Employment Law

Types of Employment Contracts in Macau

In Macau, it is not mandatory for all employment contracts to be drafted in writing. However, when signing a contract with a non-resident employee, a written contract must be signed. This is because these contracts must contain the identities and signatures of all parties.

Even if an employment contract does not need to be in writing, best practices require that the agreement be clearly written – identifying the roles and responsibilities of the employer and employee.  

Employment contracts with non-resident employees must be for a fixed term and drawn up in writing. They need to contain the following information:

• The identity of both parties is complete
• Address of both parties
• The employee's professional category, or the specific duties the employee needs to perform
• compensation
• work place
• normal working hours
• Execution and effective date of the contract

Working with our Macau PEO, Remoly's team of local experts can assist in drafting strong employment contracts that comply with local regulations.

Fixed Term

Indefinite

Macau Working Hours

In Macau, the standard working day is eight hours. Employees typically work six days a week, which means the standard working week is approximately 48 hours. Depending on the employer's business, the working time can be up to 12 hours per day, as long as the employee agrees to these hours. Macau law requires employers to provide employees with a break of at least 30 minutes for every five consecutive hours of work.

In Macau, overtime work is considered work required outside normal working hours. Both parties will usually agree to overtime, but there are some exceptions where an employer may require overtime without the employee's consent. This may be the case where the employer faces a huge loss if they encounter force majeure. The overtime pay agreed to by employees is 120% of the basic salary, and the mandatory overtime pay rate is 150% of the basic salary.

Macau employees are entitled to one paid day off per week. However, the parties may agree that paid rest days will occur at different frequencies. Employees are entitled to at least six days of paid leave after one year of employment. For contracts of more than three months, employees are entitled to half a day off for every month of service completed.

Income Tax

Residents and non-resident employees are required to pay tax on income generated while working in Macao. This is a progressive tax between 7% and 12%, with higher rates for individuals with higher incomes. First, the tax-free annual allowance, which is MOP 144,000, is deducted from the salary.

According to Macau’s tax system, there is no tax on worldwide income. This means that Macau employers only need to pay taxes on the wages they pay to their employees.

Local employees must register with the Macau Social Security Fund. The employer pays MOP 90 per month and deducts MOP 30 from the salary of each resident employee. Employers are required to pay MOP 200 for each non-resident employee every quarter.

Employers should keep records regarding employee compensation and document the employee's name, tax ID number, address and payment terms. In addition, employers need to submit documents to the Macau Ministry of Finance before February 28 of each year. This document should include the names and tax identification numbers of all employees who received wages from the employer within the past year.

Health Insurance

Macau has universal health care and a single-payer system. Employers and employees share the cost of health insurance, which accounts for approximately 5% of an employee's income. Expatriates in Macau are also required to pay these contributions.

Holiday Policy

Take a Vacation

Macau employees are entitled to at least six working days of paid annual leave in their second year of service with the company. If the employment period is less than one year but more than three months, you will be entitled to half a day off for every month of employment. This was done in the second year of service with the company.

When the remaining days in the period reach 15 days, the annual leave will be calculated as half a day. For example, an employee who works five months and sixteen days in one year will be entitled to six half-days of paid annual leave the following year.

Sick Leave and Reasonable Absence from Work

Employees may take 30 consecutive days or 45 non-consecutive days due to illness within a year. Six days of sick leave are paid by the employer. If employees are absent from work due to illness or injury at work, they are entitled to compensation equal to two-thirds of their salary for the period of absence.  

Macau employees are entitled to three days of leave in the event of the death of an immediate family member. This may be increased to 12 days of leave if required to provide assistance to a family member.

Additionally, employees are entitled to six days of vacation if they are married.

While there are other possible legitimate absences, employees will need to provide relevant documentation to their employer to qualify for the exemption.

Maternity and Paternity Leave in Macau

Female employees in Macau are entitled to 70 days of maternity leave. As of May 25, 2023, the minimum period for employer payments remains 56 days. FSS will pay employees 100% of their basic salary for a maximum period of 14 days (total period of 70 days). Effective May 26, 2023, employers will be responsible for providing the full 70 days of paid leave. To be eligible for the government subsidy, eligible employees must have worked for their current employer for at least one year before the leave begins.

Male employees who have worked for one year or more are entitled to five working days of paternity leave. These days can be counted consecutively or individually - up to 30 days after the birth of the child.

Termination and Severance

In Macau, an employee can terminate an employment contract at any time, but must give at least 7 days' notice before the termination date. Individual employment contracts may provide for longer notice periods. Employees can choose to take wages in lieu of work during the notice period.

Macau law distinguishes between dismissal with cause and dismissal without cause. Termination without cause requires at least 15 days' notice, or longer if the employment contract provides otherwise. A payment may be made in lieu of the notice period. Employees who are fired without cause are entitled to severance pay. This amount is calculated based on the number of years of service to the company, and can reach a maximum of MOP 240,000.

In Macau, dismissal with cause is immediate and employees are not entitled to severance pay or other compensation. The employer must state the reasons for dismissal in writing within 30 days after the grounds for dismissal are established.

Dismissal with cause is limited to the following reasons:

• Willful disobedience
• Repeated failure to perform duties
• Chronically late or leaving get off work early without authorization
• Unexcused absence from work
• Misrepresentation of reason for absence
• physical violence
• Seriously harm the interests of the enterprise
• Continuously provokes disputes with other employees
• Intentional loss of productivity
• Violation of safety rules

If the grounds for unjust dismissal are found to be insufficient, the employee will be entitled to due compensation.

For companies expanding overseas for the first time, dealing with employee layoffs and dealing with severance packages can be complicated. Remoly's Macau PEOs can reduce risk for foreign companies and provide guidance through the process.  

Work Pass

Non-Macau residents must hold a work permit issued by the Labor Affairs Bureau. Before any work permit is issued, employers should obtain approval from the Chinese government to hire non-resident workers. This license is granted by the Chief Executive of the Macau Special Administrative Region or other government authorized agencies.

The hiring of non-resident employees should be limited to situations where local employees are unable to achieve job objectives. The employment of non-resident employees shall not result in the dismissal of local employees or the degradation of the working conditions of local employees.

The process of obtaining a work permit typically takes three to four months from the initial request to hire a non-resident worker.