Note, however, that if the conditions for both severance payment and long service payment are met at the same time, the employee is entitled only to the higher of the two amounts.<\/p>\n<\/blockquote>\n\n\n\n <\/p>\n\n\n\n An employee who has been employed under a continuous contract for not less than 5 years meets the basic eligibility for Long Service Payment, and can receive it on leaving the job in any one of five situations.<\/p>\n\n\n\n Conditions for receiving long service payment:<\/p>\n\n\n\n * If the employee dies during employment, the eligible person must complete the specified form and apply to the employer for long service payment within 30 days after the employee's death.<\/p>\n\n\n\n For Severance Payment, the employee must have been employed under a continuous contract for not less than 24 months and be dismissed by the company for one of three reasons, such as redundancy or lay-off, in which case they can receive severance payment as compensation.<\/p>\n\n\n\n Conditions for receiving severance payment:<\/p>\n\n\n\n An employee dismissed in any of the following circumstances is regarded as dismissed because of redundancy:<\/p>\n\n\n\n If the employment contract provides that the employee's pay depends on the amount of work provided by the employer, for example pay calculated by the number of orders or by output, and the employee has no work and so receives no wages, the total number of such days will be regarded as lay-off in the following situations:<\/p>\n\n\n\n Normal working days do not include days of factory closure, rest days, annual leave and statutory holidays.<\/p>\n\n\n\n Before looking at the calculation methods, you need to know about the \u201cMPF offsetting mechanism\u201d, which affects how long service payment and severance payment are calculated:<\/p>\n\n\n\n In the past, when an employee was made redundant or left and met the conditions, the employer had to pay severance payment or long service payment, but could use the employer's contributions in the employee's MPF account to \u201coffset\u201d part of it. This is commonly known as the \u201cMPF offsetting mechanism\u201d.<\/span><\/p>\n\n\n\n However, the Legislative Council passed a bill in 2024 to abolish the offsetting mechanism, which will take effect on 1 May 2025.<\/span><\/p>\n\n\n\n This means that, from 1 May 2025, for the years of service an employee accumulates, if they are dismissed by reason of redundancy or meet the conditions for long service payment, they will receive more substantial compensation, because the amount will no longer be offset by MPF contributions.<\/span><\/p>\n<\/blockquote>\n\n\n\n Long service payment and severance payment are calculated in the same way:<\/span><\/p>\n\n\n\n <\/p>\n \u00d7 2\/3) \u00d7 the years of service before 1 May<\/span><\/p>\n that can be counted back<\/span><\/p><\/td>\n <\/p>\n \u00d7 2\/3) \u00d7 the years of service<\/span><\/p>\n from 1 May<\/span><\/p><\/td>\n<\/tr>\n <\/p>\n piece-rated employees<\/span><\/p><\/td>\n <\/p>\n the employee chooses any<\/span><\/p>\n 18 days' wages) \u00d7 the years of service before 1 May<\/span><\/p>\n that can be counted back<\/span><\/p><\/td>\n <\/p>\n the employee chooses any<\/span><\/p>\n 18 days' wages) \u00d7 the years of service from 1 May<\/span><\/p>\n from 1 May<\/span><\/p><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n\n\n * The wages for the last full month may be calculated as the average wages for the 12 months immediately before the date of termination of the contract, and the final amount is capped at two-thirds of $22,500 (i.e. $15,000).<\/span><\/p>\n\n\n\n ** Reckonable years of service of less than 1 year are calculated pro rata.<\/span><\/p>\n\n\n\n <\/p>\n\n\n\n If the relevant date of termination of the employment contract is on or after 1 October 2003, the maximum long service payment or severance payment is $390,000.<\/span><\/p>\n\n\n\n If you have worked for the company for more than 30 years, your fully reckonable years of service must be calculated as follows.<\/span><\/p>\n\n\n\n![\"Long](\"https:\/\/setuphk.com\/wp-content\/uploads\/2024\/05\/long-service-payment-3-1024x1024.webp\")
<\/figure>\n\n\n\nWhat long service payment is<\/h2>\n\n\n\n
Conditions for receiving long service payment<\/h3>\n\n\n\n
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What severance payment is<\/h2>\n\n\n\n
Conditions for receiving severance payment<\/h3>\n\n\n\n
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2025 update: how to calculate long service payment and severance payment<\/h2>\n\n\n\n
Abolition of the MPF offsetting mechanism<\/span><\/h3>\n\n\n\n
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Latest calculation of long service payment and severance payment<\/b><\/span><\/h3>\n\n\n\n
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\n <\/td>\n Before 1 May 2025<\/span><\/td>\n From 1 May 2025<\/span><\/td>\n<\/tr>\n \n Monthly-rated employees<\/span><\/td>\n (Wages for the last full month before 1 May<\/span> (Wages for the last full month from 1 May<\/span> \n Daily-rated or<\/span> (Of the last 30 normal working days before 1 May,<\/span> (Of the last 30 normal working days from 1 May,<\/span> ![\"Latest](\"https:\/\/setuphk.com\/wp-content\/uploads\/2024\/05\/SETUP-HK-1300x1300-1-1024x1024.webp\")
<\/figure>\n\n\n\nCaps on long service payment and severance payment<\/h3>\n\n\n\n
Employees' reckonable years of service<\/span><\/h2>\n\n\n\n
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Long service payment calculator and severance payment calculator<\/span><\/h3>\n\n\n\n