# Help in understanding few clauses in offer letter



## elixir.sg

Hi friends,

I have these two clause in my offer letter, and I need help from seniors here on these 2 clauses - 
1) Kids Education Fee
The company agrees to pay you a monthly fee for your kids education in HK. This is an unchangeable amount used as subsidy under the budget of HKD7,000.00, no matter how many kids you have now or in future.

Please help me understanding the above statement. 
Does this mean that I will only get HKD 7000.00 if I produce the monthly tuition fees bill from school or does this mean that I will get paid HKD 7000.00 regardless of bills/ invoice? Let's say if I don't get school for my kid this year, and I opt for home-schooling for current year, company will not pay me HKD 7000.00 or let's say I don't move my kid in HK till mid-term admissions begin and supposedly he joins school after November then company will start paying HKD 7000.00 from then onwards only?


2) Relevant MPF and individual income tax is subject to your responsibility. Monthly salary will be paid to you by credit transfer directly into your bank account in Hong Kong. (During the first year in HK, MPF-Mandatory Provident Fund is allowed not to be
paid by both parties, but it's up to you).


Company is not required to pay any % of MPF in HK? 
And I don't need to pay MPF during first year of my stay in HK? 
How much % of salary is gone towards MPF per month?


Kindly help me with these two points as I have 48 hrs to confirm the offer.

Thanks all for your help so far.


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## elixir.sg

elixir.sg said:


> Hi friends,
> 
> I have these two clause in my offer letter, and I need help from seniors here on these 2 clauses -
> 1) Kids Education Fee
> The company agrees to pay you a monthly fee for your kids education in HK. This is an unchangeable amount used as subsidy under the budget of HKD7,000.00, no matter how many kids you have now or in future.
> 
> Please help me understanding the above statement.
> Does this mean that I will only get HKD 7000.00 if I produce the monthly tuition fees bill from school or does this mean that I will get paid HKD 7000.00 regardless of bills/ invoice? Let's say if I don't get school for my kid this year, and I opt for home-schooling for current year, company will not pay me HKD 7000.00 or let's say I don't move my kid in HK till mid-term admissions begin and supposedly he joins school after November then company will start paying HKD 7000.00 from then onwards only?
> 
> 
> 2) Relevant MPF and individual income tax is subject to your responsibility. Monthly salary will be paid to you by credit transfer directly into your bank account in Hong Kong. (During the first year in HK, MPF-Mandatory Provident Fund is allowed not to be
> paid by both parties, but it's up to you).
> 
> 
> Company is not required to pay any % of MPF in HK?
> And I don't need to pay MPF during first year of my stay in HK?
> How much % of salary is gone towards MPF per month?
> 
> 
> Kindly help me with these two points as I have 48 hrs to confirm the offer.
> 
> Thanks all for your help so far.


Hoping if any body can help me with this query......


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## hkexpat

Re : MPF in HK

The MPF Schemes Ordinance (the “Ordinance”) covers employees aged 18 to aged below 65, except for certain exempt persons stipulated in the Ordinance. A category of exempt persons is overseas employees who need an employment visa in order to work in Hong Kong.

Section 4(3) of the MPFSO and section 203 of the Mandatory Provident Fund Schemes (General) Regulation provide that a person entering into Hong Kong when permission is given to the person to land or remain in Hong Kong for the purposes of employment under the conditions of stay imposed in accordance with Section 11 of the Immigration Ordinance and 
1.	the period during which the person is given permission to remain in Hong Kong does not exceed 13 months; or 
2.	the person is a member of a provident, pension, retirement or superannuation scheme of a place outside Hong Kong,

he is exempted from joining an MPF scheme.

Hence, the MPF exemption is only applicable to those persons who do not have the right of abode or the right of stay or who have not been granted unconditional stay in Hong Kong under the immigration regulations and whose visas are granted for employment purposes. The 13-month exemption period refers to “the period during which the person is given permission to remain in Hong Kong”. The commencement date of this period should be determined in accordance with the terms of the corresponding visa.

And the answering your other questions on MPF......
Company is not required to pay any % of MPF in HK? 

- If employee is registered under MPF exemption (holds an existing Pesnion or state pension outside of HK) the Company is not subject to Mandatory MPF for both employer and employee. Should employee still want MPF it would be his own voluntary contributions only and nothing from company

- NB: If registered exempt now, please note cannot at any time in the future deregister – so employee will never be entitled to company Mandatory MPF in future

- If employee is not exempt but a foreigner – MPF contributions do not need to be made for first 12 months, however in month 13 MPF is mandatory for both employer & employee – NB in 13 month both must back pay for months 1-12 have to be made (so general advise to start straight away unless can afford full annual payment in one go.


And I don't need to pay MPF during first year of my stay in HK? 

- If employee is not exempt but a foreigner – MPF contributions do not need to be made for first 12 months, however in month 13 MPF is mandatory for both employer & employee – NB in 13 month both must back pay for months 1-12 have to be made (so general advise to start straight away unless can afford full annual payment in one go.


How much % of salary is gone towards MPF per month?

- 5% from employer & 5% from employee into MPF

- Only 5% of salary deducted from salary – this is employee contribution

- Capped at HKD 1,250 each per month – so total combined capped at HKD 2,500 per month

- Basically employee 5% is free money to employee


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## hkexpat

Please help me understanding the above statement. 
Does this mean that I will only get HKD 7000.00 if I produce the monthly tuition fees bill from school or does this mean that I will get paid HKD 7000.00 regardless of bills/ invoice? Let's say if I don't get school for my kid this year, and I opt for home-schooling for current year, company will not pay me HKD 7000.00 or let's say I don't move my kid in HK till mid-term admissions begin and supposedly he joins school after November then company will start paying HKD 7000.00 from then onwards only?


Yes its likely that the employer will only pay the HKD7k once they receive the invoice from the school.
You maybe able to negiotiate with employer to also cover home schooling, providing its via a company who sends a full-time tutor to teach your child. They could provide an invoice for this service.


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## lorgnette

You maybe able to negiotiate with employer to also cover home schooling, providing its via a company who sends a full-time tutor to teach your child. They could provide an invoice for this service.[/QUOTE]

Probably the tutor must be a registered tutor, with credentials and living in HK as well

You are right, if any part of the ed allowance is not applied towards schooling, or your child is not in school, then the company might not acknowledge your claims.

You might negotiate if the ed schooling applies to your professional cert upgrading instead.


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## elixir.sg

hkexpat said:


> Re : MPF in HK
> 
> The MPF Schemes Ordinance (the “Ordinance”) covers employees aged 18 to aged below 65, except for certain exempt persons stipulated in the Ordinance. A category of exempt persons is overseas employees who need an employment visa in order to work in Hong Kong.
> 
> Section 4(3) of the MPFSO and section 203 of the Mandatory Provident Fund Schemes (General) Regulation provide that a person entering into Hong Kong when permission is given to the person to land or remain in Hong Kong for the purposes of employment under the conditions of stay imposed in accordance with Section 11 of the Immigration Ordinance and
> 1.	the period during which the person is given permission to remain in Hong Kong does not exceed 13 months; or
> 2.	the person is a member of a provident, pension, retirement or superannuation scheme of a place outside Hong Kong,
> 
> he is exempted from joining an MPF scheme.
> 
> Hence, the MPF exemption is only applicable to those persons who do not have the right of abode or the right of stay or who have not been granted unconditional stay in Hong Kong under the immigration regulations and whose visas are granted for employment purposes. The 13-month exemption period refers to “the period during which the person is given permission to remain in Hong Kong”. The commencement date of this period should be determined in accordance with the terms of the corresponding visa.
> 
> And the answering your other questions on MPF......
> Company is not required to pay any % of MPF in HK?
> 
> - If employee is registered under MPF exemption (holds an existing Pesnion or state pension outside of HK) the Company is not subject to Mandatory MPF for both employer and employee. Should employee still want MPF it would be his own voluntary contributions only and nothing from company
> 
> - NB: If registered exempt now, please note cannot at any time in the future deregister – so employee will never be entitled to company Mandatory MPF in future
> 
> - If employee is not exempt but a foreigner – MPF contributions do not need to be made for first 12 months, however in month 13 MPF is mandatory for both employer & employee – NB in 13 month both must back pay for months 1-12 have to be made (so general advise to start straight away unless can afford full annual payment in one go.
> 
> 
> And I don't need to pay MPF during first year of my stay in HK?
> 
> - If employee is not exempt but a foreigner – MPF contributions do not need to be made for first 12 months, however in month 13 MPF is mandatory for both employer & employee – NB in 13 month both must back pay for months 1-12 have to be made (so general advise to start straight away unless can afford full annual payment in one go.
> 
> 
> How much % of salary is gone towards MPF per month?
> 
> - 5% from employer & 5% from employee into MPF
> 
> - Only 5% of salary deducted from salary – this is employee contribution
> 
> - Capped at HKD 1,250 each per month – so total combined capped at HKD 2,500 per month
> 
> - Basically employee 5% is free money to employee



Thank you so much hkexpat for your detailed response, truly appreciate it.

1) So looks like I should opt for MPF right away else I will have to pay big amount on 13th month and as it is when you leave HK, you get back your MPF, right? Do govt deduct any thing on accumulated MPF when you take it back, when leaving HK?

2) On 40000 HKD, 5% is HK$2000, so MPF capped at HKD 1250 means that maximum I will/ can put only HKD$ 1250 in MPF account and I don't need to put full 5% of my salary i.e. KHD2000, am I getting it right? Please confirm.


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## elixir.sg

hkexpat said:


> Please help me understanding the above statement.
> Does this mean that I will only get HKD 7000.00 if I produce the monthly tuition fees bill from school or does this mean that I will get paid HKD 7000.00 regardless of bills/ invoice? Let's say if I don't get school for my kid this year, and I opt for home-schooling for current year, company will not pay me HKD 7000.00 or let's say I don't move my kid in HK till mid-term admissions begin and supposedly he joins school after November then company will start paying HKD 7000.00 from then onwards only?
> 
> 
> Yes its likely that the employer will only pay the HKD7k once they receive the invoice from the school.
> You maybe able to negiotiate with employer to also cover home schooling, providing its via a company who sends a full-time tutor to teach your child. They could provide an invoice for this service.


Thanks again for this piece of info, I have sent email to employer reconfirming on my take-home, regardless of my kid going to school or not.


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## elixir.sg

lorgnette said:


> You maybe able to negiotiate with employer to also cover home schooling, providing its via a company who sends a full-time tutor to teach your child. They could provide an invoice for this service.


Probably the tutor must be a registered tutor, with credentials and living in HK as well


Thanks lorgnette for this piece of info, I have sent email to employer reconfirming on my take-home, regardless of my kid going to school or not. If its payable only on kid going to school, then I will talk about paying to full-time tutor, registered tutor etc.

You are right, if any part of the ed allowance is not applied towards schooling, or your child is not in school, then the company might not acknowledge your claims.

You might negotiate if the ed schooling applies to your professional cert upgrading instead.


Sorry didn't get wht you mean by applying it to my professional cert upgrading? Please clarify the underlined text.
[/QUOTE]


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## hkexpat

Re:-MPF
If & when you leave HK you can get your MPF fund back providing you get income tax clearance.

Yes the figures I confirmed earlier re:MPF are accurate. The figure is capped, so on your salary it's on the cap limit.

Income tax- is not deducted from salary monthly, but you should save each month towards your annual tax bill.


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## elixir.sg

hkexpat said:


> Re:-MPF
> If & when you leave HK you can get your MPF fund back providing you get income tax clearance.
> 
> Yes the figures I confirmed earlier re:MPF are accurate. The figure is capped, so on your salary it's on the cap limit.
> 
> Income tax- is not deducted from salary monthly, but you should save each month towards your annual tax bill.



I see, so in case I dont plan on leaving HK by 13 months then I will have to keep money aside for Income Tax also and if I am leaving then I will not need to worry about it as that money can be deducted from the MPF account.

My employer gave me this equation to calculate the Income Tax - 

_for income tax, according to HK law, you will pay once for a year. It's pretty low if you bring your family here. Tax free amount is 108000+50000 for spouse+30000 for one kid+family tourist cost once per year, no more than 30000+house renting cost _

So with this equation and salary of 40000 p.m. I think annual tax amount for me will be between HKD 5000 - 6000, isn't it? If I am right then there will be enough in MPF account by year end. So it's good in a way that they have this mandatory PF account, forcible saving is blessing in disguise. 

Thanks a lot hkexpat 

One more thing if I may ask, do you think we will be fine in 40,000 p.m. I m really hoping that I get cheap apartment and admission in ESF school for my kid, then I think we should be fine. But saving in personal account will not be huge as money will go towards MPF every month. Hopefully we are able to pay our bills and can keep aside little money as back-up.


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## toojoon

What concerns me from your post is that you are asking other people "Do you think we will will be fine at 40,000 pm?". 
Only YOU can know what your monthly expenses/needs are likely to be. Some people have higher standard of living expectations than others. You say "hopefully" we'll be able to...... The term hopefully sounds like you are relying on optimism!
Have you factored in any medical expenses and insurance? 
It's a long way to come only to find out that the promise of riches has lost its glamour!

I believe you have to have your tax payments in order, BEFORE they consider paying you what's in your MPF account.
It's not as simple as saying to them...."Oh, there's money in the MPF account so go and take the tax out of that will you!".

Any young family needs to budget carefully, but being in a new country, this applies all the more so. What about setting up house costs? There'll be many temptations to spend! Places to go, things to see and do.
Sorry if I am sounding so negative an narky!


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## lorgnette

You might negotiate if the ed schooling applies to your professional cert upgrading instead.

Most major corporations have budgets for education, upgrading skills or professional certifications. If you are unable to apply the educational schooling for your child, you might ask for your certification upgrades costs (and certification aids your current position). Since a corporation has a considerable allocation ready for educational budget/purposes, sometimes it is allowed for adding to employee skills not only education for employee children. 

Often a budget exists, but rarely all employees applied for it. 

Negotiation depends how you phase the terms. Hope it helps.


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## elixir.sg

toojoon said:


> What concerns me from your post is that you are asking other people "Do you think we will will be fine at 40,000 pm?".
> Only YOU can know what your monthly expenses/needs are likely to be. Some people have higher standard of living expectations than others. You say "hopefully" we'll be able to...... The term hopefully sounds like you are relying on optimism!
> 
> Yes you are right I m being optimistic here, actually what I am hoping is that next job will be better paying, if I am not able to save lets say HKD15000 per month. My wife is into QA and Testing and I believe dependants can work in HK, ofcourse there are some laws around that? So hoping minimum she might get HKD 20000. I have almost decided not to send my kid to International schools till I earn around HKD 75,000 pm. So local English school or ESF school will do for us. If we dont get admission for him current year then family will join me after first term is over back in home country.
> 
> Have you factored in any medical expenses and insurance?
> I thought meical expenses would be like US, if not please help me in understanding those. We have medical coverage/ insurance from Employer. However I totally forgot about deductibles. Kindly point me to the right source/ weblink from where I can gather more info on same. MEanwhile I am searching on same.
> 
> It's a long way to come only to find out that the promise of riches has lost its glamour!
> 
> I believe you have to have your tax payments in order, BEFORE they consider paying you what's in your MPF account.
> It's not as simple as saying to them...."Oh, there's money in the MPF account so go and take the tax out of that will you!".
> Was looking at this link to calculate tax, I m entering details as married person, putting my 12 months income, MPF amount as HKD 12,000 for year and 1 child (born in other years option) and with this I would owe HKD24,000 in tax.
> 
> I hope I am calculating it correctly, I still dont know what all will/ could be my deductions viz. medical insurance, tourist visit etc.
> 
> So with giving away HKD24,000 in a year is fine with me.
> 
> Any young family needs to budget carefully, but being in a new country, this applies all the more so. What about setting up house costs? There'll be many temptations to spend! Places to go, things to see and do.
> Sorry if I am sounding so negative an narky!
> 
> Nah! its ok I need honest opinion from people already living in HK, so I really appreciate your comments/ advise here. I want to give 2nd thought to this offer. My motive is to stay into techy side and better if in financial sector, I want to return back to US once I am eligible for applying H1 visa again. And want to save same or more than what I could save in India currently. So atleast right now if family is with me in HK and wife not working I am saving same as in India, so why not I go for developed country, rather than staying back in India in managerial role to earn same amount and loose touch from latest technology.


Thanks again for your message, nobody takes that much pain to help others but this forum and forum members like yourself, hkexpat, jwilliamson and lorgnette are truly blessing for expats.

My monthly expenses I have outlined as below - 
Apartment - HKD 12,000
Kid's Education - HKD 10,000 ( if family joins me, most probably they will join permanently after Nov 2012 (after 1st term is over) or Match 2013 (after full-term is over))
Electricity - HKD 600 - HKD 1000
Water - HKD 500
Phone and Internet - HKD 500
Commuting - HKD 2000
Food - HKD 5000
MPF - HKD 1000

So I am left with HKD 10,000 and if family is not moving then expenses will come down drastically. 

I guess from this job I can expect that much only. Motive will be to negotiate more salary once I am there after probation period or find new employer.

*@toojoon -* I look forward for your comments on my this calculation..........your comments are truly helpful


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## elixir.sg

lorgnette said:


> You might negotiate if the ed schooling applies to your professional cert upgrading instead.
> 
> Most major corporations have budgets for education, upgrading skills or professional certifications. If you are unable to apply the educational schooling for your child, you might ask for your certification upgrades costs (and certification aids your current position). Since a corporation has a considerable allocation ready for educational budget/purposes, sometimes it is allowed for adding to employee skills not only education for employee children.
> 
> Often a budget exists, but rarely all employees applied for it.
> 
> Negotiation depends how you phase the terms. Hope it helps.


Hello lorgnette,
I confirmed with my employer about 7K Kid education fee. They confirmed it will be paid to me regardless of my kid study in HK or not. So basically its just the component added to my offer letter, but I will be paid whether my kid is going to any school whether in HK or any other part of world.

Thanks for the explanation above, if I may ask, how negotiating for professional upgrading certification will help? Will this make 7k as non-taxable amount if given for self-education? Even if I don't go for any professional studies, will it be non-taxabale amount? Or you were just suggesting to make it as different component in case my kid is not getting education in HK?

Will appreciate your response, thanks a ton.


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## lorgnette

how negotiating for professional upgrading certification will help?

As a testing ground, during nego, casually ask hiring manager -what is the company policy regarding upgrading professional skills (essential to job) and the budget and the types of training approved etc. 

If there is a budget for it-- then you have an add on. Many progressive companies recognize (in management, IT ...)a need for skills upgrades and investment in social capital/ employee retention etc


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## elixir.sg

lorgnette said:


> how negotiating for professional upgrading certification will help?
> 
> As a testing ground, during nego, casually ask hiring manager -what is the company policy regarding upgrading professional skills (essential to job) and the budget and the types of training approved etc.
> 
> If there is a budget for it-- then you have an add on. Many progressive companies recognize (in management, IT ...)a need for skills upgrades and investment in social capital/ employee retention etc


Ok, I see what you are saying. Thanks will discuss on same with employer.

I had one more question, if you know the answer please help us on same. If dependent (my wife) has 8+ years of experience in QA and Testing, do she need to find employer to file her work-visa or can she work without work-visa?

Thanks.


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## lorgnette

On a dependent pass, your wife could stay (as long as the sponsor' work permit is valid) and she is not prohibited from working. If she is offered a job during interview, she could state she has a dependent visa. With the letter of employment, she or employer's agency could submit the document to Immigration to change her status.

Meeting job description/ requirements, as a dependent pass holder she should have a strong chance in being employed. Of course it is a case to case approval and depends on the regulations at the time of application.

No, she should not work without a work visa (and recommend she does not attempt to do so). If caught by authorities, it might impact your work status negatively as well as her re-entry to HK later.

Hope it helps


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## elixir.sg

lorgnette said:


> On a dependent pass, your wife could stay (as long as the sponsor' work permit is valid) and she is not prohibited from working. If she is offered a job during interview, she could state she has a dependent visa. With the letter of employment, she or employer's agency could submit the document to Immigration to change her status.
> 
> Meeting job description/ requirements, as a dependent pass holder she should have a strong chance in being employed. Of course it is a case to case approval and depends on the regulations at the time of application.
> 
> No, she should not work without a work visa (and recommend she does not attempt to do so). If caught by authorities, it might impact your work status negatively as well as her re-entry to HK later.
> 
> Hope it helps


Thanks lorgnette, for your response, it's really relieving to know this, 

So it means it will be an easy process to change to work-visa from dependent-visa? I read in immigration Hk website as well in FAQs section. 

So we are assuming that supposedly she goes for an interview and tell employer that she is on dependent visa, I assume they will they be willing to hire her regardless of her immigration status (obviously if her profile meets their selection criteria ) and they will have no issues in sponsoring work-visa for her? Looks like in HK it's not a tedious job for an employer to do so, as in US for H4( dependent visa) visa holders? 

If she has an employment / offer letter, she can also submit her documents to Immigration, HK together with offer letter requesting to change her status from dependent-visa to work-visa? Or only employer needs to do so? My understanding was that employer will need to file an application for changing her immigration status. 

Please correct me if I am wrong. Thanks so much once again. Appreciate your response :clap2:


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## lorgnette

Changing dependent to work status depends on responses from her background checks and skills/qualifications from known universities, and in many instances, it depends if local applicants could fill the position.

Yes, advisable to mention that she is a dependent pass holder valid until 201_ on her cover letters and interviews. It helps potential hiring managers to know she is in HK not on short term stay social pass.

Also worth mentioning are:
she speaks Cantonese/Mandarin
has Asian, SEA work experiences
working with SEA teams virtually, physically
etc


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