Hong Kong Severance Payment and MPF Offsetting

What redundancy or a lay-off is worth after 24 months on the job.

REDUNDANCY AND LAY-OFF - S.31B - ON YOUR DEVICE

Wages and dates stay on your device

At a glance

How is Hong Kong severance payment calculated?

For a monthly-rated employee, statutory severance payment defaults to the last full month’s wages × 2/3 × reckonable years of service (continuous contract of at least 24 months). The employee may instead elect the average of the last 12 months’ wages. An incomplete year is counted on a 365-day basis, the same basis as the Labour Department calculator.

Wages are capped at $22,500 per month ($15,000 per year). The total payment is capped at $390,000.

If employment started before 1 May 2025 and ends on or after that date, the Labour Department splits the payment: the pre-transition portion uses wages immediately before 1 May 2025; the post-transition portion uses wages at termination (the last full month of wages).

From 1 May 2025, employer mandatory MPF offsets only the pre-transition portion; any statutory total above $390,000 is deducted from the post-transition portion. Voluntary MPF and the government subsidy are not modelled here.

Example (1 May 2025 – 30 Apr 2030, $18,000 monthly, exactly five years): $60,000.00 — Amount below is computed live by this calculator — confirm with the Labour Department MPF offsetting abolition calculator.

Labour Department MPF offsetting abolition calculator

  • 24months to qualify
  • 4 wkslay-off test
  • 3 mthsto claim
  • $50,000fine for not paying
In practice

What you can count on

  • 31Bopens the door
    • Redundancy, a fixed term not renewed for it
    • Or a lay-off under s.31E
  • 3 monthsto give written notice
    • Then the employer has two months to pay
    • The Commissioner may extend the deadline
  • 0data sent
    • Wages and dates stay in this tab
    • Nothing is stored
Specification

Severance Payment Calculator at a glance

Inputs
Pay basis, dates, wage
Output
Amount and the years behind it
Qualifying period
24 months
What opens it
Redundancy or lay-off
Lay-off
Half of four weeks, a third of 26
Claim window
Three months to claim
Not paying
A $50,000 fine
Wage cap
$22,500 a month
Ceiling
$390,000
Incomplete year
Complete years plus days over 365
Where it runs
On your device, no account
How to

How to use Severance Payment Calculator

  1. 1

    Say how the wage is paid

    Monthly-rated uses the last full month. Daily or piece-rated uses any 18 days out of the last 30 normal working days.

  2. 2

    Enter the two dates

    The first day of employment, and the relevant date: when notice expired, the fixed term ended, or the lay-off period closed.

  3. 3

    Check the fraction

    The reckonable years print as complete years plus leftover days over 365, so the multiplication can be checked by hand.

Questions

Frequently asked questions

How is an incomplete year counted?

An incomplete year is counted on a 365-day basis, the same basis as the Labour Department calculator. Confirm the amount with the Labour Department.

What counts as redundancy?

Section 31B: the employer is closing the business, has ceased or will cease it where the employee worked, or the need for that kind of work there has ceased or diminished. A dismissal for any other reason points at long service payment instead.

When does time off work become a lay-off?

Section 31E: no work given and no wages paid on more than half the normal working days in any four consecutive weeks, or more than a third in any 26. Lock-out days, rest days, annual leave and statutory holidays do not count.

How long do I have to claim?

Three months from the dismissal or lay-off taking effect, by written notice to the employer. The Commissioner for Labour may extend that. The employer then has two months from receiving the notice, and a fine of $50,000 for not paying without reasonable excuse.

Does an offer of another job cancel it?

It can. If the employer offered in writing, at least seven days before the dismissal or the fixed term expiring, to renew or re-engage, and the employee refused unreasonably, the entitlement is lost.

Can employer MPF still offset severance?

Employer mandatory MPF, including contributions after 1 May 2025, offsets only the earlier portion, on the wage just before that date. Voluntary contributions and gratuities can still offset both portions. This tool applies neither those nor the government subsidy. Labour Department offsetting FAQ.

Background

Why a severance case turns on the reason, not the sum

Severance is the redundancy payment. It opens at 24 months, and it opens on why the job ended: the post went, the business closed, or the work dried up and the employee was laid off.

  • The formula is the same one long service payment uses, so the money is rarely what is disputed.
  • What is disputed is whether the post really went: section 31B is about the business closing, moving or needing less of that work.
  • A lay-off is counted in days without work, not in weeks off, which is why the four-week and 26-week tests are arithmetic rather than judgement.
  • And it is the employee who has to move first, in writing, within three months.

Full specification

Specification of the Severance Payment Calculator tool
InputsHow the employee is paid, the first and last day of employment, and the wage figure.
OutputThe severance payment, the reckonable years as a fraction, and what each year of service is worth.
Qualifying periodSection 31B: 24 months under a continuous contract. Below that the tool says so instead of answering.
What opens itDismissal by reason of redundancy, a fixed term expiring unrenewed for redundancy, or a lay-off.
Lay-offSection 31E: no work and no pay on more than half the normal working days in four consecutive weeks, or a third in 26.
Claim windowThe employee gives written notice within three months; the employer pays within two months of receiving it.
Not payingAn employer without reasonable excuse is liable on conviction to a fine of $50,000.
Wage capSection 31G(1): monthly wages count up to $22,500, so one year of service is worth at most $15,000.
CeilingSeventh Schedule: $390,000 where the relevant date falls on or after 1 October 2003.
Incomplete yearAn incomplete year is counted on a 365-day basis, the same basis as the Labour Department calculator. Confirm the amount with them.
Where it runsIn your browser tab. Nothing is sent anywhere, and there is no account.
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