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.

Your employees can work from home or 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. 

Hong Kong remote offices consist of:

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

(ii) Employees employed and based outside Hong Kong are 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% of the time. However, 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 search for 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 individuals seeking remote jobs in Hong Kong, either as self-employed individuals or under an employment contract for companies abroad.

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 more jobs requiring 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 consecutive weeks 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

However, 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. A person holding a Hong Kong permanent identity card can also freely take up a remote position 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. However, 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 requires employers to compensate employees for work injuries, occupational diseases, and death.

Employers should purchase and maintain compulsory employee insurance of at least HKD 100 million if they employ up to 200 employees and at least HKD 200 million if they employ 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
• Eligibility and Expectations
• Communication Guidelines
• Performance and Accountability

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
• Security and Data Protection
• Ensuring Seamless Collaboration

Hiring and Onboarding Remote Employees

How do you know if someone will make an excellent remote employee? They can either be fluent in both English and Chinese, especially if they reside in Hong Kong. The process you follow to make a hiring decision can make all the difference.

• Sourcing Talent
• Interviewing and Selection
• Effective Remote Onboarding Process

Focused Steps to Set Up a Remote Workforce in Hong Kong

Here's a breakdown of the steps to set up a remote workforce in Hong Kong:

1. Employment and Visa

• Local vs. Foreign Talent: Decide if you'll hire locally in Hong Kong or remotely from other countries.
• Visa Requirements: For foreign hires, understand Hong Kong's visa options. There are no specific remote work visas, but options exist, such as the Quality Migrant Admission Scheme (QMAS) or General Employment Policy (GEP). Verify these details for eligibility requirements.
• Employment Contracts: Draft clear employment contracts that address remote work arrangements, including work hours, communication expectations, and data security.

2. Business Setup (Optional):

• Entity Registration: Consider establishing a legal entity in Hong Kong if you plan on long-term remote operations or require a local banking account. This involves registering your business with the Companies Registry.

3. Technology and Infrastructure

• Communication Tools: Invest in reliable tools for seamless communication and collaboration. This might include video conferencing (e.g., Zoom, Google Meet), project management software (e.g., Asana, Trello), and instant messaging (e.g., Slack, Microsoft Teams).
• Equipment and Software: Provide your remote team with the necessary hardware and software to perform their jobs effectively. This could include laptops, monitors, and industry-specific software subscriptions.
• Cybersecurity: Implement robust cybersecurity measures to protect your company data and communication channels. This includes training your team on data security best practices and employing encryption tools.

4. Remote Work Management

• Standardized Workflows: Establish clear and standardized workflows for tasks, approvals, and project management.
• Performance Management: Set clear performance expectations and conduct regular check-ins with your remote team members to track progress, offer support, and address concerns.
• Communication Strategy: Develop a communication strategy that prioritizes clear, consistent, and open communication across the team. This might involve setting communication guidelines, preferred methods (email, video calls, etc.), and scheduling regular team meetings.
• Team Building and Engagement: While working remotely, fostering team spirit can be a challenge. Schedule virtual social events, team-building activities, and encourage informal interaction during online meetings.

5. Legal and Compliance

• Labor Laws: Ensure you comply with Hong Kong's labor laws regarding working hours, minimum wage, and employee benefits, even for a remote workforce.
• Taxation: Understand Hong Kong's tax regulations for remote employees. You might need to consult a tax advisor for specific guidance.

By following these steps, you can establish a well-structured and compliant remote workforce in Hong Kong. Remember, adapting these steps to your specific business needs and company culture is crucial for success.

Bottom Line

Setting up a remote workforce is a great way to add diverse talent to your company. Besides providing freedom and flexibility to full time and part time employees, remote jobs reduce the employer's cost and increase the workforce's overall productivity.

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.