Am I Eligible for Severance Payment and Long Service Payment in Hong Kong?
As an employee in Hong Kong, you will be eligible for severance and long service payments if you meet certain conditions. For severance payments, you will need to meet the following criteria:
- Your employment is no less than 24 months. This must be under a continuous contract.
- You undergo redundancy.
- Your fixed-term contract expires with no chance of renewal because of redundancy.
- You are laid-off.
For long service payments, you will need to meet the following criteria:
- Your employment period must be no less than 5 years. This must be under a continuous contract.
- Your fixed-term employment contract expires and will not be renewed.
- You are dismissed, but not because of serious misconduct or redundancy.
- The employee passes away or resigns due to poor health.
- You are more than 65 years old and resign.
You will be entitled to either payment, but not both.
How Are Severance Payments and Long Service Payments Calculated in Hong Kong?
Payments are calculated according to the following:
- An Employee Who Is Paid Monthly – (last full month’s wages* X 2/3) x Years of service (reckonable)
- An Employee Paid Daily or Per-Piece – (any 18 days’ wages* chosen by the employee out of his last 30 normal working days) x Years of service (reckonable)
How Are Payments Made?
Employers must issue written notices to their employees before the employee is dismissed and severance payments issued. The employee needs to submit a written notice to claim severance payment.
This must be done within 3 months after dismissal takes place. A Commissioner of Labour could step in and extend the deadline if needed. Payments must then be made to the employee no later than 2-months after notice was received. If the employer does not make payment, they may be liable for prosecution. If convicted, they could be fined up to $50,000.
For long service, payments should be within 7-days after the termination date. If the employer does not make payment, they may be liable for prosecution. If convicted, they could be fined up to $350,000.
There is a priority order for how long service payments are claimed:
- First in Line – Spouses of deceased employees
- Second in Line – Children of deceased employees
- Third in Line – The parents of deceased employees
- Fourth in Line – Personal representatives of deceased employees