# The India Employee Benefits Stack for Hong Kong companies

> Hong Kong parents are used to a capped provident fund, a long service payment that only some exits trigger, and group medical cover on top of low-cost public hospitals. In India the provident fund has no cap for foreign staff, gratuity is paid on most exits after five years, and group health is the whole of the cover.

By Akshay Golechha, Chief Business Officer at Plum (https://www.linkedin.com/in/akshaygolechha/). Published by Plum (https://www.plumhq.com). Canonical: https://www.plumhq.com/india-benefits-stack/hong-kong. Updated 2026-10-05. Part of The India Employee Benefits Stack: https://www.plumhq.com/india-benefits-stack.

## In short

- There is no MPF-style cap for foreign staff in India. International Workers join EPF from day one at 12% employer plus 12% employee on full salary; Hong Kong's MPF stops at 5% of HK$30,000 a month each.
- India's gratuity is the closest match to Hong Kong's long service payment: 15 days' last drawn salary per year of service after five continuous years, capped at ₹20 lakh. It is paid on resignation as well as dismissal.
- Above ₹21,000 a month India has no statutory health cover, so Group Health Insurance carries the load Hong Kong's subsidised public hospitals carry at home. It is voluntary in law and expected by candidates hired at ₹8 LPA and above.

## Questions

### Do staff sent from Hong Kong have to contribute to EPF in India?

Yes, if they are foreign nationals on Indian payroll. India and Hong Kong have no social security agreement, so they are International Workers and join EPF from day one, at 12% employer plus 12% employee on full salary with no ₹15,000 ceiling. MPF exemptions do not carry over, and EPF can generally be withdrawn only at 58 or on permanent incapacity.

### What is the Indian equivalent of the long service payment?

Gratuity. Establishments with 10+ employees owe 15 days' last drawn salary per year of service after five continuous years, or one year for fixed-term employees under the 2025 Labour Codes, capped at ₹20 lakh. It is paid on resignation and retirement as well as dismissal, and EPF cannot be used to pay it, so fund it separately through an insured gratuity scheme.

### What replaces employees' compensation insurance in India?

The Employees' Compensation Act 1923 makes the employer liable for work injuries to employees not covered by ESI, and the employer insures that liability. Employees earning up to ₹21,000 a month are covered through ESI. Most employers add Group Personal Accident cover, and Group Term Life at 3 to 5 times CTC is common for white-collar staff.

### Is group medical insurance compulsory in India?

No. Group Health Insurance is not legally required, but candidates hired at ₹8 LPA and above expect it, and above ₹21,000 a month it is the only health cover employees get through work. Most insurers need a minimum group of 7. The premium is deductible under Section 36(1)(ib), is not a perquisite under Section 17(2), and attracts 18% GST.

### How does India's maternity leave compare with Hong Kong's?

It is longer and costs the employer more. The Maternity Benefit Act gives 26 weeks of full pay for the first two children and 12 weeks from the third, paid by the employer, against Hong Kong's 14 weeks at four-fifths of wages with the last four reimbursed. ESI covers it for ESI members. There is no statutory paternity leave under central law.

### Does the India–Hong Kong tax treaty cover short business trips?

India and Hong Kong have a comprehensive double taxation agreement, in force since November 2018 and applying in India to income from 1 April 2019. Short visits are usually exempt from Indian tax under its 183-day and employer conditions; check the exact article before relying on it. Long secondments can create a permanent establishment, so structure recharges with a tax advisor.

## What changes when you come from Hong Kong

### Assignees from Hong Kong and India's EPF

**The rule.** Foreign nationals employed in India are International Workers under EPF. They must join from day one, with contributions on full salary: the ₹15,000 wage ceiling does not apply.
**Hong Kong and India.** India and Hong Kong have no social security agreement. Staff sent from Hong Kong to an Indian payroll join EPF from day one on full salary, whatever MPF exemption applied at home, and can generally withdraw only at 58 or on permanent incapacity.

### Mapping Hong Kong benefits to India

**At home.** MPF at 5% each on relevant income up to HK$30,000 a month, compulsory employees' compensation insurance, statutory severance and long service payments, and group medical cover bought voluntarily.
**In India.** EPF for retirement, ESI or Group Health Insurance (GHI) for health, the Employees' Compensation Act plus Group Personal Accident for injury, and gratuity in place of the long service payment: fund it through an insured gratuity scheme.

### Overlap between Hong Kong and India

**Time difference.** Hong Kong is 2½ hours ahead of India all year (neither uses daylight saving), so most of the Indian working day overlaps Hong Kong's.
**What to set up.** Agree who in India signs off endorsements, claims escalations and renewals, so nothing waits for headquarters' business hours.

### India–Hong Kong tax treaty

**Treaty.** India and Hong Kong signed a comprehensive double taxation agreement in March 2018. It entered into force in November 2018 and applies in India to income from 1 April 2019. Short visits are usually exempt from Indian tax under its 183-day and employer conditions; check the exact article before relying on it.
**Secondments.** Long secondments can create a permanent establishment for the parent. Structure recharges and employment contracts with a tax advisor before staff move.

## What you call it in Hong Kong, and what it is called in India

Hong Kong's MPF caps mandatory contributions at 5% of HK$30,000 a month each. India's EPF works the other way for foreign staff: International Workers contribute 12% plus 12% on full salary, with no ceiling, from their first day. The rest of the map is closer. India has no statutory health cover above ₹21,000 a month, so the group medical plan a Hong Kong employer buys by habit becomes the main layer, and India's gratuity plays the part of the long service payment.

| At home in Hong Kong | In India | What changes for the employer |
| --- | --- | --- |
| Mandatory Provident Fund (MPF): Employer and employee each pay 5% of relevant income, capped at HK$1,500 a month each. Below HK$7,100 a month only the employer pays. | EPF and EPS (Employees' Provident Fund and Pension Scheme) | 12% employer plus 12% employee on basic plus DA, with 8.33% of the employer share going to the pension scheme. The ₹15,000 statutory ceiling does not apply to International Workers, so foreign staff contribute on full salary. |
| MPF exemption for expatriates (Exempt person): Expatriates in an overseas retirement scheme, or permitted to stay in Hong Kong for 13 months or less, need not join MPF. | Exemption only under a social security agreement, with a certificate of coverage | Hong Kong has no agreement with India, so there is no equivalent exemption. Membership of a Hong Kong or overseas scheme does not take a foreign national on Indian payroll out of EPF. |
| Long service payment (LSP): After five years, on dismissal other than for misconduct or redundancy and on some resignations: two-thirds of a month's wages per year, capped. | Gratuity under the Payment of Gratuity Act | Gratuity is broader: paid on resignation, retirement or termination after five continuous years (one year for fixed-term employees), at 15 days' last drawn salary per year of service, capped at ₹20 lakh. Provision it from day one. |
| Severance payment (SP): On redundancy after 24 months' service: two-thirds of a month's wages, at most HK$15,000, per year of service, up to HK$390,000. | Gratuity once five years are complete; notice pay under the contract | India's statutory exit payment is gratuity, which turns on length of service rather than the reason for leaving. Set redundancy terms with local counsel, and budget gratuity on top once five years are complete. |
| MPF offsetting (Offsetting arrangement): Employers could use MPF from their mandatory contributions to offset severance and long service payments. Abolished for service from 1 May 2025. | No offsetting: EPF and gratuity are separate statutory obligations | Hong Kong has just moved to where India already is. Gratuity is funded in full alongside EPF, and neither reduces the other. The gratuity liability is usually insured through a gratuity scheme. |
| Employees' compensation insurance (ECO insurance): Employees' Compensation Ordinance: insurance is compulsory for every employee, at least HK$100 million per event, or HK$200 million above 200 employees. | Employees' Compensation Act 1923 (or ESI where covered) plus Group Personal Accident (GPA) | The Act covers employees not in ESI, and the employer insures it. GPA is the usual add-on, with Group Term Life at 3 to 5 times CTC common for white-collar staff. |
| Group medical insurance (Group medical): Voluntary employer cover for clinic visits and private hospital care, on top of subsidised public hospitals. | Group Health Insurance (GHI) | In India GHI is the main layer, not a supplement: above ₹21,000 a month there is no statutory cover. Most insurers need a minimum group of 7. The India median sum insured is ₹5,00,000; global startups in India carry ₹10,00,000. |
| Public hospital services (Hospital Authority): Subsidised public hospitals and clinics. From 1 January 2026 an eligible person's public medical fees are capped at HK$10,000 a year. | ESI hospitals and dispensaries for employees earning up to ₹21,000 a month | Salaried staff above the ESI ceiling rely on private hospitals. GHI with a cashless hospital network replaces the public safety net a Hong Kong employer can assume at home. |
| Paid annual leave (Annual leave (Employment Ordinance)): 7 days after each of the first two years of service, rising to 14 days from the ninth year. | Earned leave under the state Shops and Establishments Act (offices) or the Factories Act (factories) | Earned leave is typically 12 to 18 days a year plus casual and sick leave, set by state law. Public holidays vary by state, with three national holidays, against Hong Kong's 15 statutory holidays in 2026. |
| Paid sickness days (Sickness allowance): Accrue at 2 days a month in the first year and 4 a month after, up to 120 days, paid at four-fifths of wages. | Sick and casual leave under state law, separate from earned leave | Long illness is handled through state sick-leave quotas, accumulated earned leave and the employer's own policy. Hospital bills fall on GHI. |
| Maternity leave: 14 weeks at four-fifths of wages. The Government reimburses weeks 11 to 14, capped at HK$80,000. | Maternity Benefit Act: 26 weeks of full pay for the first two children, 12 weeks from the third | Full pay rather than four-fifths, for almost twice as long, with no reimbursement (ESI covers it for ESI members). A crèche is required at 50+ employees. |
| Paternity leave: 5 days per confinement, paid at four-fifths of wages. | No statutory paternity leave under central law | Any paternity leave in India is company policy. If headquarters wants a group-wide minimum, write it into the Indian leave policy. |

## What Hong Kong companies get wrong when they set up in India

1. **Provident fund contributions are capped, as MPF is.** For International Workers the ₹15,000 EPF ceiling does not apply: 12% employer plus 12% employee on full salary from day one. A senior hire from Hong Kong costs far more in EPF than the HK$1,500 a month MPF cap.
2. **MPF expatriate exemptions also work in India.** India exempts foreign staff only under a social security agreement, and there is none with Hong Kong. Overseas scheme membership and short postings do not take a foreign national on Indian payroll out of EPF.
3. **End-of-service pay arises only on dismissal or redundancy.** Gratuity is due on resignation, retirement or termination after five continuous years, one year for fixed-term employees, at 15 days' last drawn salary per year of service, capped at ₹20 lakh. Provision it from the first payroll and insure it.
4. **Provident fund balances can cover end-of-service payments.** Hong Kong ended offsetting for service from 1 May 2025. In India, EPF and gratuity are separate statutory obligations, and one cannot be used to pay the other, so budget both in full.
5. **Public hospitals are the safety net; group medical is a perk.** Above ₹21,000 a month India has no statutory health cover, and salaried staff use private hospitals. Group Health Insurance is the safety net. Set the sum insured against the India median of ₹5,00,000 and the ₹10,00,000 global startups carry.
6. **Contributions apply to total pay, as MPF relevant income does.** EPF and gratuity run on basic plus DA. Since 21 November 2025, if allowances excluded from wages exceed 50% of total remuneration, the excess is added back into wages for EPF, gratuity and other statutory calculations.
7. **Fourteen weeks at four-fifths pay is the maternity benchmark.** The Maternity Benefit Act requires 26 weeks of full pay for the first two children and 12 weeks from the third, paid by the employer (ESI covers it for ESI members). A crèche is required at 50+ employees.
8. **Parents sit outside the family definition.** Parents are the largest claims category by relationship in India, about 40% of claims in Plum's data. Whether to cover them is the biggest single design choice in a GHI policy, and Indian candidates ask about it.

## Hong Kong vs India, benefit by benefit

| Benefit | Hong Kong | India |
| --- | --- | --- |
| Provident fund | MPF: 5% employer plus 5% employee, capped at HK$1,500 a month each. | EPF: 12% employer plus 12% employee on basic plus DA; International Workers on full salary, no ceiling. |
| Expatriate exemption | Overseas scheme members, and those permitted to stay 13 months or less, are exempt. | Only under a social security agreement, with a certificate of coverage. None with Hong Kong. |
| Statutory health cover | Subsidised public hospitals; public fees capped at HK$10,000 a year from 2026. | ESI for employees earning up to ₹21,000 a month. Nothing above that line. |
| Employer health plan | Group medical bought voluntarily, usually clinic plus hospital cover. | Group Health Insurance: voluntary in law, expected at ₹8 LPA and above, minimum group of 7 with most insurers. |
| Work injury | Compulsory employees' compensation insurance for every employee, at least HK$100 million per event. | Employees' Compensation Act 1923 for staff not in ESI, insured by the employer; GPA added voluntarily. |
| Long-service lump sum | Long service payment after five years: two-thirds of a month's wages per year, up to HK$390,000. | Gratuity after five years: 15 days' last drawn salary per year, capped at ₹20 lakh. |
| Redundancy | Severance payment after 24 months, on the same formula. | Gratuity once five years are complete, or one year for fixed-term staff; other terms with local counsel. |
| Offsetting | MPF offsetting abolished for service from 1 May 2025. | Not available. EPF and gratuity are paid separately. |
| Maternity | 14 weeks at four-fifths of wages; weeks 11 to 14 reimbursed by the Government, capped. | 26 weeks of full pay for the first two children, 12 from the third, paid by the employer. |
| Paternity | 5 days at four-fifths of wages. | No statutory paternity leave under central law. |
| Annual leave and holidays | 7 days rising to 14 with service, plus 15 statutory holidays in 2026. | Earned leave of 12 to 18 days a year plus casual and sick leave; public holidays vary by state. |
| Sick leave | Accrues up to 120 days, paid at four-fifths of wages. | Separate sick and casual leave quotas under state Shops and Establishments Acts. |

## Staff seconded from Hong Kong

Staff sent from Hong Kong usually keep an international medical plan, but an India-admitted GHI is still worth adding: it gives cashless admission at network hospitals with no deposit. There is no India–Hong Kong social security agreement, so a foreign national on Indian payroll joins EPF from day one on full salary, whatever MPF exemption applied at home. Withdrawal is generally possible only at 58 or on permanent incapacity, so factor that into the package.

## Where Hong Kong companies set up in India

- **Mumbai, Maharashtra.** HSBC's Indian head office, Tata AIA Life's headquarters, and shipping and logistics offices. Financial-services hiring here sits almost entirely above the ESI ceiling.
- **Hyderabad and Pune, Telangana and Maharashtra.** HSBC's large operations and technology centres. The two states set different Shops and Establishments leave rules, so one India policy needs state-by-state checks.
- **Delhi NCR, Delhi, Haryana and Uttar Pradesh.** Shangri-La's New Delhi hotel and the sourcing offices of Hong Kong trading houses. Each of the three states sets its own leave rules.
- **Chennai, Tamil Nadu.** KLN's Indian logistics business, built on Chennai-based Indev Logistics. Warehouse workforces mix ESI-covered staff with salaried staff on GHI.

Hong Kong companies with operations in India include HSBC, Cathay Pacific, AIA (Tata AIA Life), CLP Group (Apraava Energy), Li & Fung, KLN (Kerry Logistics), OOCL, Shangri-La.

## Benchmarks: what MNCs and GCCs offer in India

From [The Standard of Employee Benefits 2026–27](https://www.plumhq.com/standard-of-employee-benefits), Plum's report on 15,312 benefit plans, 5,20,100 claims and 74,543 checkups from Plum's FY26 book.

- **1.6×** MNC and GCC benefits spend per employee in India, against a funded Indian startup (nearly 3× a local Indian business). ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3))
- **43%** of MNCs and GCCs in India are Holistic Leaders: deep insurance plus real breadth of healthcare beside it. ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3))
- **₹7,50,000** median MNC/GCC sum insured, covering parents or in-laws, with ₹1,00,000 maternity cover and no copays or sub-limits. ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3))
- **~2%** of payroll buys India's top-quartile plan, against roughly 15% in the US, 10–25% across Europe and 8–15% across APAC. ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3-coverage))

## Further reading on plumhq.com

- [How MNCs structure health insurance for Indian subsidiaries](https://www.plumhq.com/blog/mnc-health-insurance-india-subsidiary-structure): Global programmes, local policies and who signs what.
- [Do you need to match headquarters' benefits in India?](https://www.plumhq.com/blog/gcc-match-headquarters-benefit-standards-india): Where to mirror the parent plan, and where India needs its own design.
- [Insurance for expatriate employees in India](https://www.plumhq.com/blog/insurance-coverage-expatriate-employees-gcc-india): Covering seconded staff alongside the local plan.
- [Group insurance vs ESI: a guide for employers](https://www.plumhq.com/blog/group-insurance-vs-esi-employers-guide): Who must be in ESI, and where group health insurance takes over.
- [How to calculate gratuity in India](https://www.plumhq.com/blog/how-to-calculate-gratuity): Formulas, worked examples and a free calculator.
- [The Standard of Employee Benefits 2026–27](https://www.plumhq.com/standard-of-employee-benefits): Benchmarks from 4,500+ Indian employee health plans.

Sources: Mandatory Provident Fund Schemes Authority, mandatory contributions and exempt persons (mpfa.org.hk); Labour Department, A Concise Guide to the Employment Ordinance, December 2025 edition; Labour Department, abolition of the MPF offsetting arrangement from 1 May 2025; Labour Department, Employees' Compensation Ordinance (Cap. 282); Hospital Authority and Health Bureau, public healthcare fees and charges reform from 1 January 2026; India–Hong Kong Comprehensive Double Taxation Agreement, 2018 (incometaxindia.gov.in; Inland Revenue Department); Code on Social Security 2020 and Code on Wages 2019, in force 21 November 2025.