How much does it really cost to hire in Hong Kong in 2026?

Hong Kong's employer cost structure is straightforward. The mandatory line is MPF at 5%. Beyond that, the costs are leave, statutory holidays, and any event-driven parental pay. There are no social insurance levies and no employer payroll tax on top.

These figures are illustrative. They are computed from the 5% MPF rate confirmed for 2026. They are not statutory numbers and will vary with actual relevant income, any employer-provided benefits, and parental leave events.

Add Teamed from $599 per employee per month and the total rises to around 108 to 112 percent of gross at this salary level. Use the Employer Cost Calculator to run your own salary figures.

1. Start with gross salary

   Confirm the agreed gross salary in HKD. This is the base number every other line builds on.

2. Add MPF employer contribution

   Apply the MPF employer rate to the employee's relevant income. For salaries within the standard band, this is a predictable and modest line.

3. Count the leave costs

   Annual leave and statutory holidays are built into the salary cost. Budget sick pay and parental pay as event-driven reserves rather than fixed monthly lines.

4. Confirm the annual filing obligation

   Prepare for the Employer's Return filed with the IRD each April. There is no monthly PAYE withholding to manage, which keeps ongoing payroll administration light.

5. Check for benefits and allowances

   Housing allowances, transport allowances, and any in-kind benefits are assessed to salaries tax in the employee's hands. Confirm whether any planned benefits change the employee's effective tax position.

MPF is the employer's entire mandatory contribution obligation in Hong Kong. There are no social security taxes, no unemployment insurance levies, and no health insurance mandates imposed on the employer beyond this single 5% contribution.

How the contribution is calculated

The 5% rate applies to the employee's relevant income. The MPFA sets both a minimum income level (below which only the employer contributes) and a maximum relevant income ceiling (above which contributions are capped). For employees earning below the floor, only the employer contribution is required. For employees earning above the ceiling, the employer's absolute contribution stops growing even as salary rises. The practical effect is that MPF is a modest and predictable cost at most Hong Kong salary levels.

What employers must do

Employers must enrol new employees in an MPF scheme within 60 days of their start date. Contributions are paid monthly, no later than the last working day of the calendar month following the contribution period. Teamed manages enrolment, monthly contribution remittances, and all MPFA reporting as part of the standard EOR service.

No other payroll levies

Hong Kong does not impose employer payroll taxes, social security levies, or mandatory health insurance contributions on employers. The salaries tax (equivalent to income tax) is assessed on the employee, not the employer. Employers file an annual Employer's Return with the Inland Revenue Department, due within 30 days of the issue date each April, but this is a reporting obligation and not a tax payment. The cost structure for a Hong Kong employer is genuinely simple compared to most other Asia-Pacific markets.

The statutory annual leave entitlement starts at 7 days after year one and rises with tenure under the Employment Ordinance (Cap. 57). Most employers offer more than the floor. Market practice in professional services and technology sits at 12 to 15 days from day one. Budget the statutory floor at 7 days plus the 15 statutory holidays.

Statutory holidays

Hong Kong distinguishes between statutory holidays (15 per year) and general holidays (17 per year). Only employees on continuous contracts are entitled to statutory holidays as paid days off. Employees covered by the Employment Ordinance receive all 15 statutory holidays. The most recent addition was Easter Monday in 2021.

Sick pay

Sick pay is 80% of average daily wages for each qualifying sickness day. Employees accumulate sickness days at two days per month for the first year and four days per month after that, up to a maximum of 120 days days. To qualify, the employee must provide a medical certificate and have accumulated enough sickness days. Short absences without a certificate are unpaid.

What to budget for

Annual leave and statutory holidays are built into the effective salary cost. The event-driven costs are parental pay (see the next section) and sick pay, which averages low for most teams but concentrates when it hits. Neither is optional. Both are part of the total cost of a Hong Kong hire.

Maternity leave under the Employment Ordinance (Cap. 57) is 14 weeks at 80% of average daily wages. The employee must have been employed continuously for at least 40 weeks before the leave starts. The employer pays the maternity pay directly; there is no government rebate or reclaim mechanism comparable to the UK's SMP recovery system. The full cost lands on the employer.

Paternity leave

Statutory paternity leave is 5 days at 80% of average daily wages. The employee must have been continuously employed for at least 40 weeks and must take the leave within a set window around the birth. Like maternity pay, the employer bears the full cost with no government offset.

What this means for budgeting

Neither maternity nor paternity pay appears in a monthly payroll run until it is triggered. For a small team, one maternity leave event can add meaningfully to the year's cost. Teamed handles the leave administration, wage calculations, and all Employment Ordinance compliance. The employer sees the cost as a transparent line on the invoice, not a surprise.

Hong Kong does not use a pay-as-you-earn system. Salaries tax is assessed on the employee by the Inland Revenue Department after the end of the tax year (which runs April to March). The employer does not withhold tax from monthly wages.

The salaries tax rates

The progressive salaries tax rates start at 2% on the first HKD 50,000 of net chargeable income, rising through 6%, 10%, 14%, and a top rate of 17% on income above HKD 200,000. A standard rate of 17% of total assessable income (without deducting the personal allowance) applies as an alternative if it is lower. The employee pays whichever is less.

The basic personal allowance for a single taxpayer is HKD 132,000, which is deducted from assessable income before the progressive rates are applied. This keeps effective tax rates well below the headline rates for most earners.

What employers must do

The employer files Form BIR56A (Employer's Return) within 30 days of its issue date each April. The form reports every employee's remuneration for the year ended 31 March. The IRD then issues tax demand notes directly to each employee. There is no monthly tax remittance and no PAYE equivalent. Teamed files the Employer's Return as part of the annual compliance cycle and provides each employee with the remuneration confirmation needed for their personal tax filing.

Real HR and legal experts handle your Hong Kong hires from the first offer letter through every MPF remittance and annual IRD filing. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Every employer cost passes through at cost, itemised on every invoice. You see the MPF line, the leave reserve, and any parental pay event as separate lines. Nothing is hidden inside the management fee.

EOR payroll, contractor onboarding, and entity setup all live on one platform. A Hong Kong contractor who converts to employment keeps their record. That same employee can graduate from EOR to your own Hong Kong entity without switching systems. EOR is the right structure for a first Hong Kong hire, until it isn't. Teamed does not lock you in. Start from the Hong Kong hiring overview or run the Employer Cost Calculator to see the full picture.