Currently, there is technically no legal minimum or cap on the amount that an individual can borrow from a licensed money lender (as of April, 2019). Usually, the maximum amount that can be borrowed, as well as the loan repayment schedule, are calculated by the loan company based on the domestic worker’s salary and the length of her visa. Of course, it is up to the domestic worker to negotiate and decide if she agrees to sign the contract. 

Many loan companies will also provide tempting offers to domestic workers who they know need the money or who have borrowed before. For example, they might call up those with existing loans and offer them the chance to renew their loan or to borrow a higher sum, increasing the overall amount owed.

If they have an existing loan with a money lender or if they’re not eligible to borrow for some reason, some domestic workers might turn to unlicensed money lenders or individuals to borrow money. As these are illegal and unregulated, domestic workers can borrow small or large amounts and might also be subject to illegal and unethical lending practices, such as high late fee charges, passport retention or extremely high interest rates (e.g. 20% per month) which can rapidly increase the overall amount owed and spiral out of control.

Often, the debt cycle starts with recruitment. For newcomers, upon arrival in Hong Kong they may already need to take out loans due to very high fees charged during the recruitment process (training, placement fees, etc.). With no access to formal credit (bank loans) in Hong Kong, domestic workers may resort to (licensed or unlicensed) money lenders. Sometimes, an employment agency may bring them to a loan company as soon as they get here to sign a loan contract to cover recruitment fees. 

Money lenders do not provide the same services as banks - they give out loans only and usually charge higher interest rates than banks. Most licensed money lenders offer loans not just to domestic workers but to residents too. However, they often specifically target domestic workers since they are usually more in need of instant cash. 

The loan companies usually make it very simple for domestic workers to get a loan - which of course makes it even more tempting if you are in desperate need of money. Documents typically required are a copy of their employment contract, a copy of their visa and copy of their passport. They are usually asked to list references and guarantors as well (usually other domestic workers). If the borrower cannot settle the monthly payment, loan agencies will call and follow up with the references and guarantors. Guarantors can end up paying for the remaining repayments due because the principal borrower has failed to fulfill their obligation - many often sign as a guarantor without understanding what it means.

Settling the monthly repayment can be very simple - either through the bank, at the loan company office or even at any 7/11 (like you would pay for a utility bill).

Often, domestic workers sign high interest loans because they have no choice, or maybe because they don’t know whether the interest rate is actually high/legal or not. According to the Money Lenders Ordinance, borrowers can legally be charged up to 48% of annual interest on a loan by licensed money lenders. If it can be proven that they are a high risk borrower, they can be charged up to 60% of annual interest.

Some domestic workers might ‘share’ a loan with a friend, with one person agreeing to be the principal borrower, creating an informal repayment agreement between the friends. This is of course not an arrangement that we encourage domestic workers to pursue. 

If they have an existing loan with a money lender or if they’re not eligible to borrow for some reason, some domestic workers might turn to unlicensed money lenders or individuals to borrow money. In these instances, they can often be charged extremely high monthly interest rates (e.g. 20% per month) and might even be asked to provide their passports as collateral (which is illegal). 

If you are concerned about your helper’s financial well-being, make sure she gets professional advice. You can sponsor her to attend our financial and empowerment education programmes.

The following cannot be taken as security for a loan:

• HKID card;

• passport;

• national ID card;

• bank savings or account book; or

• photographs of you, your guarantor or your family.

It is illegal for anybody except the domestic worker or the relevant authorities to keep her passport, whether as collateral for a loan or otherwise. Note that most licensed money lenders will not retain original passports (though they might ask for a passport copy). Rather, it is often unlicensed money lenders or individual lenders who will retain domestic workers’ passports. 

If your helper has given any of these items as security/collateral, encourage your helper to call and ask the money lender for them back immediately. If your helper prefers and if you are comfortable, you could call the money lender yourself (to ensure they take it seriously). If they refuse, contact the Hong Kong Police (999) and your helper’s consulate as soon as possible.

Theoretically, migrant domestic workers can invest in Hong Kong - however, this might be quite challenging in practice. Only 18% of domestic workers here have bank accounts, and many might not be able to maintain the substantial minimum balances or requirements needed in order to access investment opportunities through their bank (such as a securities account to invest in stocks).

There might be other investment opportunities that exist such as multi-level marketing or pyramid schemes which target domestic workers, but we always advise caution as some of these might be scams, or might require domestic workers to invest large amounts/purchase stock.

Many domestic workers actually prefer to invest in their home countries, as part of their future plans for themselves and their families. For example, they might use their time in Hong Kong to buy land at home, build a house, set up a business or invest in their family member’s education.

Regardless of where they invest, we always encourage our participants to first develop a good and sustainable savings habit to be able to invest enough funds. We always stress that savings have to be the main priority and that they should never invest more than they can afford to lose. When they are ready to invest, they should then begin by doing research, understanding their risk appetite, and so on. 

If your helper is interested in learning more about how to invest safely, you could sponsor her to attend our Growing My Money workshop which provides a comprehensive introduction to investment tools.

It’s great that you’re helper is thinking about how to diversify her income. However, it is definitely advisable to be wary as there are many schemes which target migrant domestic workers in Hong Kong, many of which are scams. Some domestic helpers might even take out loans or borrow from friends in order to invest in a ‘get rich quick’ scheme, often with unfortunate consequences. With education on what to look out for, these situations are entirely preventable.

As an employer you can encourage your helper to be aware of investment scams. The most important thing is to encourage her to research and ask detailed questions before deciding on an investment. Suggest that she check whether the company is registered in Hong Kong with the Companies Registry. She can also call the Hong Kong Police’s Anti-Deception Coordination Centre (ADCC) at 18222 if she suspects a scam. For the Philippines, she can check the Securities and Exchange Commission (SEC), which also provides advisories on suspected scams.

Check out our detailed advice to domestic workers on how to avoid scams when investing.

Savings programmes in Hong Kong

There might be companies or groups which offer savings programmes to migrant domestic workers in Hong Kong, often in combination with micro-finance or investment opportunities. It is important to note that these groups might have a commercial interest in encouraging their participants to invest in products from certain companies. 

As we pledge to provide neutral education and advice, we do not endorse any particular financial product or commercial scheme to migrant domestic workers. However, regardless of where they choose to save or invest, we always advise domestic workers to choose a reputable, established company and to first research whatever programme in which they choose to invest their hard-earned money. 

Opening a savings account in Hong Kong

At the very least, we encourage all domestic workers to open a bank account to assist in saving. However, some banks are not very welcoming to helpers; either they might face discrimination from front-line staff, or they might be asked for many supplementary documents which they do not always have or know how to access. Some of these documents might be easy for you to provide (e.g. proof of address), but your helper might not know whether she can ask you for this. 

For this reason, many employers find it helpful to accompany their helper to open a bank account. The account will not be in your name and will be entirely hers, but your presence can make the process smoother and ensure that she can feel more comfortable to ask you for any necessary documentation. We also advise paying her salary by bank transfer where possible, as this is a good record both for you and her, and will also help her improve her savings, rather than having cash always available on hand. 

You can even encourage your helper to open a second bank account and have an automatic transfer from her main bank account (where her salary is transferred to) to this second one for savings. 

Although we do not advise any particular bank, you can check out our handy comparison table of different banks and their requirements.

Savings in her home country

If she has an existing bank account in her home country, encourage her to continue to maintain it, especially if she chooses to remit her savings through her account. You can also encourage your helper to explore savings programmes back home which might be provided by the government or reputable, ethical organisations.

Depending on which country she is from, your helper might be entitled to a number of programmes targeted at returning domestic workers and their dependents including skills training, reintegration services, grants for small businesses or financial assistance in certain situations. 

Going back home can often be stressful and can bring up many issues and expenses that helpers often do not expect, especially if they haven’t planned for it. Before your helper leaves for good, here are some things you can do to help ease this process:

• Encourage her to complete the full Enrich programme to equip her with knowledge and skills to manage her finances, especially future expenses that will arise when she returns. You can even sponsor her to attend our workshops.

• Suggest that she can take advantage of the numerous training programmes for domestic workers in Hong Kong to gain further skills which she can use for future employment or a potential business back home.

• When paying her long service pay, you can remind her that instead of spending it quickly, she could instead invest it in her retirement savings or pension plan.

Migrant domestic workers in Hong Kong are not subject to a compulsory pension scheme (such as MPF) as you would be if you worked in an office setting. However, there is no reason for employers not to proactively pursue an insurance arrangement between themselves and their helper.

Ensuring that your helper has a future plan, especially if you are open to contributing to it, can create a harmonious long-lasting working relationship between you and your helper.

Depending on which country she is from, she might have government pensions schemes available to her in her home country. 

The Philippines

By Philippine law, it is now mandatory for Overseas Filipino Workers (OFWs), which includes migrant domestic workers, to contribute towards their Social Security System (SSS). As helpers are working abroad, their category is OFW/Self-Employed/Voluntary Member and there is a corresponding schedule for contribution payments.There is no mandatory amount that must be paid towards this each month - the regular payment amount can be chosen by the member. 

Monthly contributions are made via accredited remittance centres that have been approved by SSS. SSS provides multiple benefits to their members which you can read more about here. The Philippine Consulate in Hong Kong has an SSS Office which can answer further questions.

If you would like to contribute towards your helper’s SSS, you can certainly do so. Currently (as of May 2019), there is no formal process to do so. It is important to note that you would not be contributing officially as an ‘employer’ but this would be a more informal arrangement between you and your helper. Employers are welcome to contribute in either of the following ways:

• Remit money in person via the SSS approved list of banks and payment centres.

• Incorporate the monthly contribution amount (or an agreed percentage of it) into your helper’s monthly salary and request a receipt of the remittance transaction from her on a monthly basis. 

Indonesia

Indonesian domestic workers can choose a voluntary government scheme entitled ‘BPJS’. While BPJS is commonly known for medical insurance, few domestic workers know that they also provide a pension plan. The next time she visits home, your helper can visit her local BPJS office and explore her options. To learn more about the BPJS Pension Plan for Indonesian domestic workers (also known as ‘PMI’), visit their website.

There are several ways in which you can encourage your helper to manage her own money:

Provide Access to Education

Financial education is preventative and can provide future protection for your helper and even yourself - a helper who is financially literate can avoid common financial traps, focus on her priorities and ensure a harmonious working relationship with you. Sponsor your helper to attend our financial and empowerment education programmes so that she can learn to budget, save and plan for her future. Our workshops are tailored to domestic helpers’ needs and delivered in English, Tagalog and Bahasa Indonesia.

Give her simple daily financial responsibilities

Think of small ways through which she can practice financial management during her daily work. For example, you could task her with managing the grocery money. This is a way of allowing her to learn about money management in an accountable way, but without encroaching on her private life. 

Encourage her to think long-term

She might be focusing on the next phone call to her family or her activities next Sunday, but you can encourage her to plan for the next several years instead. Ask her what her goals are for the future, and how she plans to achieve them. Encourage her to think of setting aside a small amount each month towards those goals.

Ensure she has a bank account 

Some banks in Hong Kong are not very welcoming when approached by helpers so you may find it helpful to accompany her to the bank to open an account. Always pay her salary by bank transfer. You can encourage your helper to open a second bank account and have an automatic transfer from her main bank account (where her salary is transferred to) to this second one for savings. 

Although we do not advise any particular bank, you can check out our handy comparison table of different banks and their requirements.

Employers play a key role in ensuring that the domestic worker they hire is not overcharged or forced to take out loans. Do your due diligence when using an employment agency and use other ethical resources to find your next migrant domestic worker. 

Employment agencies in Hong Kong must comply with the Labour Department’s ‘Code of Practice for Employment Agencies’. If you do find out your worker has been overcharged, help her to get her money back by raising the issue with the agency or reporting it to the Labour Department’s Employment Agencies Administration.

You can consult the Labour Department’s hotline at +852 2157 9537.

You can also call the Indonesian Consulate at +852 6773 0466, the Philippine Consulate at +852 9155 4023 or the Philippine Overseas Labor Office at +852 28660640