Chapter 9

9

SEVERANCE PAYMENT AND LONG SERVICE PAYMENT

For Both Employer and Helper

Q9.1 Under what circumstances should an employer pay severance payment to a helper?

An employer should pay severance payment to the helper if he/she:

is dismissed or the contract is not being renewed* by reason of redundancy; and

has not less than 24 months of employment with the same employer immediately prior to the termination.

Q9.2 Under what circumstances should an employer pay long service payment to a helper?

An employer should pay long service payment to the helper if he/she has worked continuously for not less than 5 years, and:

is dismissed or the contract is not being renewed** by reason other than summary dismissal due to his/her serious misconduct or redundancy;

is certified by a registered medical practitioner or a registered Chinese medicine practitioner as being permanently unfit for the present job and he/ she resigns;

aged 65 or above and he/she resigns on ground of old age; or dies in service.

Q9.3 Would a helper be entitled to severance payment and long service payment simultaneously?

No. A helper will not be simultaneously entitled to both severance payment and long service payment. A helper dismissed by reason of redundancy is entitled to severance payment but not long service payment.

Q9.4 How are severance payment and long service payment calculated?

The following formula applies to the calculation of both severance payment and long service payment:

[(Last month wages x 2/3) x reckonable years of service Note]#

Note Service of an incomplete year should be calculated on a pro rata basis.

* If the employer has offered in writing to renew the contract or re-engage the helper under a new contract not less than 7 days before the expiry of the contract, but the helper has unreasonably refused the offer, the helper is not eligible for severance payment.

** If the employer has offered in writing to renew the contract or re-engage the helper under a new contract not less than 7 days before the expiry of the contract, but the helper has unreasonably refused the offer, the helper is not eligible for long service payment.

# For details of the calculation of severance payment or long service payment, please refer to “A Concise Guide to the Employment Ordinance”. Copies of the Guide can be obtained at the branch offices of the Labour Relations Division or downloaded from the homepage of the Labor Department.