The following can only be a brief introduction of the legal subject concerned. Before you take any action which may have legal consequence, you should first seek advice from your own lawyer or make an appointment at any District Office to see a volunteer lawyer of the Free Legal Advice Scheme.




(406) EMPLOYMENT 6 - LONG SERVICE PAYMENT

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Eligibility for Long Service Payment

An employee is eligible for long service payment subject to the following conditions:

1. he is dismissed for reasons other than summary dismissal or redundancy and he has completed 5 years of service with the employer under a continuous contract.
2. he resigns on grounds of ill health, and has completed 5 years of service under a continuous contract. In this case, the employee has to be certified by a registered medical practitioner or registered Chinese medicine practitioner as permanently unfit for the present job.
3. he dies in service, and has completed 5 years of service under a continuous contract. In this case, the priority in claiming long service payment will be the spouse, children, parent and the personal representative of the employee.
4. he resigns on grounds of old age. In this case, he has to be aged 65 or above and has completed 5 years of service under a continuous contract.
5. if the employment contract of a fixed term expires without being renewed and he has been employed for not less than 5 years, under a continuous contract, the employee is entitled to long service payment. However, if not less than 7 days before the expiry of the fixed term contract, the employer has offered in writing to renew the contract of employment or re-engage him under a new contract but the employee has unreasonably refused the offer, the employee is not eligible for the long service payment.

An employee will not be simultaneously entitled to both long service payment and severance payment.

Amount of Long Service Payment:

Long Service Payment is calculated as follows:

• The rate of long service payment is 2/3 of the employee's last month wages or 2/3 of $22,500, whichever is less, for every year of service if he is monthly-rated.
• For daily-rated or piece-rated employee, the entitlement is 18 days' wages, or 2/3 of $22,500, whichever is less, for every year of service. The employee may choose any 18 days' wages out of his last 30 normal working days.

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

An employee may also elect to use his average wages in the last 12 months for the calculation.

By 1.10.2004, the maximum amount of long service payment is $390,000 and all years of service will be reckoned.

For non-manual employees whose average monthly wages exceeded $15,000 for the 12 months preceding 8 June 1990, their years of service can be reckoned up to 1980.

Set off of Long Service Payment

If an employee becomes entitled to long service payment and:

• gratuities based on length of service or occupational retirement scheme benefits (excluding any part attributable to employee's contributions) have been paid to the employee; or
• accrued benefit (excluding any part attributable to employee's contributions) is being held in a mandatory provident fund scheme in respect of the employee, or has been paid to the employee,

The long service payment is to be offset against the aforementioned amount of gratuities and benefits to the extent that they relate to the employees' years of service for which the long service payment is payable.

If you have any further queries on the relevant provisions of the Employment Ordinance, please contact the telephone hotline 2717 1771 (handled by the 1823 Call Centre) or Offices of the Labour Relations Division of the Labour Department.

Date of amendment: 22nd February 2013