JoMcK - No, our set-up is not technically legal. But it's common. And I don't see anything wrong with it, as we are covering all her room and board. If anything, helpers have a much higher quality of living if they are living out, as it gives them privacy and time off.
Her food costs are part of her HK $3000 living allowance. (The legal minimum for a food allowance is something like $920). Her share of their studio flat is $2000.
We are also quite easy-going about food at home. Our helper is here from 8am to 8pm, sometimes later if we go out for dinner. And while she does cooks breakfast and dinner in her own home -- and sometimes packs lunch -- we obviously do not expect her to go 12, 13 hours with only one meal.
We tell her she is welcome to the basic food in our home - a tea or coffee in the morning, or maybe some of the rice, pasta, etc, she cooks for our child. Usually she eats her own stuff, but we're not fascists about it. If there's a special birthday or holiday, we invite her to share some cake with us.