- Overview: Hong Kong
- Contractor vs. Employee: Which Is Better?
- Global HR Compliance
- Work permit for hiring expats via PEO
- Expand without a company set up
- Global PEO and Payroll
- Global Payroll Calculator
Find out how you can decide whether you should engage and pay employees or independent contractors using our free ‘Employee vs. Independent Contractor’ Checklist.
Designed to be used by companies engaging remote workforce in Hong Kong, the checklist is the best way to define why and in what cases companies should onboard new hires or convert existing contractors/freelancers into employees without missing any crucial aspects.
What Our Clients Say
I want to share my experience dealing with Express Global Employment.
Speed & responsiveness: Very prompt in response to my first enquiry about converting contractors into employees to follow-up questions.
Completeness of information: I like how detailed the estimates and the transparency make us feel more confident in knowing where the money goes.
Overall experience: I am pleased and impressed with how fast they respond to my enquiries. We can trust the company to employ the contractors we want to keep.
Quah Shen Dee,
People Success Officer
I always found Express Global Employment very supportive, professional and helpful. They pay salary on time and are always ready to sort out any issues.
I must admit I truly enjoy my time as an Acumen International employee and feel like they care about me as an individual. I have my own dedicated manager that provides me with detailed explanations when it’s needed. Payments are always prompt, and the entire team does its best to respond to any of my questions.
I highly recommend Acumen International to anyone who requires their services.
Andrew Yanchurevich,
COO
The Advantages of Hiring Employees Through Global EORs Over Independent Contractors in Hong Kong
Expanding your business internationally is both exciting and complex, especially when it comes to hiring employees overseas. In Hong Kong’s dynamic business environment, even a small mistake in classifying an independent contractor can lead to costly fines, legal issues, and a hit to your company’s reputation. Let’s discover why hiring full-time employees through a Global Employer of Record (EOR) is often safer, more efficient, and cost-effective than independent contractors.
Why Does Employee Misclassification Occur?
- Financial Benefits: One of the primary drivers behind misclassifying workers as independent contractors is financial. Employers aim to reduce overheads related to taxes, social security contributions, and employee benefits.
- Regulatory Evasion: Some employers deliberately misclassify their workforce as a strategic way to sidestep compliance with labour laws. This includes avoiding obligations related to minimum wage, overtime pay, and health and safety regulations.
- Operational Agility: Employers often prefer the flexibility of hiring contractors, as it allows them to swiftly scale operations up or down without the long-term commitments associated with permanent employees.
- Lack of Legal Understanding: In some instances, the misclassification of workers is inadvertent, stemming from an employer’s limited knowledge or understanding of the complexities of labour and tax legislation.
- Changing Work Landscape: The evolving nature of the gig economy has blurred the lines between traditional employment and contract work. This increasingly complex landscape can inadvertently lead to the misclassification of workers.
The Risks of Wrongful Worker Classification
- Tax Repercussions: Failure to accurately classify workers exposes employers to significant tax penalties and arrears. Additionally, misclassified workers may face the financial burden of paying self-employment taxes.
- Legal Ramifications: Employers can be subject to legal action for not providing employee benefits, including workers’ compensation and unemployment insurance, further complicating their legal and financial standing.
- Lost Employee Benefits: Incorrect classification robs workers of essential benefits such as healthcare coverage, paid leave, retirement savings, and other job security measures.
- Brand and Reputational Risk: Being embroiled in a misclassification lawsuit can tarnish an employer’s brand, leading to loss of customer trust and long-term financial repercussions.
- Increased Regulatory Oversight: Employers who misclassify workers may attract greater scrutiny from regulatory bodies, resulting in exhaustive audits and financial and time burdens associated with legal defence and settlements.
The Price of Neglect: Understanding the Costly Consequences of Employee Misclassification
An American corporation engaged a Slovakian IT freelancer on a full-time basis for a span of roughly three years. Recognising the potential hazards linked to the misclassification of this individual as an independent contractor, the company’s Human Resources director reached out to Express Global Employment to formalise the freelancer’s employment status.
Although Express Global Employment proposed officially employing Slovakian talent, the finance department rejected the offer. The projected costs exceeded what they were currently remunerating the freelancer. At that time, the likelihood of facing an employee misclassification lawsuit seemed remote, prompting the decision to maintain the status quo.
Fast forward six months, and the company reinitiated contact with Express Global Employment, approving the employment offer for the Slovakian freelancer. However, by that point, the working relationship had deteriorated. The freelancer opted not to enter the employment agreement, instead filing a complaint with the labour authorities. While the final outcome remains undisclosed, communication with the HR director suggested that the company was at risk of incurring substantial liabilities, including back payments for social security taxes, accrued vacation, severance packages, and additional fines. The total sum in contention was estimated to be approximately 70,000 EUR.
This case underscores the significant financial risks and legal ramifications of employee misclassification, emphasising the importance of preemptive action and due diligence in international employment arrangements.
Proactive Approach to Employee Misclassification in Hong Kong
Accurate Employee Classification & Compliance
Our team specialises in aligning correct worker classification with Hong Kong’s unique regulatory landscape, ensuring full compliance with local tax and labour laws.
Cost-effective Employment Solutions in Hong Kong
We offer compliant global employment solutions that are both flexible and budget-friendly. Partner with us to provide statutory benefits to your Hong Kong-based staff without the legal risks associated with independent contractor arrangements.
Customised Employment Structures
Whether for short-term projects or long-term roles in Hong Kong, we tailor our employment solutions to align with your international operations perfectly, reducing the risk of misclassification.
Comprehensive Local Tax Guidance
Our experts help you navigate the complexities of Hong Kong’s tax system, from payroll to employee benefits, taking the guesswork out of your compliance obligations.
Discover the Total Cost of Hire in Hong Kong
Global Payroll Calculator: Leverage our Global Payroll Calculator for real-time insights on payroll costs and hiring, enhancing precision in budgeting and strategic talent acquisition decisions.
How We Simplify the Transition from Independent Contractors to Compliant Employees in Hong Kong
Transitioning from independent contractors to full-time employees can be a complex task with legal intricacies. Our systematic approach ensures that your company navigates this transition effortlessly, aligning with employment compliance standards.
- Thorough Legal Audit of Independent Contractor Agreements: Our initial step involves reviewing your current engagements with independent contractors meticulously. This audit will identify potential non-compliance risks, setting the stage for a seamless transition to an employee-based model.
- Employment Contract Revisions for Compliance: Our legal team will scrutinise and modify your independent contractor agreements, transforming them into fully compliant employment contracts. These revisions will align with current employment laws, addressing job roles, working conditions, and entitlements.
- Integrated Payroll Compliance: After transitioning from independent contractors to employees, they will be integrated into a compliant payroll system. This system will account for essential deductions, including social security contributions and tax withholdings.
- Benefits Realignment for New Employees: As part of the transition, we ensure that your new employees are offered mandatory and optional benefit plans. These include statutory requirements like healthcare and pensions, and voluntary benefits that can boost employee morale and retention.
Through our expertise, you can confidently transition from independent contractors to compliant employees, avoiding legal pitfalls and ensuring long-term operational success. This enhances your company’s reputation and optimises your human resource management for future growth.
This approach to transitioning from independent contractors to employees ensures that you stay on the right side of the law, mitigating risks related to employee misclassification and enhancing your company’s overall compliance posture.