The Employment Ordinance, Cap. 57

Content

An employee employed under a continuous contract for not less than 24 months is eligible for severance payment if:

*If not less than 7 days before the date of dismissal/ expiry of the fixed term contract in case of severance payment, and not less than 7 days before the expiry of the fixed term contract in case of long service payment, the employer has offered in writing to renew the contract of employment or re-engage him under a new contract but the employee has unreasonably refused the offer, the employee is not eligible for the entitlements.

An employee is taken to be dismissed by reason of redundancy if the dismissal is due to the fact that :

If an employee is employed on such terms and conditions that his remuneration depends on his being provided by the employer with work of the kind he is employed to do, he shall be taken to be laid off if the total number of days on which no work is provided or no wages is paid exceeds:

The days of lock-out, rest days, annual leave and statutory holidays should not be counted as normal working days during the above periods.

If an employer dismisses an employee due to redundancy, he should pay severance payment as soon as practicable.  The Employment Ordinance also requires an employer to make severance payment to his employee not later than 2 months from the receipt of a written notice for claiming such payment from the employee.

An employee employed under a continuous contract for not less than 5 years is eligible for long service payment if:

*If not less than 7 days before the date of dismissal/ expiry of the fixed term contract in case of severance payment, and not less than 7 days before the expiry of the fixed term contract in case of long service payment, the employer has offered in writing to renew the contract of employment or re-engage him under a new contract but the employee has unreasonably refused the offer, the employee is not eligible for the entitlements.

Long service payment should be paid to an employee within 7 days after the date of termination of employment contract, except as otherwise specified in the case of payment to the beneficiaries of a deceased employee.

An employee who is dismissed by reason of redundancy is eligible for severance payment but not long service payment.

Where an employee’s employment did not straddle over 1 May 2025¹ (i.e. the effective date of the abolition of Mandatory Provident Fund (“MPF”) offsetting arrangement) (“the transition date”) or where the employee is not covered by the MPF System or other statutory retirement schemes², the formula below will be used for calculation of severance payment / long service payment for the whole period of employment.:

Where an employee’s employment straddled over 1 May 2025³, his severance payment / long service payment is divided into two portions by the transition date – the pre-transition portion (for employment period before the transition date) and post-transition portion (for employment period starting from the transition date). The calculations are as follows:

Service of an incomplete year should be calculated on a pro rata basis.
Click here for information on the reckonable years of service (PDF).

(see here for details)

• If the employee’s employment was terminated before 1 May 2025, – the employer can use the accrued benefits derived from employer’s MPF contributions, vested benefits of occupational retirement scheme (“ORS”) attributable to employer’s contributions and/or gratuities based on length of service to offset the employee’s severance payment / long service payment.
• If the employee’s employment commenced on or after 1 May 2025, an employer cannot use the accrued benefits derived from employer’s MPF mandatory contributions to offset the employee’s severance payment / long service payment, but can continue to use the accrued benefits derived from employer’s MPF voluntary contributions and gratuities based on length of service to offset the employee’s severance payment / long service payment.
• If the employee’s employment straddled over 1 May 2025, the employer can continue to use the accrued benefits derived from employer’s MPF mandatory contributions to offset the employee’s pre-transition portion of severance payment / long service payment (but not the post-transition portion of severance payment / long service payment). The accrued benefits derived from the employer’s MPF voluntary contributions and gratuities based on length of service can continue to be used to offset pre- and/or post-transition portion of severance payment / long service payment.
• The abolition of offsetting arrangement is also applicable to employees who joined ORS.
  (see here for details)
• Starting from 1 May 2025, eligible employers, after payment of severance payment / long service payment to employees according to the Employment Ordinance, may apply to the Government for subsidy⁴ in respect of expenses on post-transition portion of severance payment and long service payment. For details, please visit the thematic website at https://www.op.labour.gov.hk.

Note : When offsetting the above sum of money, an employer should observe the time limit and requirements on making severance payment or long service payment set out in the Employment Ordinance.
(For enquiries on application for payment of an amount from the ORS benefits or accrued benefit in the MPF scheme due to severance payment / long service payment paid / payable to an employee, please contact the trustees concerned for details.)