowned as a great place to do business in Asia, Hong Kong’s business-friendly regulatory environment puts it among the number one places to do business in Asia. Its strategic location, attractive tax regime and effective legal system are among the many reasons why western businesses choose the Special Administrative Region as their next market to enter. Hong Kong is one of the freest economies in the world and the government of Hong Kong SAR has long enforced minimal regulations in order to create a truly business friendly environment. Its economy focuses on international trade, tourism and financial services.

Employment Ordinance is the primary employment legislation in Hong Kong. The key distinction in the Hong Kong Employment Ordinance is between “continuous” and “non-continuous” employment. Continuous employment can be defined as continuously working for the same employer for 18 hours or more per week for at least four consecutive weeks.  

Doing Business in Hong Kong: Things to Know

Public Holidays

Employees in Hong Kong, irrespective of their length of service, are entitled to the following 12 statutory holidays:

  • 1 January
  • Lunar New Year’s Day
  • The second day of Lunar New Year
  • The third day of Lunar New Year
  • Ching Ming Festival
  • Labour Day (1 May)
  • Tuen Ng Festival
  • Hong Kong Special Administrative Region Establishment Day (1 July)
  • The day following the Chinese Mid-Autumn Festival
  • Chung Yeung Festival
  • National Day (1 October)
  • Chinese Winter Solstice Festival or Christmas Day (at the option of the employer)

If the employer requires the employee to work on a statutory holiday, the employer should arrange an alternative holiday within 60 days before or after the statutory holiday. Prior notice should be provided to the employee no less than 48 hours before the statutory holiday. If the statutory holiday falls on a rest day, the employee should be granted a paid holiday on the following day.  

Working Hours

There is no law governing the maximum number of hours employees should work. Employers should give workers at least one day off.  

Holiday Entitlement

In addition to paid statutory holidays, employees in Hong Kong are entitled to 7 days paid annual leave after working for an employer for at least 12 months. An employee’s annual leave entitlement increases progressively to a maximum of 14 days after nine years of service. In practice, most white-collar professionals and executives are granted 14 days annual leave per year.  

Maternity Leave

In Hong Kong, an employee is eligible for 10 weeks of maternity leave pay if:

  • she has worked for the employer under a continuous contract for no less than 40 weeks immediately before taking scheduled maternity leave;
  • she has given notice of her intention to take scheduled maternity leave;
  • she has submitted a medical certificate with her expected due date.

Maternity leave should be paid on the regular pay day of the pregnant employee. Maternity leave is calculated according to a daily rate, equivalent to 4/5ths of the average daily wages earnt in the 12 months period to the maternity leave, or since the date of hire if less than 12 months. Maternity leave should be paid on the employee’s regular pay day.

Paternity leave differs according to whether an employee is employed in the public or private sector. Government employees are entitled to take five days paid paternity leave on the birth of each child.  

Sick Leave

In Hong Kong, employees that are employed continuously, accumulate sick leave in the form of a sickness allowance equal to two paid sick days per month of employment in the first year of employment and four days per month thereafter. The maximum sickness allowance that can be accumulated in any given period is 120 days.

Sick pay is calculated according to a daily rate, equivalent to 4/5ths of the average daily wages earnt in the 12 months period to the sickness period, or since the date of hire if less than 12 months. It is unlawful to dismiss an employee who is absent from work during sick leave, except in cases of gross misconduct.  


The Hong Kong Employment Ordinance (EO) stipulates the minimum notice periods required for employer and employee to terminate an employment contract. There is no period of notice required in the first month of probation. During the remainder of the probation period, seven days’ notice must be given. After probation, a contract can stipulate a notice period that is no less than 7 days. If no notice period is specified in the contract, one months’ notice is required for employees who are employed under a continuous contract.

An employee is eligible for a Severance Payment if they have been made redundant by an employee and have continuously worked for them for more than two years. The amount is calculated by multiplying two-thirds of the employee’s monthly wage by period of service in year (calculation is made pro-rata). The maximum severance payment that can be given to an employee is HK$390,000.

An employee is eligible for a Long Service Payment if they have worked under a continuous contract for at least 5 years and their employment contract was terminated for one of the following reasons:

  • Retirement at the age of 65 or older
  • Declared by a medical practitioner to be permanently unfit for their employed role


Healthcare in Hong Kong

Both public and private healthcare are of high quality in Hong Kong. Hong Kong boasts a low-cost, high quality public healthcare system which both permanent and non-permanent residents are able to freely use as long and they have a valid visa and ID card. Many doctors speak fluent English which make healthcare relatively easy to navigate as a foreign professional. However, the downside is that the state healthcare system involves a lot of queuing and patients should not expect a ‘customer friendly’ experience.

As such, it is not uncommon for expats to choose private health insurance, whether they opt for it themselves or it is included as part of their contractual benefits. If negotiating healthcare cover with your employer in Hong Kong, it is advisable to pay attention to specific information as plans can vary with respect to the treatments they cover. For example, some plans may include dental care and maternity benefits, while others may not.  

Hong Kong Tax

Hong Kong has one of the lowest tax rates in the world. The Special Administrative Region follows a progressive tax system comprising of five marginal tax brackets.


Develop your Business in Hong Kong: Why INS Global?

Want to hire or expand your operations into Hong Kong but don’t know where to start? INS Global’s services offer you peace of mind when expanding into the Hong Kong market so you can focus on running your business. We employ your employee exclusively on your behalf so that they can get to work on expanding your business straight away. Speak to one of our expert advisors today to learn more about how our PEO solution or other services can help your business reach new heights in Hong Kong today.


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