Nancy Neumann, managing partner, Hong Kong Executive Search discusses the challenges of compliance.

Following Rules

Compared to setting up a recruitment business in China, where the applicant has to come up with a minimum registered capital of RMB100,000 and a budget to establish an office with a minimum team of five employees who needs to be at least diploma graduates and attained the Professional Certificate of Providing Human Resources Services 人力资源服务资格证 among other city/provincial specific statutory law compliance requirements, Hong Kong has a very transparent and simple process. There is no minimum capital requirement nor minimum number of employees, let alone a stipulated academic qualification.  

The Employment Ordinance states that ‘employment agency’ means a person (the Licensee) who operates a business the purpose of which is to obtain employment for another person, or to supply the labour of another person, to an employer. In Hong Kong an employment agency is required to be registered and licensed by the Hong Kong Labour Department under their Employment Agency Administration Division. The same licence covers whether your business is engaged in placing domestic helpers or CEOs, irrespective their workplace is within or outside Hong Kong. To date there are over 3,000 employment agencies on record and the executive search space is very crowded.  

As an executive recruiter, we are normally engaged/retained by clients who paid us to find a shortlist of candidates. Most of the time, these are passive candidates and not active job seekers per se. Employment agencies that entertain walk-in jobseekers have also long done away with charging a commission to those people. However, in Hong Kong, the law permits employment agencies to charge job seekers a maximum of 10 per cent of their first month’s wage only after it has been received. The only rationale behind this is the Employment Agency Licence covers a broad spectrum of recruitment firms including those handling domestic helpers and blue- collar workers. A ‘Schedule’ (notice) bearing the message “The Maximum Commission which may be received by an Employment Agency shall be – from each person applying to the employment agency for employment, work or contract or hire of his services, an amount not exceeding a sum equal to ten per cent of the first month’s wages received by such person after he has been placed in employment by the employment agency” is required to be displayed in a prominent place in the office to be law compliant. Overcharging commission is a serious offence and liable to a fine of HK$350,000 and imprisonment for three years. Upon conviction, the Commissioner for Labour will refuse to renew or will revoke their employment agency licence.

Once a placement occurs, the employment agency must maintain a record of the placed candidate containing the person’s name, address, Hong Kong Identity Card number (in the case of a non-resident, passport number and citizenship), fee and commission received, date of employment and name and address of employer for a period of two years. If the collection of the above personal data is for the purpose of complying with the Employment Ordinance, it would not constitute a breach of the Personal Data (Privacy) Ordinance. However, in collecting, holding, processing or using job-seekers’ personal data, employment agency must comply with the Data Protection Principles of the Personal Data (Privacy) Ordinance.

The above are basic operational compliance requirements usually managed by an office manager or a staff responsible for general administration. The Employment Agency Administration Division of the Hong Kong Labour Department pays regular visits to employment agencies and check records, unannounced. In any event, the Licensee ultimately is the one responsible to ensure the business fully complies with all laws of Hong Kong at all times, including but not limited to the Employment Ordinance, the Employment Agency Regulations, the Immigration Ordinance, the Trade Descriptions Ordinance, the Personal Data (Privacy) Ordinance, the prevention of Bribery Ordinance when conducting employment agency business.

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