Hong Kong Payroll Guide 2026: MPF, Tax & Leave Entitlements

5 Key Takeaways

Hong Kong does not operate a PAYE (pay-as-you-earn) withholding system, each employee files their own salaries tax return with the Inland Revenue Department annually.

Both employers and employees must contribute 5% of the employee’s relevant income to the Mandatory Provident Fund (MPF), capped at HK$1,500 per month each.

Wages must be paid by the last day of the wage period or within 7 days of its end, and MPF contributions must be remitted to the trustee by the 10th of the following month.

Eligible employees under a continuous contract are entitled to 7–14 days of annual leave (scaling with tenure), 17 statutory holidays, 14 weeks of maternity leave, and 5 days of paternity leave.

Employers must file annual IR56B returns reporting each employee’s remuneration, and must notify the IRD of new hires (IR56E) and departing employees (IR56F/IR56G).

💡 At a Glance: Hong Kong Payroll

Running payroll in Hong Kong requires employers to manage Mandatory Provident Fund (MPF) contributions, comply with the Employment Ordinance on pay timing and entitlements, and handle salaries tax reporting.

Unlike many countries, Hong Kong does not operate a pay-as-you-earn (PAYE) withholding system. Employees are individually responsible for filing salary tax returns, though employers have notification obligations.

The employer MPF contribution rate is 5% of the employee's relevant income, up to a maximum of HK$1,500 per month.

How Payroll Works in Hong Kong

To remain compliant with the latest 2026 regulations from the Hong Kong Inland Revenue Department (IRD) and the Mandatory Provident Fund Schemes Authority (MPFA), employers must audit their local payroll structures. Unlike most global markets, Hong Kong does not operate a pay-as-you-earn (PAYE) withholding system; instead, accurate MPF calculation and strict adherence to statutory reporting deadlines are an employer's primary legal obligations.

In most countries, employers are legally required to deduct income tax from employee wages and remit it to the government each pay cycle. Hong Kong does not follow this model. Instead, the Inland Revenue Department (IRD) assesses each employee’s salaries tax individually, and employees file and pay their own tax returns. This significantly simplifies the payroll calculation for employers. In other words, gross pay is not reduced by income tax at source.

What employers are required to manage directly is the MPF. Under the Mandatory Provident Fund Schemes Ordinance (Cap. 485), employers must enrol eligible employees into an MPF scheme, deduct the employee’s contribution from wages, and remit both the employer and employee contributions to the relevant MPF trustee each month.

 

Pay Timing Requirements

Under the Employment Ordinance (Cap. 57), wages must be paid on the last day of each wage period, or within 7 days after the end of that wage period. For monthly-paid employees, this means wages must be received by the last calendar day of the month, or no later than 7 days into the following month. Employers who consistently pay late face statutory penalties, so maintaining an accurate Hong Kong payroll processing timeline is essential, particularly for companies managing staff across multiple time zones.

MPF Contributions: Rates, Caps, and Deadlines

The Mandatory Provident Fund (MPF) is the core of Hong Kong payroll compliance. Since you do not need to withhold income tax, calculating and submitting MPF contributions correctly is your biggest administrative responsibility. Both employers and employees contribute. See the MPFA’s employer obligations overview for full scheme details.

 

Contribution Rates

Party	Rate	Monthly Cap
Employer	5% of relevant income	HK$1,500
Employee	5% of relevant income	HK$1,500
Combined Total	10% of relevant income	HK$3,000

The MPF employer contribution is calculated on relevant income, which includes wages, salaries, leave pay, fees, commissions, bonuses, gratuities, and housing allowances paid in lieu of accommodation. Full rate details are published on the MPFA contribution rates page.

 

Relevant Income Thresholds

Threshold	Monthly Amount	Impact
Minimum relevant income	HK$7,100	Employees below this are exempt from their own contribution; the employer must still contribute
Maximum relevant income	HK$30,000	Contributions are capped, income above this is not subject to MPF

Enrollment and Remittance Deadlines

New employees must be enrolled in an MPF scheme within 60 days of their employment commencement date. Casual employees in the construction and catering industries face a shorter enrollment window.

Contributions must be remitted to the MPF trustee by the 10th day of the month following the contribution period. Late contributions attract a surcharge of 5% per annum on the outstanding amount, plus additional penalties for prolonged non-compliance.

 

MPF Exemptions

Certain categories of workers are exempt from MPF participation, including:

• Employees under 18 or aged 65 and over
• Domestic helpers
• Self-employed persons (who have separate MPF obligations)
• Employees covered under certain defined-benefit occupational retirement schemes (ORSO schemes)

Salaries Tax in Hong Kong: Employer Obligations

As noted above, Hong Kong does not require employers to withhold income tax from employee wages. Salaries tax is assessed by the IRD on each individual’s employment income, and employees file their own returns annually. However, employers are not entirely uninvolved. The Employment Ordinance and Inland Revenue Ordinance require employers to notify the IRD of specific employment events using official forms.

Key IRD Employer Notification Forms

The IR56B (Employer’s Return) is the most routine form. It is filed annually and reports each employee’s total remuneration for the year, which the IRD uses to issue individual tax assessments. All IR56 forms can be downloaded from the IRD forms index. If an employee is leaving Hong Kong permanently, employers should note that the IRD may require the employee to obtain tax clearance before departure. In these cases, employers sometimes hold back a portion of the final salary pending clearance, requiring careful payroll planning in Hong Kong.

Statutory Leave Entitlements and Pay Calculations

Hong Kong’s Employment Ordinance establishes minimum leave entitlements for all eligible employees. An “eligible employee” generally means someone employed under a continuous contract. It’s defined as working at least 18 hours per week for 4 consecutive weeks.

Annual Leave

Annual leave pay is calculated at the employee’s daily wage rate. For monthly-paid employees, the daily rate is derived by dividing the monthly wage by the number of days in the relevant month.

Sick Leave

Employees accumulate paid sick leave at a rate of 2 days per month of service, up to a maximum of 120 days. Sick leave is paid at 4/5 (80%) of the daily wage rate, provided the employee has been on sick leave for at least 4 consecutive days and produces a valid medical certificate.

To qualify for sick pay, which is calculated at 80% of a worker’s normal daily wage, the employee must take at least 4 consecutive sick days and provide a valid doctor's note.

Maternity and Paternity Leave

Maternity leave pay is calculated based on the employee’s average daily wages over the preceding 12 months. Paternity leave eligibility and pay rules are published by the Labour Department.

Hong Kong Public Holidays and Payroll Impact

Employers must provide 17 paid statutory public holidays each year. If a holiday falls on an employee's regular rest day, you are legally required to grant them a substitute day off on the following working day.

The statutory holidays include: New Year’s Day, Lunar New Year (3 days), Ching Ming Festival, Labour Day, Buddha’s Birthday, Tuen Ng Festival, Hong Kong SAR Establishment Day, the day following Mid-Autumn Festival, National Day, Chung Yeung Festival, Christmas Day, and the first weekday after Christmas.

If a statutory holiday falls on a rest day, the employer must grant a substitute holiday on the following working day. For employees on monthly salaries, statutory holidays are typically included within the monthly salary, but employers should review individual employment contracts when calculating daily rates for pro-rated pay.

Payroll Processing Timeline in Hong Kong

A compliant monthly payroll run in Hong Kong follows a consistent sequence. Here is a step-by-step overview of Hong Kong payroll processing:

How Global Payroll Providers Handle HK Payroll

For companies hiring in Hong Kong from overseas, whether via a local entity or through an Employer of Record (EOR) structure, working with a global payroll provider simplifies compliance considerably. Managing MPF contributions, tracking IRD deadlines, and calculating statutory leave manually will quickly drain a lean HR team's resources. Missing these localized deadlines doesn't just cause administrative headaches — it triggers direct financial penalties from the Hong Kong government.

Slasify streamlines payroll in Hong Kong and over 130 countries, facilitating compliant MPF enrollment and remittance to minimize employer administrative burdens. Onboarding a new employee in Hong Kong through Slasify typically takes approximately 2 weeks.

For businesses considering expansion into Hong Kong, Slasify’s EOR service allows you to hire compliantly in HK without establishing a local legal entity, covering Hong Kong employer obligations, including MPF, tax reporting, and Employment Ordinance entitlements from day one.

Managing MPF contributions, IRD deadlines, and statutory leave in Hong Kong can quickly become a compliance burden. Slasify’s global payroll and EOR solutions help you hire, onboard, and pay your Hong Kong team compliantly in 130+ currencies, without setting up a local entity.

Contact Slasify today for a free consultation with our Hong Kong compliance experts.

Essential Hong Kong Payroll Questions Answered

Q1: What is the MPF contribution rate for employers in Hong Kong?

In 2026, Hong Kong employers and employees each contribute 5% of the monthly relevant income to the Mandatory Provident Fund (MPF). Contributions are capped at HK$1,500 monthly for income above HK$30,000. Employers must remit these payments to the trustee by the 10th day of the following month.

Q2: Do employers withhold income tax in Hong Kong?

No. Hong Kong does not operate a PAYE system. Employers are not required to deduct salary tax from employee wages. Each employee files their own salary tax return with the IRD annually. Employers’ tax obligations are limited to filing IR56B annual returns and ad-hoc forms (IR56E, IR56F, IR56G) for new hires and departing employees.

Q3: When must payroll be paid in Hong Kong?

Under the Employment Ordinance, employers must disburse wages by the final day of the wage period or within the 7-day statutory grace period. For monthly pay cycles, this means no later than 7 days into the following month. Regular late payment of wages constitutes a breach of the Employment Ordinance and can result in statutory penalties.

Q4: What are the statutory leave entitlements in Hong Kong?

Eligible employees under a continuous contract receive 7 to 14 days of paid annual leave, up to 120 days of paid sick leave, 14 weeks of maternity leave (with the first 10 weeks paid by the employer), 5 days of paternity leave, and 17 statutory public holidays annually.

Q5: How do I set up payroll for a new employee in Hong Kong?

Setting up Hong Kong payroll for a new hire involves:

(1) enrolling the employee in an MPF scheme within 60 days of their start date.

(2) notifying the IRD using Form IR56E within 3 months of employment commencement.

(3) configuring your payroll system with the employee’s relevant income, contribution rates, and leave entitlements.

(4) ensuring the first pay date falls within the Employment Ordinance’s timing requirements.

Companies without a local HK entity can use an EOR provider such as Slasify to manage all of these obligations from day one.