Being dismissed is undoubtedly a significant challenge in one’s career, but it is not the end of the road. In the face of unexpected changes, the most important thing is to remain calm and clearly understand your rights and compensation under the Hong Kong Employment Ordinance. This article will break down various types of dismissal compensation, helping you respond effectively, protect your rights, and plan your next steps wisely.
FAQ 1: What are the conditions for receiving severance pay or long service payment?
If an employee has worked continuously for 24 months under a contract and meets any of the following conditions, they are eligible for severance pay:
• Dismissed due to redundancy;
• Fixed-term contract not renewed upon expiry;
• Suspension from work.
Long service payment requires the employee to have worked continuously for 5 years and meet any of the following conditions:
• Dismissed (not dismissed for serious misconduct);
• Fixed-term contract not renewed upon expiry;
• Deceased during employment;
• Resigned with medical proof indicating unfitness for work;
• Resigned at the age of 65 or above.
FAQ 2: How is severance pay or long service payment calculated?
The calculation for severance pay and long service payment is as follows:
• Monthly salary employees: Last month's full salary x 2/3 x length of service
• Daily or piece-rate employees: Any 18 days' wages from the last 30 working days x length of service
Note that employees can only receive either severance pay or long service payment, and service periods of less than one year are calculated proportionately. The cap for severance pay is HKD 15,000, and for long service payment, it is HKD 390,000.
FAQ 3: Can unused annual leave be compensated in wages? How is it calculated?
According to the Employment Ordinance, if an employee has worked continuously for 12 months, they are entitled to paid annual leave. Upon termination of the contract, employees have the right to receive compensation for unused annual leave. This is calculated based on the average daily wage over the last 12 months before contract termination. If the employee has worked for less than 12 months, the calculation is based on the actual working period.
FAQ 4: Can MPF be used to offset severance pay or long service payment?
Currently, employers can use their contributions to the Mandatory Provident Fund (MPF), including both mandatory and voluntary parts, to offset severance pay or long service payment owed. This is limited to the employer's contribution portion. If the employer's contributions exceed the amount of severance pay or long service payment, only the corresponding amount can be offset; if it is insufficient, the employer must make up the difference. The government has implemented the cancellation of MPF offset arrangements effective May 1, 2025. After the "transition date," employers cannot use their mandatory contributions accumulated benefits to offset severance pay or long service payment arising from service after the transition date.
FAQ 5: Am I entitled to a year-end bonus? How is it calculated?
Year-end bonuses are typically based on the remuneration specified in the employment contract, including double pay and a 13th month salary. If an employee has worked continuously for 3 months under a contract, they can receive a prorated year-end bonus. It is important to note that the probation period does not count towards this calculation; however, if the employee continues to meet the conditions after the probation period, the entire working period should be considered.
FAQ 6: When will I receive dismissal compensation?
Employers are required to pay severance pay within 2 months after receiving a notice of claim for it. Other payments, including unpaid wages, unpaid year-end bonuses, long service payment, provident fund or accrued benefits, payment in lieu of notice (if applicable), and wages in lieu of any unused annual leave, must be paid by the employer no later than 7 days after the contract termination date or the contract expiry date.
If employers fail to comply with the relevant regulations, they will face the following penalties:
• If an employer fails to pay compensation within 7 days after the employment contract expires, they must pay interest on the unpaid amount to the employee.
• If an employer intentionally and without reasonable excuse fails to pay dismissal compensation on time, they may face prosecution, with a maximum penalty of HKD 350,000 and 3 years of imprisonment.
FAQ 7: What should I do if I encounter an employment dispute?
If you face a labor dispute, you can seek assistance or file a complaint with the Labor Department, or call their 24-hour hotline at 27171771 for inquiries. If mediation fails, depending on the claim amount, you can file a claim with the Small Claims Tribunal or the Labor Tribunal.
