Long Service Payment (HK)
Updated November 2026 · Free · No sign-up
Calculate Hong Kong long service payment (LSP) and severance payment (SP) — both use: 2/3 × last month’s wages (capped $22,500) × years of service, ceiling $390,000, with the MPF offset abolished for post-May-2025 service.
Quick answer: LSP/SP formula: (2/3 × monthly wages, wages capped at $22,500) × years of service — i.e. max $15,000 per year, total ceiling $390,000. SP needs 24 months + redundancy/lay-off; LSP needs 5 years + dismissal (non-misconduct)/death/certified-unfitness/age-65 resignation.
One Formula, Two Gates
Both payments compute identically: 2/3 of the last month’s wages (or the $22,500 cap if higher-paid — i.e. max $15,000/year) × reckonable years, with monthly-paid staff able to elect the 12-month average instead, and the $390,000 statutory ceiling. Which one applies:
| Severance (SP) | Long service (LSP) | |
|---|---|---|
| Service gate | 24+ months | 5+ years |
| Trigger | Redundancy / lay-off | Dismissal (not misconduct/redundancy), death, certified unfitness, or resignation at 65+ |
| Both? | Never — one or the other | |
Worked Examples
Example 1. $28,000 wages, 9 years, LSP: wages exceed the cap → $22,500 × 2/3 = $15,000/year × 9 = $135,000.
Example 2. $18,000, 3 years, redundancy: 12,000 × 3 = $36,000 SP.
Example 3 — the offset era split. Post-1-May-2025 service: employers can’t offset LSP/SP against their mandatory MPF; PRE-transition service keeps the old offset (grandfathered, computed on pre-transition wages) — long-tenure exits now split into two computation eras. See the offset calculator.
Claims and Edges
Employer must pay SP within 2 months of notice-of-claim (serve it within 3 months of termination — the deadline people miss); LSP is due automatically within 7 days. Labour Tribunal enforces; insolvency → the Protection of Wages on Insolvency Fund fronts the money. Fixed-term non-renewals can trigger both regimes’ logic — take advice before signing anything styled "mutual separation".
Frequently Asked Questions
How is long service payment calculated?
2/3 × last month’s wages (wages capped at $22,500 → max $15,000/year) × years of service, up to the $390,000 ceiling — identical math to severance.
What’s the difference between LSP and severance?
The trigger: severance = redundancy/lay-off (24+ months); LSP = other non-misconduct dismissal, health unfitness, death, or 65+ resignation (5+ years) — never both.
What changed on 1 May 2025?
The MPF offset was abolished for service from that date — employers can’t use their MPF contributions to offset post-transition LSP/SP; earlier service stays offsettable (grandfathered).
Is there a deadline to claim severance?
Serve written notice of claim within 3 months of termination; the employer then owes payment within 2 months — LSP needs no claim (7-day automatic).
Can I choose the wage basis?
Monthly-paid employees may elect the 12-month average instead of the last month — pick whichever computes higher.
✓ Formula verified • Last updated: November 3, 2026