See exactly how much your Severance Pay or Long Service Payment is worth, split into the pre-1-May-2025 portion (still offsettable against accrued employer MPF) and the post-transition portion (paid in full, in cash, no offsetting allowed).
Formula
2/3 x wages
per year of service
Wage cap
HK$22,500/mo
used in the calculation
Total cap
HK$390,000
statutory ceiling
Transition date
1 May 2025
MPF offsetting abolished after
Severance Pay requires 2+ years of continuous service and redundancy/lay-off. Long Service Payment requires 5+ years and a different qualifying reason (resignation on ill health, retirement at 65+, death, or dismissal other than for redundancy). You cannot claim both for the same termination.
Only the accrued benefits from the employer's MANDATORY MPF contributions can offset the pre-transition portion. Voluntary employer contributions and service-based gratuities can still offset either portion, but aren't modelled separately here.
Total payable in cash by the employer
HK$30,000
Two-portion breakdown (pre / post 1 May 2025)
Pre-transition portion (offsettable)
4.0 years x HK$22,500 x 2/3
Post-transition portion (not offsettable)
2.0 years x HK$22,500 x 2/3
Uses the Employment Ordinance formula (2/3 x monthly wages x years of service), with wages capped at HK$22,500/month and total SP/LSP capped at HK$390,000, and the post-1-May-2025 MPF offsetting abolition rules for employees ceasing employment on or after the transition date. Voluntary employer MPF contributions and service-based gratuities (which can offset either portion) are not modelled. For your exact entitlement, confirm with the Labour Department or a qualified adviser.
Both Severance Pay and Long Service Payment use the same underlying formula: two-thirds of your last month's wages, multiplied by your years of service, with the wage figure capped at HK$22,500/month and the whole payment capped at HK$390,000 no matter how long you've worked or how high your real salary is.
The 1 May 2025 abolition changes what happens next, not the formula itself. Your entitlement now splits into two portions around that date: a pre-transition portion, calculated on your wages just before 1 May 2025, which employers can still offset against accrued mandatory MPF contributions; and a post-transition portion, calculated on your final wages at termination, which must be paid out in cash in full, with no offsetting allowed at all.
That split matters most for anyone with long tenure spanning the transition date: the longer your service straddles 1 May 2025, the larger your post-transition portion grows relative to your total years, and the more of your final payout an employer can no longer chip away at with MPF offsetting.
Keep your numbers current
Tax rates and allowances change every year
Get an email when we update this calculator for new rates, so you're never planning from stale numbers.
Both use the same formula: 2/3 x your last month's wages x years of service. The wage used in the calculation is capped at HK$22,500/month, and the total payment is capped at HK$390,000, regardless of how long you've worked or how high your actual salary is.
Before 1 May 2025, employers could use the accrued benefits from their MANDATORY MPF contributions to offset (reduce) the severance pay or long service payment they owed you, sometimes down to very little cash out of pocket. From 1 May 2025 onward, that offsetting is abolished for the portion of your service from that date forward. Your entitlement is now split into two portions: a pre-transition portion (still offsettable by accrued mandatory MPF) and a post-transition portion (must be paid in full, in cash, no offsetting allowed).
The pre-transition portion uses your last full month's wages immediately before 1 May 2025, not your final salary. The post-transition portion uses your actual final monthly wages at termination. If you got a raise after May 2025, only the post-transition portion benefits from it.
Severance Pay requires at least 2 years of continuous service and a redundancy or lay-off. Long Service Payment requires at least 5 years of continuous service and a different qualifying reason: resignation due to ill health, retirement at age 65 or above, death, or dismissal (other than for redundancy or serious misconduct) or non-renewal of a fixed-term contract. You cannot receive both for the same termination.
Yes. The abolition only removes offsetting from MANDATORY employer MPF contributions for post-transition service. Accrued benefits from voluntary employer contributions, and gratuities already paid based on your years of service, can still offset your severance pay or long service payment, for both the pre- and post-transition portions. This calculator focuses on mandatory contributions, the most common case.
No. Statutory severance pay and long service payment, calculated strictly according to the Employment Ordinance formula and within the statutory caps, are not chargeable to Salaries Tax and don't need to be reported as income.
Related reading
Understand the mechanics behind the two-portion calculation.
What to check next
Put the result alongside the pay available in the wider market.