HK LOCAL CONSULTANT CONTRACT

[Parson]

Dear All,

Let me explain my "complicated" situation : I'm currently working in France as freelance for a french company. That company has a HK based subsidiary which wants me for a 6 months > 1 year mission period.
They want (and I agree) I still work as a "consultant" (freelance) in HK.
I made searches on internet and the only solution is to negotiate a renewable permanent consultant contract (or agreement) as I cannot create my local company and work for it (and there is no Freelance contracts in HK). They also told me a 6 months contract only (renewable) will prevent me from getting the visa.`
First, is this true ?

Then, they refuse the permanent contract because they are afraid this type of contract is, from the point of view of the HK administration, a disguised permanent staff contract.
There is any difference between a permanent consultant contract and permanent employee contract ?
Because my idea was to propose them a HK permanent contract to become a normal employee and ask them to fire me at the end of the mission.

But, I wonder if :
1) this type of contract in HK will impose some state taxes of costs for the company
2) the HK contracts can be ended easily by the company without any cost

I also found and contacted the hubconsult.com website (no answer yet). They already have a local company and sign consultant contracts with freelance people. Does anyone know this service ?

I would really appreciate your help

Regards.

[HK_Katherine]

You are suffering from a blight that I suffered for years. It's called the "overseas company assumes the rest of the world has employment laws just like theirs and even when you prove that's not true they just ignore you" syndrome.

You will be perfectly fine with a permanent contract with 1 week notice. Nobody will blink an eyelid here. There is no payment of tax by employers - tax is paid by employees. The employer is required to submit a simple form for each employee - it takes about 2 minutes to complete AND YOU NEED TO DO ONE FOR CONTRACTORS TOO - so they save nothing. Ditto MPF - you have to pay for anyone who works for you for more than 60 days. If they want you to work here, they need to give you a work contract, simple as. They can even give you a 6 months permanent contract - simple as. I suspect if you hand in a 6 month contract you will get a 6 month visa - no issues there.

Unfortunately the French work system is utterly different and full of rules, regulations and entitlements. You should, perhaps, download the Employment Ordinance and send it to them. Because that's ALL THERE IS.

[Parson]

Dear Katherine, thank you very much for your kind reply

I just need more details regarding your answer :

1) You ask me to fill a form for "contractors". Who are they exactly ?
2) Are you speaking about the "visa application forms" number 990A and 990B or this is another document ?
3) You say that the company does not pay any tax for the permanent employee contract, but what about the MPF ? They have to pay something for that, right ?

Thank you in advance for your feedback

[MandM!]

What a shady company, they don't want to follow the rules of Hong Kong. Sounds like trouble...

Anyway, if you need a visa, you can't do this freelance or contractors status legally.

You need an employment relationship first. Without it, just forget it. You get little rights as it is as an employee so they shouldn't try to take that away.

For immigration, once you have an employment contract, you complete forms 990A and 990B and show proof of your university degree.

You pay tax, the employer does not pay taxes because of you.

Both parties (employee and employer) each pay 5% of your monthly salary, up to a maximum of HK$1500 per month, into a retirement fund called MPF.

You need a notice period, if you or your employer wants to terminate the contract, you shall deliver a notice or payment in lieu.

Standard terms. It's literally all right there on the internet and HK immigration and labour department website like said above.

I've dealt with companies like this and passed up the opportunity to work with them, because if they are doing this, they have no idea the way things work here and I'd rather work for an established and stable company versus one who is trying to cut the basics. If they can't get this right, what faith do you have that they will get your salary paid, bonuses, commissions, etc.

[MandM!]

The form is the immigration form and at the end of the year the tax form. This is not a contractor's form, just reporting your earnings to the IRD.

[HK_Katherine]

Yes - what MandM said - I was referring to the "other obligations" your employer might worry about, like filling in tax forms, and making the point that they would have to do that whether you are a contractor or an employee.
A contractor is someone on a contract (which I thought was you from your opening post!).
As I noted in my post, yes they have to pay MFP and again they have to do that if you are a contractor or a full time employee, so again, no difference.

I don't think your employer is shady as someone noted, I think they just worry, as I would worry as an employer in their shoes, that giving you a 6 month permanent position here in HK will in some way entitle you to stay longer. Don't worry - it won't. Contract law is king here, not wooly socialist ideals like in France. Trouble is, if all they know is France they probably won't believe this!

[Parson]

Thank you all very very very much for your replies

In fact, the company is really reliable and strong so there is no problem with that. I just discussed with them this morning and the reason why they cannot hire me as an "employee" is because they don't have permissions from the french headquarters (I will be whole part of the staff and the status will be comptetely different for them) !!

Regarding the full time "consultant" agreement, they are afraid it must turn as full time employee contract (HK law ?) because I will work directly for them (as consultant) throuth a sponsorship and not through a local company !!!

Someone can give me more details regarding this point ?

So, they only can sign a "consultant" agreement with a local company. They told me made an agreement with a chinese guy who signed a 3 months contract to developp an application. This guy created his own business on February 1st just for this 3 months mission !!!

Do you think there is something possible for me using some specific solution ?

Do you know if there are existing "umbrella companies" (such as hubconsult) in HK providing that kind of service ?

So if I well understood, there are two consultant status :
- self-employee
- contractor

What is the difference between them ?

Thank you in advance for your feedback

[HK_Katherine]

The difference between you and the "chinese guy" is that you need a visa. The local chinese guy can become a single-person company by filling in a form and paying a small fee. You can't. You need a visa or to be employed by a company (any company, local or international). Your French employers just don't understand HK law. You CANNOT become a full time permanent member of staff if they employ you on a 6 month work contract under HK law. CANNOT. I guess they are thinking you will take that contract to a FRENCH court and probably under French law you can, and since they are a French company that's a legit concern.

Find a HK company to employ you. Perhaps a temping agency.

[hullexile]

I got round this by being officially employed by a local college that I was working with, although paid by my UK university and my contract was with the UK university. Immigration never asked any questions and accepted the UK university contract as proof of employment but with a letter from the local college saying I was working for them.

[MandM!]

My thoughts on the word contractor mean self employed, whereas Katherine is thinking it means having a contract.

Your relationship can be employer/employee or there is another relationship called someone other than an employee. This would be the same for the tax form.

The difference is being self employed, you would have a contract with the company and you would be responsible for your own MPF, on both sides. So you would pay 10% up to 3k per month. You would not have the rights as an employee and no rights to an employment visa.

For tax purposes, they may or may not look the other way. I'm not sure. Perhaps you can be here on a tourist visa and paid under your France agreement. This is getting into a grey area and likely illegal but doesn't mean that many people don't do it.

So I think the first thing you need to figure out, is do you want to come here and work on a tourist visa, which is illegal or do you want a proper visa.

If you want to do the contractors or self employed way, you can set up a limited company and be legit that way but then the liability of being here legally goes to you. Think that would skirt the liability on the employers side. If you have a limited company, it doesn't come with the right to work and live in HK and to get an investment visa to do so is difficult and not worth the effort for 6 months. An easy exception is to deposit HK$10m into a bank account in HK and you will be granted the right to live/work here freely.

Also, having a limited company has auditing costs. So factor in another HK$3-10k.

As the last poster said, be hired via a company here to get an employment visa and outsource your work to your current company. Again grey line but sounds doable but trouble and headache for only 6 months.