Long service payment under Hong Kong employment law

Long Service Payment Under Hong Kong Employment Law

A long service payment is a statutory severance-type entitlement payable to an employee dismissed or not offered a suitable alternative contract due to redundancy. The long service payment hong kong regime is set out in the Employment Ordinance (Cap. 57) and applies to employees who have worked under a continuous contract for at least five years.

Eligibility Conditions

An employee qualifies for a long service payment if dismissed by the employer, or if their fixed-term contract expires without renewal, and the reason is redundancy. The employee must have been employed under a continuous contract for a minimum of five years. The Labour Department administers the statutory entitlement and provides guidance on claims.

LSP Hong Kong

LSP is the common abbreviation in employment documentation and payroll systems. LSP hong kong refers to the same statutory payment governed by the Employment Ordinance. Employers must calculate the amount correctly and pay it within the statutory time limits.

Hong Kong Long Service Payment Calculation

The calculation is based on the employee's length of service and their last month's wages. The formula is: (last month's wages × 2/3) × years of service. The maximum number of service years that can be counted is 15, and the maximum payment is capped at 390 times the employee's average daily wages.

Employment Ordinance Long Service Payment

The Employment Ordinance long service payment provisions are found in Part VA of Cap. 57. The ordinance specifies the qualifying conditions, the calculation method, and the circumstances under which an employer may be exempt from making the payment.

LSP vs Severance Payment

The distinction between LSP vs severance payment is primarily one of service length. A severance payment applies to employees with at least two years of continuous service who are dismissed due to redundancy. A long service payment applies to employees with at least five years of service under the same redundancy conditions. An employee cannot receive both payments for the same period of service. The MPF offsetting arrangement, which was abolished on 1 May 2025, previously allowed employers to reduce these payments using accrued MPF benefits.