The big day has finally arrived. You’re ready to expand your business and hire your first employee. It can be an equally exciting and stressful time. To make sure the process goes as smoothly as possible, check out this brief guide to hiring your first employee. It covers all the essentials you need to know before writing your job ad or interviewing prospects.
Who Can You Hire?
The Hong Kong government encourages business owners to use recruitment and hiring techniques that are non-discriminatory. In other words, don’t take sex, disability, family status, or race into account when looking for new employees. The only exception is that you must prioritize local workers over foreigners. That said, if you can’t find the employees you need in Hong Kong, you may be able to help someone from another country get an employment visa. You must also take care to avoid putting questions in your application materials that could be discriminatory based on age, religion, and language as well as the previously mentioned sex, disability, family status, or race.
What Are Hong Kong’s Employment Rules?
When you hire employees in Hong Kong, you have to follow the terms of the Employment Ordinance. Most employees are covered by these rules, but there are exceptions for family members who live with you, certain apprentices, ship crew members working under the Merchant Shipping Ordinance, and employees of foreign companies doing manual labour outside of Hong Kong. Under this ordinance, workers have different rights depending on if they are employed under an employment contract or a continuous contract.
In both cases, workers need a contract specifying how many days and hours they can work in a week. Generally, that’s five days and up to 50 hours per week, and under the ordinance, they also receive 12 paid public holidays per year. In most cases, new employees have a probation period where they can be terminated without notice, but after a few months with the company, you need to give them at least seven days notice (30 days in the absence of a contract) if you plan to terminate them without just cause.
Continuous employees get a few extra rights. In particular, they receive paid annual leave, which starts at seven days for the first year and goes up from there. They also get 24 days of sick leave in the first year and 48 days in the second year. In most cases, continuous employees are also eligible for maternity benefits, severance pay after two years, and long service payment after five years.
Unlike other countries, Hong Kong’s employment laws don’t distinguish between independent contractors and employees. Instead, all workers receive the same protections. If workers are with your company for more than four weeks, they fall into the continuous employment category, even if they are part time or temporary.
What Are the Paperwork Requirements for Employees?
You should have an employment contract with your employees. Legally, you’re allowed to create a verbal contract, but to protect your business, it’s best to get everything on paper. Remember to give a copy to your employees, and don’t make changes without their consent.
You also need to let the Inland Revenue Department know you hired an employee by submitting Form IR56E (Commencement of Employment). At the beginning of each year, IRD will send you Form IR56B, which you need to complete and return. There are also forms you need to file if an employee leaves your business or departs from the country.
On top of that, you want to maintain copies of all employees’ Hong Kong identity card, or passport if they’re a foreign worker, and you should keep copies of timesheets, work logs, and paycheque stubs for at least seven years.
What Happens if a Worker Leaves the Country?
If one of your foreign workers is heading back home or one of your national employees is immigrating to another country, you have a few obligations. You must submit a form to the IRD at least one month before the employee’s departure, but you also need to withhold payments until you get clearance from the IRD. Basically, the IRD just wants to double check that the individual does not owe any tax, and generally, you can pay your worker within a month.
This rule doesn’t apply to workers who travel frequently for business and are heading out on a long business trip.
How Do You Choose the Right Employee?
The legal aspects of hiring an employee are just the beginning. You also want to develop ways to screen employees to ensure they have the skills you need. Depending on your industry, you may want to contact old employers, look at portfolios, or have the worker do a trial run. The right interview questions can also help guide you to the best employee for your company. Make sure to pay attention to intangible elements. Do you think you’d enjoy working with a prospective candidate? Do you feel confident about that person’s skills and qualifications? If so, you might have the right fit.
Keep these essentials in mind as you hire your first employee. If you’re not sure which obligations you need to meet as an employer or have additional questions, consider consulting an accountant or business adviser. In most cases, you should find the process pretty straightforward once you get started.