⚠️ This page is for general education and reference only and is not legal advice. Hong Kong employment rights are governed by the Employment Ordinance (Cap. 57) and your individual contract; if in doubt, consult the Labour Department or a professional. Severance payment and long service payment are mutually exclusive.
How are SP and LSP calculated?
Generally, for a monthly-rated employee, the amount = (last full month's wages × 2/3) × reckonable years of service. Monthly wages are capped at HK$22,500 (so max about HK$15,000 per year of service); incomplete years are pro-rata; total cap HK$390,000. The employee may elect to use the average of the last 12 months' wages instead of the last month. This tool estimates from the last full month's wages before termination; if your case uses the 12-month average, enter that average instead.
Eligibility: Severance payment (SP) generally requires ≥24 months continuous contract and dismissal by reason of redundancy or layoff. Long service payment (LSP) generally requires ≥5 years continuous contract and a qualifying termination (e.g. dismissal other than redundancy and not summary dismissal for serious misconduct; fixed-term contract expires without renewal; death; certified permanently unfit; or resigns at age ≥65). SP and LSP are mutually exclusive — one or the other, never both. Related termination pay: annual leave calculator (untaken leave) or leave calculator; for wage bases see the ADW calculator.
MPF offset abolition (transition date 2025-05-01): for employment spanning that date, the amount splits into a pre-transition portion (last full month's wages immediately before 2025-05-01 × 2/3 × years before the date) and a post-transition portion (last month's wages before termination × 2/3 × years from the date). If the sum exceeds HK$390,000, the excess comes off the post-transition portion. Employers can still offset the pre-transition portion with MPF employer-contribution benefits (mandatory or voluntary, whenever made) but cannot offset the post-transition portion with mandatory contributions. Employment starting on/after 2025-05-01: no split, no offsetting with mandatory contributions. A 25-year government subsidy scheme helps employers with the post-transition portion. When the period spans the transition, this tool asks for pre-transition wages; if left empty it falls back to final wages and shows a caveat.
Payment deadlines: generally LSP within 7 days of termination; SP within 2 months of the employee's written claim (claim within 3 months of dismissal). Confirm with Labour Department guidance for your case.
Worked example
Labour Department example: employed 2021-05-01 to 2028-04-30, wages HK$15,000/month before the transition date and HK$18,000/month at termination → pre portion = 15,000 × 2/3 × 4 = HK$40,000; post portion = 18,000 × 2/3 × 3 = HK$36,000; total = HK$76,000. Set the tool to these dates and wages to reproduce. Caps: HK$22,500 wage cap → HK$15,000/year; HK$390,000 total, excess off the post portion.
Eligibility and conditions
The tool flags service-length eligibility: under ~24 months for SP, or under 5 years for LSP, it still shows the computed amount but marks it as generally not payable. Choose redundancy/layoff vs other qualifying situations above — the amount formula is the same, but SP and LSP are mutually exclusive and apply in different situations. Edge cases (commission, daily/piece-rated, insolvency) are out of scope. See also the holiday pay calculator and sick leave calculator.
Sources
- Labour Department Concise Guide ch.11 (SP/LSP):ConciseGuide/11.pdf
- Abolition of MPF Offsetting Arrangement FAQ:op.labour.gov.hk FAQ
- Abolition of MPF Offsetting Arrangement overview:labour.gov.hk / aoa
FAQ
How is severance payment calculated?
Generally, for a monthly-rated employee, SP/LSP = (last full month's wages × 2/3) × reckonable years of service. Monthly wages are capped at $22,500 (about $15,000 per year of service); incomplete years are pro-rata; total cap $390,000. The employee may elect the average of the last 12 months' wages instead of the last month.
What is the difference between long service payment and severance payment?
The amount formula is the same, but eligibility and termination reasons differ, and they are mutually exclusive — an employee gets one or the other, never both. SP generally needs ≥24 months and redundancy/layoff; LSP generally needs ≥5 years and a qualifying termination (e.g. dismissal other than redundancy / not summary for serious misconduct, fixed-term non-renewal, death, permanent unfitness, or resigns at ≥65).
How is SP/LSP calculated after MPF offset abolition?
Transition date 2025-05-01. For employment spanning that date, split into a pre-transition portion (last full month's wages immediately before the date × 2/3 × years before) and a post-transition portion (last month's wages before termination × 2/3 × years from the date). If the sum exceeds $390,000, excess comes off the post portion. Pre-transition can still be offset with employer MPF benefits; post-transition cannot be offset with mandatory contributions.
How many years before long service payment?
Generally ≥5 years under a continuous contract, plus a qualifying termination situation. Under 5 years generally does not qualify for LSP (SP instead hinges mainly on ~24 months and redundancy/layoff).
When must SP or LSP be paid?
Generally LSP within 7 days of termination; SP within 2 months of the employee's written claim (claim within 3 months of dismissal).
Can I rely on this calculator legally?
No. It is for general estimation and education only, not legal advice. Rely on Concise Guide ch.11, the MPF offset abolition materials and Cap. 57.