Service before 1 May 2025
Calculated on the last month’s wages before the transition date; eligible benefits from employer contributions may still offset this portion.
Employment rights · MPF offsetting abolished
Long service payment and severance payment calculator
Roughly how much should you receive when you leave?
Splits the amount before and after the transition date by length of service and the wage cap, to help you understand the arrangement from 1 May 2025.
Statutory overall cap$390,000
- Monthly wage cap
- $22,500
- Transition date
- 1 May 2025; the portions before and after are calculated separately
Your actual entitlement depends first on the reason for leaving and the length of service.
Results
Estimated statutory amount—Whether the reason for leaving meets the statutory conditions has not been assessed
Pre-transition portion—
Post-transition portion—
Benefits used to offset—
Estimated employer payment—
Total service—
Monthly wage cap$22,500
How long service payment is calculated
Each year of service: two-thirds of a month’s wages
The general statutory formula for monthly-rated employees is “last full month’s wages × 2/3 × reckonable years of service”, with monthly wages capped at $22,500, so at most $15,000 is counted per year.
Service of less than a year is counted pro rata, using the number of days in the year in which the contract was terminated (365, or 366 in a leap year) as the denominator. The statutory overall cap on severance payment and long service payment is $390,000; where the total exceeds the cap, the excess is deducted from the post-transition portion.
Labour Department example · across 1 May 2025
Eligibility first, then the amount, then the offsetting
The Labour Department’s FAQs on abolishing the offsetting use this example: 4 years of service before the transition date and 3 years from it; wages of $15,000 in the last month before the transition date and $18,000 in the last month before termination. Below we assume employment started on 1 May 2021, the last day of employment is 30 April 2028 and the conditions for payment are met.
- Pre-transition portion $40,000$15,000 × 2/3 × 4 years.
- Post-transition portion $36,000$18,000 × 2/3 × 3 years; together the two portions come to $76,000, below the $390,000 cap.
- Offsetting $40,000Accrued benefits from the employer’s mandatory MPF contributions total $68,400, but they can only offset the pre-transition portion, so at most $40,000; the remaining $28,400 stays in the employee’s MPF account.
- The employer still pays $36,000The post-transition portion cannot be offset by mandatory contributions. The employee’s benefits total $104,400 ($36,000 + MPF benefits of $68,400).
Enter the same dates and wages in the tool above, with $68,400 in the offsetting field, and “Benefits used to offset” shows $40,000. The tool only calculates amounts; whether you are eligible must first be judged by the reason for leaving and the length of service described below.
Abolition of MPF offsetting
1 May 2025 is the dividing line
Service from 1 May 2025
Calculated on the last month’s wages before leaving; the employer’s mandatory MPF contributions cannot offset this portion.
Employment starting on or after 1 May 2025
All service is post-transition; the statutory formula itself is unchanged.
Severance payment vs long service payment
Length of service is not enough: the reason for leaving matters too
Severance payment
Requires at least 24 months’ employment under a continuous contract, and dismissal by reason of redundancy, lay-off, or a fixed-term contract expiring without renewal by reason of redundancy. The law and the facts of each case still decide.
Long service payment
Requires at least 5 years’ employment under a continuous contract and one of the following: dismissal not for serious misconduct or redundancy; a fixed-term contract expiring without renewal; death in service; resignation on health grounds certified by a registered medical practitioner or registered Chinese medicine practitioner; or resignation at age 65 or over.
Not both at once
The Labour Department states that an employee can only be entitled to either severance payment or long service payment at a time.
FAQ
Check before you calculate
Do bonuses and commission count?
The definition of wages and the choice of a 12-month average affect the result; check them against your employment records.
What should I enter for the offset?
Enter only benefits from employer contributions that can lawfully offset the pre-transition portion; if unsure, leave it blank and ask the trustee or the Labour Department.
Must the employer pay on the same day?
The time limit and procedure for payment differ between severance payment and long service payment under the statutory rules.
Will the tool decide whether I was made redundant?
No. The result only calculates amounts; entitlement depends on the actual reason for termination and the contract.
Sources and notes
The calculation follows the statutory formula published by the Labour Department, split at the transition date of 1 May 2025, and runs on your device. It only calculates amounts, does not judge the reason for leaving or eligibility, and is not employment or legal advice.
- Transition date
- 1 May 2025
- Caps
- Monthly wage cap $22,500; statutory overall cap $390,000
- Rules
- Labour Department, Concise Guide to the Employment Ordinance, Chapter 11 and Appendix 2; SP/LSP calculation statement, Note 3 (September 2025 version)
- Nature
- Calculated on your device; input not uploaded; not employment or legal advice
- Official rules checked
- 11 October 2026Labour Department FAQ on abolishing the offsetting arrangement: transition date, wage cap and total cap. Checked against the sources cited on the Chinese edition of this page.
Official rules and sources
- Labour Department: FAQs on the abolition of the MPF offsetting arrangement (opens in a new tab)
- Labour Department: official worked examples (Appendix 2) (opens in a new tab)
- Labour Department: Severance Payment and Long Service Payment (opens in a new tab)
- Labour Department: SP/LSP calculation statement (opens in a new tab)
Information and tool results are for general reference only and are not a recommendation or a basis for an individual decision; verify important matters independently. For limitation of liability, see Data use and disclaimer.
Coverage and limitations
No amount is shown for service under 24 months; for at least 24 months but under 5 years, the tool only notes that severance payment may apply on redundancy or lay-off. No amount is shown where pre-transition employment was less than one month.
Not handled: the limit on counting service before 1980, daily-rated or piece-rated employees and employees not covered by the MPF (such as domestic helpers), and offsetting by voluntary contributions, occupational retirement scheme benefits or gratuities based on length of service.
See worked examples (3 rows)
The dates, wages and accrued benefits from the employer’s mandatory MPF contributions (HK$50,000 and HK$80,000) in examples 1 and 2 are taken from Appendix 2 of the Labour Department’s Concise Guide to the Employment Ordinance; the benefits in example 1 cannot offset post-transition service. The third row assumes monthly wages of HK$18,000 before the transition date and HK$22,000 before termination, with no offsetting. With at least 24 months but under 5 years of service, only severance payment may apply, in situations such as redundancy or lay-off.
| Example | Start date | Last day of employment | Pre-transition portion (HK$) | Post-transition portion (HK$) | Total (HK$) | Employer payment after offsetting (HK$) |
|---|---|---|---|---|---|---|
| Labour Department Appendix 2, example 1 | 2025-05-01 | 2030-04-30 | 0.00 | 60000.00 | 60000.00 | 60000.00 |
| Labour Department Appendix 2, example 2 | 2022-05-01 | 2030-04-30 | 30000.00 | 60000.00 | 90000.00 | 60000.00 |
| 24 months’ service (severance payment only may apply) | 2024-05-01 | 2026-04-30 | 12000.00 | 14666.67 | 26666.67 | 26666.67 |
Method and calculations
Service runs from the start date to the last day of employment (inclusive) and is split at 1 May 2025 into pre-transition and post-transition portions. Each portion counts complete years of service (by anniversary) first, then divides the remaining days by the number of days in the year in which the contract was terminated (365, or 366 in a leap year).
Each portion uses its own wages, the two-thirds ratio and the $22,500 wage cap; where the two together exceed $390,000, the excess is deducted from the post-transition portion. The tool reproduces examples 1 and 2 of the Labour Department’s Appendix 2 and the cap allocation in question 5 of its FAQs on abolishing the offsetting.
Published: Page content updated: