How to Calculate Long Service Payment in Hong Kong

As an OFW working in Hong Kong, you should be fully aware of the employee rights that you have, as well as your responsibilities to both your employee and the Hong Kong government. However, not all OFWs are aware that they are entitled to certain payments, for example. This article seeks to clarify some of those questions. In particular, the focus is on long service payments and a similar other payment called severance pay.

Also Read: OFW in Hong Kong Receives $70K (Php 434K+) as Send-off Gift from Employers

When it comes to long service payments in Hong Kong, things can be quite confusing for both employer and employee. In most cases, both cases are compliant; that is, the employer understands how much and when they need to pay, and the employee already knows how much to expect after doing their own calculations. To those who don’t know these details yet, this article is for you.

calculating long service payment hongkong

Disclaimer: The information posted here is based on the personal experiences shared by the OFW in the video below. Please let this post serve as a guide only. If you have specific questions, you may ask the OFW by commenting on their video on their accounts.

The information shared in this video comes from an OFW with a YouTube channel called Lakwatcherang Kuratcha. In the video linked below, the vlogger emphasized that OFWs in Hong Kong are entitled to have Long Service status when they have at least 5 years working for the same employer. He talks about how you can calculate your Long Service and Severance payment and how you can get these payments from your employer.

In the video above, the vlogger talks about two important payments that employees in Hong Kong need to know about. These are:

  • Long service Payment
  • Severance Payment

The main questions are, what are these payments, what are the differences between the two, and how can you get the long service or severance payment from your employer?

Long Service Payment

So who are qualified to get a long service payment in Hong Kong? Here are the requirements:

    • You have worked for 5 or more years for a single employer.
  • After 5 years or more, your employer no longer renewed your contract – specifically, you were removed from the job or you were terminated without any clear valid reason
  • You have a serious disease, injury or illness and you can no longer work. That is you are no longer fit to work and you have had at least 5 years working for the same employer.
  • You suddenly pass away. – of course, we don’t want to wish this on anyone, but if this happens when you have had 5 or more years of working for the same employer, then your immediate family members will receive the long service payment.
  • You retire – that is, if you are already 65 years old or older.

Here’s an example. You have worked for six and a half years as a domestic helper in Hong Kong. Then, all of a sudden, your employer terminated your contract.

If this happens, the law demands that the employer gives you a long service payment 7 days before you step down from the house or establishment you are working in. In fact, if it’s possible, your employer can even give you the payment on the spot.

If your employer doesn’t comply in this case, you can actually sue them, and the government has strict safety measures to ensure labor rights are taken cared of.

Getting Sick and Qualifying for the Long Service Payment

Another way to qualify for the long service payment is if you’ve worked for 5 or more years for the same employer and you got sick, enough so that you can no longer work.

This one is a bit more complicated, for the following reasons:

You need a medical certificate from a doctor to prove that you really have the debilitating health condition
Your employer can get a second opinion to check if what you are claiming is true.

One of the responsibilities of the employer in this case is that if they are planning on getting a second opinion from another doctor, they should inform you within 48 hours. Moreover, your employer cannot ask you to go with them to see a doctor right away. The latest they can do so is the following day.

Also, mentioned in the list above is that an OFW who has served at least 5 years with the same employer and died, is qualified to get a long service payment. So, in behalf of the employee, who receives the payment? Well, here they are:

  • The spouse
  • The children
  • Parents

Any of the above-mentioned people can claim your long service payment when you go.

In addition, the law also requires the employer to give the long service payment at least 7 days before the body is flown back to the Philippines. So before that time comes, the money should already be in the hands of the family members.

Another situation is retirement. When you have worked for 5 or more years for an employer, and you have reached the retirement age, and you wish to retire, then you are entitled to get the long service payment. You can use the money to go back home and settle in the Philippines.

how to calculate long service payment

Employer not Capable of Paying

Here’s one situation that may not be ideal for OFWs anticipating a long service payment.

What if your employer loses their job, and they don’t have enough money or savings to pay your long service payment. Even if you qualify in terms of the number of years and other considerations, imagine that your employer has to drop you because they can no longer afford to give you a job.

If they can prove to the Labor department that indeed this is the case, then they are excused from having to pay your long service. However, they should give you one month notice, stating that they lost a job and they can no longer pay you.

That’s definitely unfortunate for the OFW, but what can you do? They no longer have a source of income and enough money to give you long service payment. However, often this is a special case, and most employees are generous and are able to pay their dues.

Don’t give your employers a valid reason to terminate you

For example, if you have already worked for 6 years for an employer, and you’re now thinking about the long service payment you’re gonna get, that might lead you to falsely think that you no longer have to do a good job with your work.

Don’t do naughty things and maintain doing an excellent job with your work even if you already qualify for a long service payment. That’s because your employer can complain to the labor that you are not doing a good job, and that might be grounds for your termination with a valid reason.

When you are terminated with a valid reason, that means you will no longer be entitled to receiving your much awaited payment. That’s why we need to be careful with the jobs we are doing. Even if you are confident that your employer is kind and understanding, work is still work. We need to be honest with our profession.

What if your employer won’t give you long service? Well, you can always ask the help of the labor department and sue the employer, but the vlogger said that a huge majority of employers in Hong Kong are not gonna deny you this right.

How to Compute the Long Service Payment

So how can you compute your long service payment? According to the vlogger, here is the formula:

  • First, multiply your monthly salary by 2.
  • Then, divide the answer by 3
  • Then, multiply that by the number of years you’ve already worked for your employer

In short, multiply your monthly salary by 2/3 and then multiply that to your number of years of service.

For example, if your salary is 4630 HKD, the minimum salary of OFWs in Hong Kong, then you multiply it by 2, divide by 3, then multiply by let’s say 5 years of service, you will get HKD 15,433 for your long service payment.

In other words, you will receive that amount of money if you have worked for 5 years for the same employer and if you’ve lost your job for all the valid reasons mentioned that qualify you for long service.

Severance Pay

A similar concept is known as the severance pay. What is this? Well, here are the qualifications to get this pay:

  • You have worked for at least 24 months
  • During those 2 years, you have worked for the same employer

When will you qualify to get the severance pay? Here are some examples:

  • You terminated immediately, or your contract is not renewed
  • Your employer says that they can no longer pay your salary

The formula for how much you can get for severance pay is the same as that for long service:

  • First, multiply your monthly salary by 2.
  • Then, divide the answer by 3
  • Then, multiply that by the number of years you’ve already worked for your employer

To reiterate, you only qualify for severance pay if you have worked for at least 24 months with the same employer.

What if Employer Doesn’t Pay

There are many cases of employers not paying the long service payment to their employees even if they deserve it. After all, this is big money we are talking about.

As an employee whose work is about to be terminated, you need to know what your rights are. You will received the following if your contract is not renewwed:

  • One month salary
  • One way flight ticket going back to the Philippines
  • allowance of 100 HKD

Aside from the items mentioned above, you will also get payment for all the leaves they didn’t give you, like when they asked you to work during special holidays. For example, the Chinese new year in Hong Kong is a 4-day holiday. If they asked you to work for two of those days, then you will be paid for 2 of those.

Your employer then cannot force you to leave unless they pay all of these, including the long service payment or the severance pay if you qualify. If the lawyers can prove that the employer violated the law, you can get 350,000 HKD for not getting the long service pay. If you deserved the severance pay and your employer violated the law by not paying you, then you can receive around 35,000 HKD.

Having said that, these situations are quite rare. The whole process can be quite intricate and individualized, so the best thing you can do is go to the labor department so that they can assess what your specific situation is and they can make the right call to action.

You can also go to the Philippine consulate to make a similar appeal. Having said that, it is of the opinion of the vlogger that going to the labor department is a much better move. That’s because she believes the labor department can do more than the consulate.

If you have a generous employer, which happens a lot in Hong Kong, they will actually give you more than what you are entitled to receive. If that is the case for you, then that is very generous of them and you need to thank them. Most Hong Kong nationals and expats don’t want trouble, so most of them are really obedient to the law.

While you hear a lot of horror stories about employers not treating OFWs well, you also hear a lot of good news. There are so many more employers that go the extra mile when it comes to taking care of OFWs. In fact, in this story, an employer gives the OFW a lot of extra money so that she can go and have her sickness treated. Indeed, if you do your part and be a wonderful employee, chances are that your kindness and hard work will reciprocate and you will have a wonderful time working in Hong Kong.

Leave a Comment