Are there any risk for Cash payroll? Boss could get into trouble at any time!

After the pandemic, the demand for manpower in various industries has increased. The catering industry, which has always had difficulty in hiring staff, is particularly affected. Some restaurant owners said that they would hire almost anyone who is willing to work because they need more staffs. In the catering industry, it is a common practice for labours to ask payroll paid in cash. Bosses who want to have enough staff will generally cooperate with the arrangement. Although cash payroll is convenient, there is also a chance of entering the gray area of tax evasion.

• Employees who evade taxes, employers may have legal responsibilities

Whether it is a bank transfer or cash payroll, every taxpayer should report their income truthfully, such as wages, commissions or bonuses. In fact, some employees will request cash payroll to maintain their income below the limit for public housing applications. They believe that there is no record of cash payroll, so they do not report taxes or only report a small amount. Employee tax evasion is illegal, and employers cannot evade responsibility even if they have fulfilled their tax reporting obligations.

According to Hong Kong laws, after the employer paid the salary to the employee, if the employee will not pay correspondence taxes, the employer has the responsibility to deduct the amount of tax that needs to be paid in advance from the salary paid. If the employees have outstanding tax liability, their employers may be awakened by a letter from the tax bureau at any time. At this moment, it is better for the employers to ask advice from professional accountants. If the employee is still employed, the employer may need to withhold the relevant amount from the next payroll for tax bureau to avoid legal responsibilities.

• The catering industry is difficult to hire staff, is compromise the only way out?

Even if employers know that cash payroll has potential risks, some employers still have to “do it” due to labour shortages. In fact, in recent years, dishwashing companies which provide one-stop services for collecting, cleaning, and disinfecting tableware have gradually increased. There are now more choices and lower entry barriers. They will provide monthly fee plans suitable for small restaurants to solve the problem of manpower. Instead of taking risks to hire or retain employees, it is better to consider other new solutions, which may lead to another way out.

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