When is long service payment due in Hong Kong

When Is Long Service Payment Due in Hong Kong

Long service payment is due when an employee with at least five years under a continuous contract is dismissed for reasons other than redundancy or misconduct, or resigns at age 65 or later. This statutory entitlement is governed by the Employment Ordinance (Cap. 57) and administered by the Labour Department.

Hong Kong Long Service Payment Eligibility

An employee qualifies for long service payment after five or more years under a continuous contract. Eligibility is triggered by dismissal for any reason other than redundancy or summary dismissal, resignation at age 65 or older, or death in service. Continuous contract status follows the 4-18 rule: employment for four weeks or more, working at least 18 hours each week. Employees dismissed for redundancy are not eligible for long service payment, as they receive severance payment instead.

Long Service Payment Calculation HK

Long service payment is calculated from the employee's length of service and final monthly wages. The formula is: (last month's full wages × 2/3) × number of years of service. For daily or piece-rate employees, the calculation uses the average daily wages over the last 30 days. Service is capped at 35 years, and the payment is capped at 12 times the final monthly wages. The Labour Department provides an online calculator for this computation.

Employment Ordinance Long Service

The Employment Ordinance (Cap. 57) provides the legal framework for long service payment. Section 5A defines a continuous contract, while sections 31R to 31ZB detail the entitlement, calculation, and payment. Employers must pay within seven days of termination or, for resignations at age 65 or later, within seven days of the resignation date. Late payment incurs interest and a penalty. This payment is separate from payment in lieu of notice, end-of-year payment, and other statutory entitlements.

MPF Offsetting Long Service Payment

The MPF offsetting arrangement was abolished effective 1 May 2025. Before that date, employers could offset long service payment with accrued benefits from mandatory MPF contributions. Now, employers cannot offset using mandatory contributions made on or after 1 May 2025. For employment that began before that date, accrued benefits from mandatory contributions may still offset the portion of the payment calculated on years of service before 1 May 2025. Offsetting with accrued benefits from voluntary contributions and length-of-service gratuities remains permitted. The Government operates a subsidy scheme to share employer expenses for service on or after 1 May 2025.

Distinction From Severance Payment

Long service payment and severance payment are mutually exclusive. An employee cannot receive both for the same period of service. Severance payment applies to dismissals due to redundancy or business discontinuation. Long service payment applies to dismissals for other reasons or resignations at age 65 or later, after at least five years of service. If an employee qualifies for both, the employer pays the higher amount. The calculation methods differ; severance payment uses the same formula but applies different service year caps and maximum payment limits.

What to Do When Long Service Payment Is Due

When a claim is made, the employer must verify the employee's continuous contract service, calculate the payment using the statutory formula, and pay within seven days. The employer must also check for any MPF offsetting applicable to service before 1 May 2025. The Labour Department offers conciliation services for disputes. An employee who believes they are owed long service payment but has not received it can seek assistance from the Labour Department or file a claim with the Labour Tribunal.