Long Service Payment in Hong Kong: Computation and Calculation Guide

Whether you're employed or running a business in Hong Kong, understanding local employment benefits is essential. If you've worked in Hong Kong for over five years but your employment is coming to an end, you may be eligible for a long service payment. Likewise, if you employ a domestic helper, it's important as an employer to be aware of their entitlement to a long service payment as well.

You can find everything you might want to know about long service payment within this guide, including who could be eligible and how to calculate your long service payment. You will also find out just about everything related to long service payment for your domestic helper.

This article will also introduce Wise as an excellent way to reduce the costs of sending money internationally — perfect if you're receiving a long service payment in HKD and need to transfer it to an overseas bank account.

What is long service payment in Hong Kong?

Long service payment is a termination payment you receive if you have worked for the same employer under a continuous contract for at least 5 years and your employment is ending¹. Domestic helpers may also be eligible for long service payment if they have worked for the same employer for the same period.

If you’re eligible for a long service payment, your employer should normally transfer the funds within 7 days after your employment contract ends¹. How much long service payment is paid will depend on your salary and the number of years you’ve been working for the employer. But the maximum payment you can get is 390,000 HKD². You will find a detailed long service payment calculation later in this article.

Important: that long service payments are not provided if an employee is laid off due to redundancy. In such cases, the employee may be entitled to a severance payment instead.

Difference Between Severance Payment and Long Service Payment

Severance payment and long service payment might seem similar because both relate to the payment for contract termination, but they have totally different purposes. The key differences lie in the qualifying period and the eligibility requirements of the beneficiary. Here’s how they compare³:

Who qualifies for long service payment?

Long service payments can be paid if an employee has worked under a continuous contract with the same employer for at least 5 years. Once you’ve hit the qualifying period of employment, long service benefits may apply in any of the following situations³:

• The employee is dismissed (except for the reason of serious misconduct or redundancy)
• The employee’s fixed term contract expires and will not be renewed
• The employee’s death
• The employee resigns due to health issues
• The employee is aged 65 or older and retires

Where a long service payment is made due to an employee dying, the payment will be passed on to the next of kin.

How to calculate long service payment?

The amount of long service payment you receive depends on your salary and the number of years you have worked for your employer. The formula for calculating long service payment is as follows:⁴

• For employees with a fixed monthly salary:

  (Last full month’s wages x ⅔) x Number of working years for the same employer

• For employees who are paid on a piece basis or who have a daily rate, the calculation is slightly different:

  (Any 18 days wages from the past 30 days, selected by the employee) x number of years of service

Whether you’re monthly paid or work on a day rate, the amount calculated using the formula (Last full month’s wages x ⅔) should not exceed 15,000 HKD, with an overall cap for the payment of 390,000 HKD. Partial years of service will be calculated on a pro rata basis.

Let’s look at an example to better understand the long service payment computation.

Suppose in your last month of employment, your full monthly wage was 21,000 HKD, and you have worked for the same company for seven years. Your entitled Long Service Payment in Hong Kong would be:

• 21,000 x ⅔ * 7 years= 98,000 HKD long service payment

Factors Affecting Long Service Payment Computation

Right now, you might have already seen some factors that can affect your long service payment computation like:

• The reason for termination
• Your salary
• Number of years you work for the same employer (at least 5 years)

Also if you have some partial years of service, your calculation for years will be based on a pro rata basis, meaning your payment will be adjusted proportionally to the fraction of the year worked.

Long Service Payment for Domestic Helpers

You might be considering hiring—or have already hired—a foreign domestic helper. Hiring a domestic helper will also mean you'll need to understand and take on the responsibilities of being an employer.

Domestic helpers, whether local or from abroad, are also entitled to Long Service Payment . If your helper has been employed under a continuous contract for an extended period and their contract is ending without renewal, you are required to compensate them with a Long Service Payment.

Specific Regulations for Domestic Helper Long Service Payment

The regulations for Domestic Helper Long Service Payment are generally standard, whether your helper is local or from abroad. To qualify, the same following conditions must be met:

• The employment contract ends due to dismissal, early termination, or expiration without a renewal plan—excluding redundancy.
• The helper has worked for the same employer for at least 5 years.

As an employer, you can only terminate your helper for valid reasons. It is strictly illegal to dismiss a foreign domestic helper in the following situations or for the following reasons⁵:

• The helper is pregnant and has informed the employer;
• The helper is on paid sick leave;
• The helper is providing evidence or information related to employment laws or work accidents;
• The helper is a member of a trade union or participates in trade union activities;
• The helper has suffered a work-related injury.

A foreign domestic helper must leave Hong Kong within 2 weeks of contract termination or upon completion of employment contract (whichever is earlier). Plus, you will be required to report to the Director of Immigration about the contract termination within 7 days of the date of termination. And, a domestic helper is also entitled to annual leave if the helper has been serving at least 12 months. As an employer, you will also need to pay your helper payment in lieu of any annual leave not yet taken. If the helper has worked for at least three months, the pay will be calculated based on pro-rata. When the contract ends, you’ll need to cover their return trip to their home country.

So, if you decide to let your helper go, it’s crucial to settle all outstanding payments promptly, including the domestic helper long service payment.

Calculating Long Service Payment for Domestic Helpers

The formula for calculating long service payment for domestic helpers is the same as the one mentioned earlier. You can still use this formula to determine the amount of long service payment for domestic helpers:⁵

(Last full month’s wages x ⅔) x Number of working years for the same employer

Partial years of service will also be calculated on a pro rata basis.

Is long service payment taxable in Hong Kong?

The short answer is: no, the long service payment is not subject to taxation in Hong Kong! But you should be aware that any additional amount paid by the employer beyond the employee’s statutory entitlement must be reported for tax purposes.

Is long service payment subject to MPF?

Currently, employers can offset some, or all, of the long service payment required to pay against benefits accrued in Mandatory Provident Fund (MPF) contributions. This could be done in a couple of ways like:⁶

• If an employer has already made a long service payment, the employer may apply to the MPF trustees to withdraw the corresponding amount from the MPF funds.
• If the long service payment has not yet been made, the employee can apply to the MPF trustees to withdraw the corresponding amount from the MPF funds directly
• If the amount in the MPF fund which has been derived from the employer’s contributions does not cover the full long service payment, the employer should make up the difference themselves.

However, starting from 1 May 2025, employers can no longer offset the long service payment using their MPF contribution. Employers can still offset long service payment from any extra employer voluntary contribution.

This new rule will only apply to years of working starting from May 1, 2025. This means employers can still offset the long service payment using their MPF contribution for the work you have done before that date.

Sending Long Service Payment Internationally? Get Wise

There you have it - this is your full guide to understanding, calculating and receiving long service payments in Hong Kong. You also see how employers can offset the long service payment with the MPF contribution from their part. Whether you are an employer or an employee, you will also understand the requirements about this employee entitlement after reading this article.

When you need to transfer your long service payment out of Hong Kong - or you’re simply just sending money internationally for any other reason - there actually would be several ways to do so, like using traditional banks or virtual banks. But if you have ever done international remittances, you can see they are quite confusing or costly.

So, you could be better off with Wise. Sending money with Wise is super easy - you’ll always get the mid-market exchange rate, with low, transparent fees. You'll always know what you're paying for! What makes it even better? Your payment can arrive way faster than using a bank, too.

Sources last checked on 10-Mar-2025.