What Is a Severance & Long Service Payment Calculator?
A severance and 長期服務金計算機 is a handy online tool designed to help Hong Kong employees estimate how much compensation they may receive if they're laid off or if their employer shuts down. With just a few inputs like your monthly salary and years of service, it calculates your potential payout instantly and accurately.
Why You Need a Severance Calculator
Let’s face it, being laid off can be overwhelming. Between the emotional stress and the paperwork, figuring out your severance shouldn’t be another headache. That’s where a calculator comes in. It helps you know exactly what you’re owed, so you’re not left in the dark or at the mercy of a vague promise.
Terminology Explained
Severance Payment (遣散費)
This is a statutory payout for employees who are terminated due to redundancy, business closure, or similar non-disciplinary reasons. You must have been employed for at least two years continuously.
Long Service Payment (長期服務金)
Think of this as a thank-you bonus for being a loyal employee. It’s available under certain conditions, like retirement, health-related resignation, or employer closure after long service.
Statutory vs Contractual Arrangements
Your contract might offer more generous compensation than what’s required by law, but it can’t offer less. Hong Kong’s Employment Ordinance provides a baseline all employers must follow.
Eligibility Criteria for Hong Kong Employees
Minimum Employment Period
You need to have worked for at least 24 consecutive months to be eligible for either payment.
Types of Termination Covered
You qualify for these payments if you’re laid off, your role is made redundant, or your employer closes shop. However, if you’re fired for misconduct or resign voluntarily, you likely won’t qualify.
The Formula for Severance Payment
The basic formula is:
Severance = 2/3 × Last Monthly Wage × Years of Service
There is a statutory cap on the amount, which is currently set at HK$390,000.
Basic Wage Components
This includes your basic salary and fixed monetary allowances. Overtime pay, discretionary bonuses, and commissions generally don’t count.
Calculation Method
Let’s say your basic monthly salary is HK$20,000 and you worked for 5 years and 3 months. Convert that to a decimal (5.25 years), multiply by two-thirds of your monthly wage, and you’ll get your severance entitlement.
How to Compute Long Service Payment
Long service payment uses the exact same formula as 遣散費. The difference lies in when it’s paid: typically when an employee retires, is injured, or their employer goes out of business after years of continuous employment.
Using an Online Tool
Input Required
To use a calculator, you’ll usually need your final basic monthly salary, total length of employment (in years and months), and type of payout (severance or long service).
Instant Output
Once you enter your details, the tool gives you an immediate estimate. No complex math or legal lingo involved.
Step‑by‑Step Calculation Guide
Gather Employment Details
Before anything, collect your payslips and contract. You’ll need to know your basic monthly wage and the exact dates you started and ended your job.
Enter Data
Plug this info into the calculator. Make sure you’re entering the monthly wage, not your total or average pay.
Verify Result
Compare the output against the legal formula to double-check it’s accurate, especially if you're nearing the statutory cap.
Common Mistakes to Avoid
Incorrect Wage Basis
Only include your base pay and fixed allowances. Don’t add performance bonuses or variable commissions unless they’re guaranteed in writing.
Miscounting Service Period
A few days or weeks can make a difference. Be precise, especially if you're close to the 24-month mark or calculating pro-rated years.
Overlooking Cap Limits
Even if your calculated amount is more, the law caps the total payout at HK$390,000. Don’t expect more unless your contract offers it.
Cap Amounts and Limits
The cap is currently HK$390,000. If your formula-based payout exceeds this, you’ll still only receive up to this maximum.
When Is Compensation Not Due?
Misconduct Terminations
If you were fired for serious misconduct (like theft or violence), you're not entitled to severance or long service payment.
Contractual Exemptions
While the law sets a minimum, some contracts may specify exceptions. Still, these can't override statutory rights.
What If the Employer Refuses?
Complaint to Labour Department
File a formal complaint. The Labour Department will investigate and can arrange mediation.
Mediation & Legal Action
If talks fail, you can take your case to the Labour Tribunal or Small Claims Tribunal depending on the amount.
Tips to Maximize Your Benefits
Check Your Records
Always double-check your payslips, employment contract, and time of service. A small error could cost you thousands.
Use Reliable Tools
Stick to well-known calculators like the one offered by AC Accounting. They follow current legal standards and are updated regularly.
Real‑World Examples
Example 1
- Monthly salary: HK$20,000
- Years of service: 5.25
- Severance: ⅔ × 20,000 × 5.25 = HK$70,000
Example 2
- Monthly salary: HK$30,000
- Years of service: 15
- Severance: ⅔ × 30,000 × 15 = HK$300,000
Key Takeaways
- If you’ve worked continuously for two years or more and get laid off, you’re probably entitled to severance or long service pay.
- The calculation is straightforward when you use a proper calculator.
- Know your rights and use the law to your advantage.
Conclusion
Being let go from your job can feel like a punch in the gut, but knowing what you're owed makes a big difference. Whether you're calculating a severance package or long service pay, the process doesn't have to be confusing. Use a trusted calculator, stay informed about your rights, and don’t be afraid to stand up for what’s legally yours.
FAQs
Q1: Can I use overtime in the wage calculation?
No. Only your base monthly salary and fixed allowances are used.
Q2: What if my service isn’t continuous?
Breaks in service may disqualify you. Continuous employment is key for eligibility.
Q3: The calculated amount exceeds the cap – what happens?
You’ll only receive up to HK$390,000, even if the formula yields more.
Q4: Is resignation eligible for long service pay?
Only in special cases like illness, old age, or employer misconduct.
Q5: How fast can I receive payment after termination?
Usually within 7–14 days. If delayed, contact the Labour Department.