Long Service Payment Guide in Hong Kong 2025
Published: 17 June, 2025 | Updated: 18 June, 2025
Starting from May 1, 2025, the Hong Kong government will cancel the MPF "offsetting" mechanism. This means that employers can no longer use their Mandatory Provident Fund (MPF) contributions to offset Long Service Payments (長期服務金）made to employees after the transition date.
Many employees are still unclear about Long Service Payment, including how many years they need to work to be eligible, and how it differs from severance payment. They may also be unsure about how Long Service Payment is calculated and its tax implications.
To help clarify these questions, iBlynq has put together this Long Service Payment guide for 2025. We'll explain everything you need to know about Long Service Payment and how it affects you.
Eligibility for Long Service Payment: How Many Years Do You Need to Work?
Long Service Payment is a type of compensation under Hong Kong's Employment Ordinance.
If you've worked for the same company for 5 years or a minimum of 18 hours worked per week or more (whether part-time or full-time), and you're let go not because of any misconduct (like theft or fighting) or redundancy, you may be entitled to receive this payment.
This includes cases like your contract not being renewed, retiring at age 65, or resigning due to health reasons.
Long Service Payment vs. Severance Payment: What's the Difference?
Both Long Service Payment and Severance Payment are employee rights that provide compensation under certain circumstances.
If an employer fails to pay Severance Payment or Long Service Payment according to the Employment Ordinance, or doesn't pay on time, they can be prosecuted.
If convicted, they can be fined up to HK$50,000.
Comparison: Long Service Payment v.s. Severance Payment
Here's a simple comparison between the two:
Long Service Payment
Eligibility: Employee has been employed under a continuous contract for 5 years or more and leaves the job for the above mentioned reasons.
Payment timeline: Within 7 days after the employment contract is terminated.
Severance Payment
Eligibility: Employee has been employed under a continuous contract for at least 24 months and is terminated due to redundancy, company closure, etc.
Payment timeline: Within 2 months after the employee submits a claim for Severance Payment.
If you're eligible for both Severance Payment and Long Service Payment, you can only receive one of them. For more information on Severance Payment, check out this article: Severance Pay Guide in Hong Kong 2025.
How to Calculate Long Service Payment: How Much Will You Get?
The amount of Long Service Payment you receive depends on how many years you've worked and your salary before leaving. The maximum amount you can get is HK$390,000.
For Employees Paid Monthly:
(Your last monthly salary x 2/3) x Eligible years of service.
However, the calculation of (Your last monthly salary x 2/3) is capped at HK$15,000.
For Employees Paid Daily:
Average pay for 18 days out of your last 30 working days x Eligible years of service
the average pay for those 18 days is also capped at HK$15,000.
Example 1:
Years worked: 5 years
Last monthly salary: HK$15,000
Long Service Payment Amount：
= HK$15,000 × 2/3 × 5 = HK$50,002.5
Example 2:
Years worked: 10 years and 6 months (10.5 years)
Last monthly salary: HK$30,000
Long Service Payment Amount：
= $30,000 × 2/3 × 10.5
= $15,000 × 10.5 (use $15,000, as $30,000 × 2/3 is more than $15,000)
= HK$105,000
Example 3:
Years worked: 30 years
Last monthly salary: HK$50,000
Long Service Payment Amount：
= $50,000 × 2/3 × 30
= $15,000 × 30 (use $15,000, as $50,000 × 2/3 is more than $15,000)
= HK$450,000
Retiring at 60: Getting Long Service Payment
Many employees worry whether they will lose their Long Service Payment if they retire at 60.
First of all, there’s no official retirement age set by law in Hong Kong.
If an employee has worked continuously for the same employer for 5 years or more, and their employment contract clearly states “mandatory retirement at age 60,” this is usually treated as a non-renewal of contract — which means they would generally qualify for Long Service Payment.
However, since contract terms can be complicated, it’s best to check with the Labour Department for confirmation.
On the other hand, if an employee chooses to retire at 60 by resigning on their own, they will not be eligible for Long Service Payment — unless they can prove the resignation was due to health reasons.
Taxation: Do You Pay Tax on Long Service Payment?
According to Hong Kong tax law, Long Service Payment paid according to the Employment Ordinance is a tax-free payment. It's seen as compensation for your long service, not as regular income, wages, or a bonus.
But be careful: If your employer tries to label part of your regular salary or bonus as Long Service Payment, the Inland Revenue Department might investigate this to see if it's actually "disguised compensation".
Frequently Asked Questions
1. Can part-time employees get Long Service Payment?
Yes, as long as you've worked continuously for 5 years or more for the same employer (working at least 18 hours per week) and weren't fired for serious misconduct, you can get it. This applies to both full-time and part-time staff.
2. Do I have to pay tax on Long Service Payment?
No, Long Service Payment paid according to the Employment Ordinance is considered tax-free compensation. You don't need to pay tax on it.
3. What if my employer doesn't pay Long Service Payment?
You can report it and make a claim with the Labour Tribunal (Call 2625 0020) or the Labour Department (Call 2717 1771).
4. If the company closes down when I retire, do I lose the Long Service Payment?
Even if the company closes, you can still ask the Labour Department for help to follow up on your payment. You might need to provide proof documents like pay slips or your employment contract.
iBlynq is here to help
For employers, accurately calculating long service payment can help avoid legal disputes and ensure the business operates smoothly and legally.
We’re here to help you comply with payroll management and other employment matters with ease.
Based in Hong Kong, we offer a range of business services to support your business, including accounting and tax consulting, company registration, payroll management and company secretary services and more.
Let us take care of the details so you can focus on what you do best!
