Hong Kong Severance & Long Service Payment Calculator
Calculate your statutory Severance Payment (SP) or Long Service Payment (LSP) under the Hong Kong Employment Ordinance (Cap. 57). Computes 2/3 of monthly salary per year of service, the statutory monthly wage cap (HK$22,500), and the maximum HK$390,000 statutory limit.
Employment & Termination Details
Statutory monthly wage capped at HK$22,500 for calculation
Statutory Compensation & Offsetting Breakdown
| Item | Calculation Basis | Amount (HKD) |
|---|---|---|
| Monthly Wage for Calculation | Min(Actual, HK$22,500) | HK$22,500 |
| Rate per Year of Service (2/3) | HK$22,500 × 2/3 | HK$15,000 / yr |
| Gross Statutory SP / LSP | 7 Years | HK$105,000 |
| MPF Employer Contribution Offsetting | Accrued Benefits | -HK$45,000 |
| Direct Cash Payment from Employer | Net Cash | HK$60,000 |
Chartered Systems Engineer, specialist in legal engineering and financial computation automation. Verified compliant with Hong Kong Cap. 57 Employment Ordinance, Inland Revenue Department rules, and Transport Department schedules.
Frequently Asked Questions & Hong Kong Statutory Provisions
What is the qualifying condition for Severance Payment (SP) versus Long Service Payment (LSP)? ▼
Severance Payment (SP) requires at least 24 months (2 years) of continuous service and dismissal by reason of redundancy or lay-off. Long Service Payment (LSP) requires at least 5 years of continuous service upon dismissal (not for serious misconduct), death, permanent incapacity, or retirement at age 65 or above. An employee cannot receive both SP and LSP simultaneously.
What is the statutory calculation formula for SP and LSP in Hong Kong? ▼
For monthly-rated employees, the statutory formula is: `(Last Month's Salary × 2/3) × Years of Service`. For daily-rated or piece-rated employees, it is `18 days' wages × Years of Service`. Service of an incomplete year is calculated on a pro-rata basis.
What are the statutory monthly wage ceiling and maximum payment cap? ▼
Under Cap. 57, the monthly salary used in the formula is capped at HK$22,500 (meaning 2/3 is at most HK$15,000 per year of service). The absolute maximum statutory payout for both SP and LSP is capped at HK$390,000 regardless of total service duration.
How does the MPF Offsetting Mechanism work? ▼
Currently, an employer may offset the Severance Payment or Long Service Payment against the accrued benefits derived from the employer's mandatory (and voluntary) MPF contributions. Under legislative amendments taking effect from 1 May 2025, the MPF offsetting mechanism is being abolished with a government subsidy scheme for employers.
Is Severance Payment or Long Service Payment subject to Hong Kong Salaries Tax? ▼
Statutory Severance Payments and Long Service Payments calculated strictly in accordance with the Employment Ordinance are treated by the Inland Revenue Department (IRD) receipts or statutory compensation and are fully exempt from Salaries Tax.
Official Statutory Tool for Hong Kong SAR • Compliant with Labour Department, IRD & Transport Department Regulations • Zero external telemetry.
📊 Hong Kong Inland Revenue Department (IRD) & MPF Matrix
| Statutory Component / Legal Deduction Item | Calculated Amount (HKD) |
|---|---|
| Primary Net / Statutory Payable Amount | HK$ 0.00 |
Engr. Muhammad Shahzad
Principal Financial Systems Architect & Hong Kong Special Administrative Region Fiscal Systems Architect
Lead software and systems architect specializing in high-performance browser computing, algorithmic validation, financial models, and zero-telemetry client-side privacy architecture.