Exploring Hong Kong’s Minimum Wage Landscape

Hong Kong, known for its high cost of living, mandates a minimum wage to help low-income workers keep up with living expenses. This guide covers how to calculate minimum wage, ensure compliance, and understand exemptions.

What is the Minimum Wage in Hong Kong?

The International Labour Organization defines minimum wage as the lowest remuneration an employer is legally required to pay a worker, as mandated by law, a wage board, court decision, or collective agreement.

Under Hong Kong law, any employment contract that sets wages below the Statutory Minimum Wage (SMW) is void to that extent.

Current Statutory Minimum Wage Rate in 2025

Starting 1 May 2025, the statutory minimum wage (SMW) in Hong Kong is HKD $42.10 per hour.

This rate was approved by the Legislative Council and replaces the previous rate of HKD $40, which was in place since 1 May 2023.

The minimum wage applies to most employees, regardless of job type or payment structure.

This new rate is set under the Minimum Wage Ordinance (Cap. 608) and is reviewed every two years.

Calculation of Hourly Salary Rate

Hong Kong’s law does not require wages to be paid hourly but ensures the total pay is no less than the SMW when averaged across the total hours worked.

The Labour Department’s Minimum Wage Reference Calculator is also a handy tool to work the minimum wage your employee is entitled to and whether you are paying above their entitlement based on their current salary.

Definition of Working Hours in Hong Kong

Working hours include any time the employee is:

• At the workplace under the employment contract
• Present as agreed with the employer
• There at the employer’s direction

This includes training, waiting, or standby time. Travel time counts only if it’s for work-related duties outside regular commuting.

Travel to temporary job sites or locations outside Hong Kong may be counted as working hours, depending on the employment terms.

What Qualifies as Wages?

Under the Employment Ordinance (Cap. 57), wages include all earnings payable for work done under a contract.

The default wage period is 1 month, unless stated otherwise in the contract. For terminated contracts, the final wage period ends on the last day of employment.

Commission paid within 7 days after the wage period (if agreed) counts toward that period. Late payments, wage arrears, and overpayments do not count toward current wages.

Deductions made under Section 6(1) must still be treated as part of the wage for compliance.

Who Is Covered by the Law

All employees are entitled to the SMW regardless of:​

• Employment contract type (permanent, casual, full-time, part-time, etc.)​
• Wage payment period (monthly, weekly, daily, hourly, or per piece)​
• Disability status (employees with disabilities are also covered, unless they opt for a voluntary productivity assessment)​

Who Is Exempt from the Minimum Wage?

The following categories are exempt from the SMW:

• Live-in domestic workers: Including domestic helpers, chauffeurs, gardeners, or other personal helpers who receive free housing from their employer.
• Student interns: Students undergoing internships arranged or endorsed by their educational institution as part of their curriculum.
• Work experience students: Students under 26 years old who agree with their employer to treat a continuous period of up to 59 days as exempt student employment. Only one such period is allowed per calendar year, and a statutory declaration must be made. 
• Individuals not covered by the Employment Ordinance: This includes those serving their employment contract outside Hong Kong and apprentices registered under the Apprenticeship Ordinance.

Live-in Foreign Domestic Workers

Live-in foreign domestic helpers (FDHs) in Hong Kong are not covered by the same minimum wage law as other workers. 

Instead, they must be paid a Minimum Allowable Wage (MAW) of HKD 4,990 per month and free food or a HKD 1,236 allowance. 

Employers are also required to provide:

• Free medical care
• Suitable accommodation within the employer’s residence
• At least one rest day per week

Employers must also provide medical care, rest days, and other basic benefits to their domestic helpers. For more information, you can check the Hong Kong guide on hiring domestic helpers.

Student Interns and Work Experience Students

Student Interns are not entitled to minimum wage if the internship is part of their school program and they are not officially hired as employees. Employers must keep a document from the school confirming that the internship is part of the student’s education and that the individual qualifies as a “student intern” under the Minimum Wage Ordinance (Cap. 608).

Work Experience Students under the age of 26 can also be exempt from minimum wage during a special exemption period of up to 59 consecutive days in a calendar year. To qualify:

• The student must not have used this exemption earlier in the same year.
• Before starting, the student must provide the employer with a statutory declaration confirming no prior exemption in that year.

If these conditions aren’t met, or no agreement is made, the student must be paid at least the statutory minimum wage.

For more details, see the Labour Department’s note on student employees and interns.

History and Legal Framework

The Minimum Wage Ordinance enforces the Hong Kong minimum wage.

It applies to every employee and their employer, subject to the exceptions below.

Before the ordinance, a 1932 legislation and the Trade Board Ordinance of 1940 gave powers to the governor to establish minimum wages. However, the governors did not propose any minimum wage under these legislations.

The Hong Kong government proposed a Minimum Wage Provisional Commission in February 2009 to reduce the widening wealth gap. 

The Minimum Wage Ordinance was finally passed in 2010 and brought into effect in May 2011.

How the Minimum Wage Is Reviewed and Adjusted

The recommendations of the Minimum Wage Commission influence the policy decisions regarding the minimum wage in HK.

Role of the Minimum Wage Commission

The Minimum Wage Commission (MWC) is an independent body established under the Minimum Wage Ordinance.

Its main role is to review the Statutory Minimum Wage (SMW) at least once every two years and make recommendations to the Chief Executive in Council. 

The Commission aims to strike a balance between protecting low-income workers, minimizing job losses among low-paid employees, and preserving Hong Kong’s economic competitiveness. 

Before making its recommendation, the MWC consults with key stakeholders, including employer groups, labour representatives, and academics.

Wage Adjustment Mechanism

The MWC relies on an evidence-based approach to assess whether and how the minimum wage should change. 

It conducts simulations using different proposed wage levels to estimate potential effects on wages, employment, business costs, inflation, and competitiveness. This allows policymakers to understand the trade-offs. 

For example, if the rate is too low, workers may lack meaningful protection from poverty; if it’s too high, businesses—especially small ones—might struggle, potentially leading to job losses.

Factors Considered in Determining the Wage Rate

The Commission considers a wide range of economic and labor market indicators, including:

• Hong Kong’s prevailing economic conditions (e.g., GDP growth, inflation),
• Labour supply and demand trends,
• Labour productivity data,
• Trends in market wage levels,
• Views from employers’ groups and trade unions.

Economic and Social Impact of Minimum Wage in Hong Kong

Here’s how the minimum wage policy of Hong Kong may impact the following:

Income Inequality and Worker Protection

Minimum wage increases help reduce poverty and income inequality by ensuring a basic pay level for low-income workers.

A guaranteed wage floor can also motivate workers to be more productive and deliver better results.

Employment Rates and Labor Market

Critics warn that higher minimum wages may reduce hiring in labour-intensive sectors, but local data shows no strong evidence of job losses after past increases.

Supporters of minimum earners suggest that the employment rate may increase if minimum wages increase domestic consumption and demand.

Cost of Living and Inflation

Having a higher minimum wage is unlikely to significantly increase inflation and the cost of living in Hong Kong.

In fact, labor groups in HK argue that the minimum wage revision of May 2023 is still less than the accumulated inflation rate over the last four years.

Impact on Businesses and Industries

Employers must still comply with other obligations under the Employment Ordinance, such as paid leave and rest days. 

Some businesses raise concerns about a “knock-on effect,” where they feel pressured to increase wages across the board to maintain pay hierarchy.

Comparing Hong Kong’s Minimum Wage to Other Regions

Learn the wage gap between Hong Kong and the rest of the world:

Here’s a snapshot of the current minimum wages:

Minimum Wage Systems Around the World

A majority of countries across the globe follow minimum wages.

The United Kingdom and New Zealand were some of the earliest countries to pass legislation to guarantee minimum earnings.

Some countries follow a national minimum rate for all workers, while others apply different rates based on the sector, geographical region, population, and enterprise size.

Factors Affecting Wage Rate Differences

A number of factors contribute to the variation in minimum wages across countries. These include:

• Regional economic conditions
• Cost of living
• Differences in labor market conditions
• Size of the enterprises
• Population
• Sector-specific economic factors

Lessons From Other Minimum Wage Models

Hong Kong may consider elements from other jurisdictions to strengthen its wage framework. 

For example, the UK applies an age-based system, offering a national minimum wage for workers aged 16–22 and a higher national living wage for those aged 23 and above. 

Allowing certain industries in Hong Kong to determine sector-specific wage rates based on their financial capacity and skill requirements could also be explored. 

In addition, annual reviews of the minimum wage could help ensure it keeps pace with rising living costs and inflation.

Navigating Hong Kong’s Minimum Wage Landscape as an Employer

If you're planning to register a business in Hong Kong and hire employees, compliance with the Minimum Wage Ordinance (Cap. 608) is mandatory. Here’s how to stay aligned with legal requirements:

Ensuring Compliance

Consulting an employment law professional is essential to keep up with changes to the Employment and Minimum Wage Ordinances.

Payroll Management

Outsource your payroll processing to a trusted service provider to keep your accounting system up to date with the latest minimum wage laws.

Managing Labour Costs

Invest in employee training to improve productivity and offset rising labour expenses. Since higher wages may increase your overall tax liability, consult an accountant for efficient corporate tax planning and filing.

Employee Engagement

Maintaining average wages above the statutory minimum can support employee satisfaction, motivation, and retention.

Future of Minimum Wage in Hong Kong

The future of minimum wages in Hong Kong is uncertain as there are multiple actors at play.

Here’s a look at some of the key aspects:

Potential Changes and Trends In Wage Policies

HK's economy faces challenges due to the ongoing global economic crisis in the wake of the COVID-19 pandemic and geopolitical risks.

As MWC noted in its findings, increasing minimum wages in such an economy can force enterprises to reduce headcount, leading to unemployment.

As such, the government may freeze the statutory minimum wage rate until the economy bounces back. Between 2011 and 2018, when the Hong Kong economy was in a better position, the rate of base salary increased from HKD 28 to HKD 37.5. However, from 2019 until 2023, it has only increased from HKD 37.5 to HKD 40.

Role of Government and Policymakers

Hong Kong’s government faces significant public pressure to reconsider the mechanism of deciding minimum wages in light of the protests and demonstrations.

The government has also pointed out the need to balance the interests of businesses and workers and avoid sharp increases that may potentially impact employment rates.

Advocacy and Workers’ Rights Movements

Labour groups have been vocal in their criticism of recent wage adjustments, advocating for a living wage (currently estimated at HKD 60) to better reflect the city’s high cost of living. They have also called for annual wage reviews rather than the current biennial system.

Conclusion

While minimum wages protect the employees, they also directly impact a business’s bottom line. Given the economic situation of Hong Kong, there is a greater need to closely monitor the minimum wage policies that create a win-win situation for all.

Running a business in Hong Kong can be challenging when you have to ensure compliance with labor and employment laws. Need help with starting up in Hong Kong and sailing through legal compliances?

Contact Air Corporate today so we can guide you in the right direction.