Building the right team composed of the most qualified individuals is among the most important and challenging aspects when growing a business. As many entrepreneurs and small business owners are often preoccupied with revenue driving activities, it can be difficult for them to effectively balance their ongoing work responsibilities with hiring new employees.
As the FastLane Group is also a group of dedicated HR and payroll specialists, we have curated a quick list of tips Hong Kong employers should consider when undergoing the hiring process.
1. Create a Clear Job Description
As an employer, you will need to be clear on what type of individual you want to hire, the skills needed for their role, and the budget you have for their salary when screening potential employees.
Most likely, you will meet a wide range of individuals during your hiring process – it’s thus important to maintain an accurate record of each candidate, such as their strengths, weaknesses, expectations and interview notes. These notes will be useful when reviewing and selecting your preferred candidate.
2. Determine Who Will be Responsible for Hiring
The hiring process takes time and involves various tasks, including the following:
- Writing the job description
- Advertising the position
- Communicating with prospective candidates
- Answering questions and responding to enquiries related to your company and the job
- Interviewing and screening applicants
- Communicating with unsuccessful candidates
Because this is often a time-consuming process, it is often more efficient to outsource the hiring process to an individual in your team or an external recruiter.
3. Establish Proper Record Keeping Procedures
Once you have identified an individual and have successfully onboarded them as an employee, you will need to adhere to Hong Kong’s various employer obligations – namely record keeping requirements.
Hong Kong employers have to maintain proper records of their employees’ wage, employment history, and all relevant accounting / payroll records. Furthermore, records pertaining to each employee must be maintained for at least seven years.
4. Stay on Top of Your Payroll
As a Hong Kong employer, you will need to perform your payroll calculations on a monthly basis in accordance with the terms set out in each employee’s employment contract.
To calculate an employee’s total compensation, you will need to take into consideration the number of hours and employee has worked in a set time period, their benefits and even payment arrangements.
Because the average payroll takes more than a few days to process, it’s important to utilize accurate and current payroll data as it can significantly reduce the payroll processing time, especially for large and complex payrolls.
However, since most business owners do not have the time to manage this aspect of their business by themselves, they will often engage a professional payroll specialist to assist them.
5. Understand Your Reporting Obligations
Once a Hong Kong company has successfully onboarded an employee, they must notify the Hong Kong Inland Revenue Department (“IRD”) within 3 months of the staff’s employment. After this initial reporting obligation has been met, the employer must then adhere to their annual obligation to report the remuneration paid to each employee via various Employer Return, such as form BIR56A or IR56B. Finally, upon termination of a staff, an additional Employer Return should be submitted with sufficient notice.
6. Ensure Your Employment Contracts are Compliant with Hong Kong Standards
Hong Kong employment contracts should follow the rules set by Hong Kong’s Employment Ordinance. Generally, this means that the terms set out in employment contracts must satisfy the minimum entitlements stated in the Employment Ordinance in regards to statutory holidays, Mandatory Provident Funds (“MPF”), sick and maternity leave and severance.
Oftentimes, new business owners may not be entirely familiar with their employer obligations and will omit necessary terms from their employees employment contracts. In such situations, it is often best to engage a professional HR specialist who can not only advise on the various obligations that need to be met, but can also help set up your internal HR processes to minimize the risk of non-compliance.
7. Ensure Your Employment Contracts are Compliant with Hong Kong Standards
MPF’s are compulsory retirement schemes / pension funds that are created by the Hong Kong government and are provided by approved private organizations. They are a key aspect when performing Hong Kong payroll calculations as employees and their employees are required to make monthly contributions to the employee’s MPF scheme.
As a Hong Kong employer, you have the obligation to ensure that you are properly supporting your employees MPF needs by firstly completing the one-time obligation of assisting them in opening MPF accounts and the ongoing obligation of remitting contributions to these accounts once every contribution period.
In the event of non-compliance, a Hong Kong employer will be issued with a “surcharge notice” by the Mandatory Provident Fund Schemes Authority (“MPFA”) which is a 5% surcharge on default contributions.
Defaulting on contributions is a criminal offence and the defaulter is liable to a maximum penalty of HKD 450,000 fine and imprisonment for four years.
The MPFA can also impose a financial penalty of HKD 5,000 or 10% of the default amount, whichever is greater, on the defaulting employer.
All Hong Kong employers are not allowed to hire any employee unless the company has an insurance policy in place to cover any potential injuries or liabilities incurred in respect of their employees. Those who fail to have an ECI scheme in place are liable to a maximum fine of HKD 100,000 and imprisonment for two years.
8. Ensure Your Employment Contracts are Compliant with Hong Kong Standards
Depending on your type of business, your employees may need access to non-confidential company information, such as internal policies, training manuals, procedures or job-specific instructions.
Your employees may also need to utilize cloud-based platforms, such as Workstem and Xero, that will make it easier for them to fulfill their job responsibilities and easier for employers to manage their business.
You can set up each employee with access to personalized information and online tools – and if you set yourself up as an administrator, you can also restrict their access if needed.
Just remember to make sure that you have adequate security in place as there may be times when your employees may no longer need access to this information or functionality offered in these platforms. Consider adopting a cloud-based platform that will grant your employees access to the tools they need and fulfill their job responsibilities.
9. Be Clear on Your Goals and Expectations
Even if you intend to hire a small team, it’s important that you work with your employees to define and establish what is expected of them from day one. The above statement also holds true employees should be entitled to know what you will provide in return.
As professional relationships are built on mutual trust, respect and honesty, it is better to treat your employees right to maximize the strength of your working relationship.
10. How Can FastLane Help
The FastLane Group is a dedicated group of Hong Kong-based payroll and HR service specialists. Not only do we serve a broad spectrum of SMEs, we have obtained many years of experience in providing outsourced services for both local and foreign organisations. We ensure that every aspect of your business complies with current regulations and ordinances. Please contact us for enquiries!