How to Set Up a Remote Workforce in Hong Kong

In the ever-evolving modern business landscape, embracing a remote workforce is a win-win for all stakeholders, thanks to the flexibility offered. While only a certain section of the global workforce worked from home before the pandemic, the mass transition to remote working became a reality in the post-COVID-19 world.

Being gainfully employed no longer means working out of a physical office.

Your employees can work anywhere in the world and still get their work done. And if experts are to be believed, companies opting for remote workforces to give employees the freedom to work from any location they choose are here to stay. 

The remote working landscape in Hong Kong consists of:

(i) Employees based and employed in Hong Kong and seeking to work remotely within Hong Kong and

(ii) Employees employed and based outside Hong Kong and seeking to work remotely from Hong Kong.

In this guide, we’ll explore the various legal and practical considerations before setting up a remote workforce in Hong Kong, along with insights into creating an effective remote work policy for seamlessly managing your employees.

Understanding Remote Workforce in Hong Kong

Remote work refers to a form of employment where the employees do not work from an employer's central office. Typically, such employees do not commute to any office and can work from anywhere they want as long as they can access the internet and their laptops.

There are various types of remote working arrangements.

Some remote workers are fully remote, which means they never have to walk into an office and can work remotely 100%. Some employers only allow certain employees to be remote workers depending on their geographic location and job function.

Freelancers and independent contractors in specific sectors are also technically remote workers, although they are not bound by any formal employment contract.

Remote working is prevalent in Hong Kong. Hong Kong companies hiring globally prefer having a remote workforce and hiring candidates from countries such as Ukraine, India, the Philippines, the United Kingdom, and the United States. A survey found that in 2022, 89 percent of employment contracts offered by Hong Kong companies were for remote work.

Hong Kong is also a popular destination for digital nomads working remotely as self-employed individuals or under an employment contract for companies in the United States, the UK, Canada, Singapore, and Denmark.

But to become a remote-friendly company doesn’t mean you cannot have a physical office in Hong Kong.

Several companies set up a branch or representative office to establish their business presence.

The advantages and disadvantages of a remote workforce are as follows:

Advantages

• Reduced costs for both employer and remote worker
• Remote workers can set up their schedules and work flexibly
• Remote workers enjoy a better work-life balance
• Employers get access to a diverse and wider pool of candidates with specialized skills
• Reduced absenteeism
• Better productivity of employees

Disadvantages

• Security is a major concern for employers and remote workers, especially those handling sensitive or confidential information
• Unstable internet access can prevent remote employees from performing their tasks on time
• Training remote employees is a challenge

Legal Aspects of Setting Up a Remote Workforce in Hong Kong

Every employee in Hong Kong enjoys several legal rights under Hong Kong laws, which extend to those who are part of a remote workforce. There is also no distinction between employees hired by a non-Hong Kong company and a Hong Kong company.

However, no legal protections are available to independent contractors/freelancers who are remote workers.

Employment Law and Labor Ordinance

Employee Rights and Protections

Key rights and protections available to all employees include:

• Protection from discrimination on any ground, including sex, marital status, disability, and race
• Receiving minimum wages
• Minimum paid holiday entitlement and paid time off for illness or injury for four consecutive days

Continuous employees are also entitled to paid annual leaves, maternity/paternity leave, sickness allowance, rest days, and severance or long service payments. A person must work for 18 or more hours weekly for the same employer for at least four weeks consecutively to qualify as a continuous employee.

Courts have held that even if Hong Kong law doesn’t govern the employment contract, employees working in Hong Kong still enjoy employment protections offered by law, and employers cannot bypass compliance obligations. This also applies to remote workers and entitles them to enjoy employee benefits per Hong Kong law and the foreign law applicable to the employer’s central office.

Employer Obligations

Key obligations under the Hong Kong Employment Ordinance include:

• Paying minimum wages
• Enrolling employees in the mandatory provident fund scheme and making a contribution
• Maintaining necessary insurance coverage to cover liabilities for work-related injuries, if any
• Providing annual leave, statutory holidays, maternity and paternity leave, sickness allowance, severance, etc.
• Ensuring a safe work environment
• Providing minimum notice of termination or payment in lieu

But a foreign entity employing remote workers in Hong Kong is unlikely to provide the benefits under the scheme unless it holds a business registration certificate in Hong Kong.

Visas and Work Permits

If an individual is a national or a resident of Hong Kong or has a valid employment visa to work in Hong Kong, they can work remotely from Hong Kong. Persons holding a Hong Kong permanent identity card can also freely take up remote employment in Hong Kong and work for foreign entities.

There is no special visa for individuals who are not Hong Kong nationals but want to relocate as digital nomads and take up remote work opportunities in Hong Kong. But they can apply under the Quality Migrant Admission Scheme or the General Employment Policy.

Under the Quality Migrant Admission Scheme, applicants don’t need any offer of local employment before they enter Hong Kong. However, applicants must have a confirmed employment offer if they apply under the General Employment Policy.

Taxation

Both employers and remote workers have tax obligations in Hong Kong:

Employer Tax Obligations

Since Hong Kong follows territorial tax laws, profits arising in or derived from Hong Kong are taxable. Employers with a tax presence in HK must file annual tax returns and the most recent audited financial statement.

Any overseas company that employs persons in Hong Kong to carry on its business as part of its remote workforce may be considered a Hong Kong permanent establishment. A Hong Kong PE is subject to local tax laws, subject to a double taxation agreement.

Every employer in Hong Kong also should notify the Inland Revenue Department about the commencement and cessation of employment of its employees in Hong Kong.

Employee Tax Considerations

A foreign individual who works remotely from Hong Kong is subject to Hong Kong salaries tax, provided their employment income is derived from Hong Kong. This is subject to any double taxation avoidance agreement between Hong Kong and the individual’s country of residence.

If an overseas employer employs a foreign national who works remotely from Hong Kong, they will likely be considered non-Hong Kong employees. They only need to pay salaries tax on income directly from services provided in Hong Kong.

Insurance

Corporate insurance is a crucial aspect of maintaining a remote workforce.

Mandatory Insurance Requirements

The Hong Kong labor department states that employers must compensate employees for work injuries, occupational diseases, and death.

Employers should purchase and maintain compulsory employee insurance of at least HKD 100 million if employing up to 200 employees and at least HKD 200 million if there are more than 200 employees.

Employers cannot provide insurance coverage through salary deductions.

Additional Insurance Options

There is no maximum insurance coverage laid down under Hong Kong law. So employers are free to purchase a higher coverage depending on the job function of the remote worker.

Practical Aspects of Setting Up a Remote Workforce in Hong Kong

When you set up a remote team, it’s important to understand the practical aspects that are required.

If you’re opting to get a remote business address in Hong Kong or other options, it’s critical to understand these aspects beforehand.

Here are some things you should consider.

Establishing a Remote Work Policy

A remote work policy clearly outlines employees’ and employers’ expectations when work is done remotely.

Hiring a remote workforce without a formal policy can lead to miscommunication and confusion. Here’s what you should consider while framing one:

Scope and Objectives

A remote work policy aims to broadly lay down the scope of work of remote workers, rights and obligations, and how the employer will evaluate their performance.

A well-drafted policy ensures that even though employees may be working remotely in different locations, they know relevant resources and protocols to perform their tasks efficiently.

Eligibility and Expectations

The policy should clearly specify which job functions are allowed to work remotely. It should also clarify whether the policy applies to full-time or part-time employees working remotely.

The availability expectations from remote employees should be clearly stated in the policy and state whether employees have the flexibility to decide their own schedule, or if they should be available from 9 AM to 5 PM on all working days.

Communication Guidelines

Remote working requires efficient communication.

The policy should lay down whether employees working remotely are expected to respond to their coworkers immediately on a real-time basis or if an asynchronous mode of communication is acceptable. Including an indicative response time guideline can be useful.

It should also identify a digital workplace platform/communication tool all employees should use for all project-related conversations.

Performance and Accountability

The remote working policy should lay down the working hours of everyone working remotely.

It should also lay down what KPIs are taken into account for evaluating the performance of employees.

Technology and Infrastructure

Managing a remote workforce is highly dependent on technology. Here are a few things to keep in mind:

Remote Work Technology Essentials

To allow your employees to work smoothly from a remote location, ensure they have access to relevant hardware such as a laptop with an in-built web camera, other mobile devices, USB or external drives, etc.

Avail the services of a reliable third-party cloud hosting provider to upload all your files, databases, and applications your employees need to access.

Security and Data Protection

Ensuring compliance with data protection law is a non-negotiable for data security.

Create a comprehensive cybersecurity policy telling employees how to handle sensitive and confidential data. Have virtual training to sensitize remote workers about potential threats. Make it mandatory for the mobile workforce to use virtual private network software for business.

Implement a strong password policy and multi-factor authentication for the mobile workforce as a security measure.

Ensuring Seamless Collaboration

Working remotely can make collaboration awkward and clunky, resulting in poor productivity.

To overcome obstacles, opt for cloud business communication platforms that support video and voice needs and can be easily integrated into your existing workflow. Establish clear communication protocols to make remote collaboration work smoothly.

Hiring and Onboarding Remote Employees

How do you know if someone will make an excellent remote employee? The process you follow to make a hiring decision can make all the difference.

Sourcing Talent

The first step is coming up with a job description. To create a solid JD, provide details of the position and the skills you seek. Add a line or two about your company values and ethos. This will help you to filter candidates who do not fit the bill.

Post the details on popular head-hunting websites as well as the social media accounts of your company.

Remember to share the JD with your existing employees if you have a referral system.

Interviewing and Selection

Hiring for a remote role usually involves conducting remote interviews.

Ensure that all interviews are conducted over a video call instead of a phone call, as it helps establish a better connection with the candidates. Have a list of questions to evaluate whether the individual is a right fit for the role. But don’t shy away from asking a few icebreaker questions to make the candidate comfortable.

Effective Remote Onboarding Process

Remote onboarding goes beyond offering logistical or technical support.

Create an intentional onboarding experience by appointing a dedicated onboarding team. Once a candidate accepts the job offer, the team can start the joining formalities, such as giving them access to the digital workplace and sharing employee policies, etc.

The team can also proactively reach out to the remote employees and iron out any practical issues they may face once they start work.

Best Practices for Managing a Remote Workforce in Hong Kong

Here’s what you should put into practice for seamlessly managing a remote team in Hong Kong:

Communication and Collaboration

Ensuring efficient communication and collaboration with individuals working remotely is one of the crucial practical considerations you must consider.

Make sure to establish standardized formats for communication but also make an effort to understand the communication preferences of your teammates. Before starting virtual meetings, set aside some buffer time to allow everyone to catch up and have a virtual water cooler moment.

Lack of team cohesiveness is a challenge managers face when employees work remotely. Since remote working means no physical interaction daily, schedule regular check-ins with members to get an exact idea about where your team is currently at.

Performance Management

Micromanagement is the death knell for remote teams.

For effective performance evaluation, communicate to your employees what’s expected of them and what metrics will be considered for assessment and review.

Set aside time regularly to provide feedback and talk about an employee’s performance in general and also let them know how they are faring against specific objectives.

Employee Engagement and Well-being

As there is no clear separation between home and work, it is far more challenging for remote teams to maintain a healthy work-life balance.

Working remotely shouldn’t be at the cost of sacrificing mental and emotional well-being, and employers should lead by example. It is best not to promote a work culture where everyone puts in ridiculously long hours and stays online round the clock. Except in an emergency, your team members shouldn’t be expected to answer work queries once they log off or are on leave.

Schedule regular check-ins to gauge employee well-being. If you notice any troubling signs, provide the necessary support, such as reimbursing employees for mental health counseling sessions.

Check whether your employees have a proper set-up for home working and as them to contact the technical support team if they are experiencing technical difficulties.

Bottom line

Setting up a remote workforce is a great way to add diverse talent to your company. Besides providing freedom and flexibility to employees, remote working reduces the employer’s cost and increases the workforce’s overall productivity.

Before you take the leap, you must consider all the legal and practical considerations of maintaining a remote workforce in Hong Kong. Complying with various provisions of employment law, tax law, insurance law, and immigration laws is critical to avoid penalties.

Several businesses are proactively embracing the remote work trend and hiring workers from Hong Kong. As the law doesn’t distinguish between remote and regular workers in Hong Kong, ideally, businesses must establish a presence in the region to comply with their statutory obligations.

Setting up virtual offices for remote workers can help businesses manage their remote workforce efficiently. But even in a business-friendly destination like Hong Kong, choosing the correct mode for establishing the presence of your business can be challenging.

Get in touch with Air Corporate — we help businesses across the globe to explore their options in Hong Kong and get their business up and running.