LSP

If you are working in Hong Kong, LSP is one of the important factors you must learn as your financial protection.

Long Service Payment is a statutory allowance paid to people in Hong Kong who’ve been running for an organization for decades and meet certain qualifying requirements. It acts as financial protection for employees who are made redundant, retire, or fall unwell.

Learning how to claim the process is very important, as it guarantees workers get their rightful pay. The guide offers a step-by-step method of claiming Long Service Payment from your Hong Kong employer. It covers eligibility criteria, computation, and what to do in case the employer denies payment.

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    Long Service Payment (LSP) in Hong Kong

    Definition of LSP Under Hong Kong Labor Laws

    LSP is statutory pay offered to workers with five or more years of service in the same business company and are terminating under the agreed-upon terms.

    Difference Between LSP and Severance Payment

    LSP is for long-serving staff who resign due to retirement, illness, or dismissal (except redundancy).

    The employees receive Severance Payment when they are dismissed due to redundancy.

    When an Employee Becomes Eligible

    Employees are eligible for LSP if they have completed a minimum of five years of continuous service and under conditions.

    • Dismissal due to reasons apart from serious misconduct.
    • Retirement at or on or after the age of 65.
    • health resignation.
    • Death (where the payment is given to the family of the employee).

    Eligibility Criteria

    The following are the criteria which must be met to claim LSP:

    They must have been employed by the employer for not less than five consecutive years.

    The employment must have terminated due to dismissal, redundancy, retirement, or ill health.

    LSP does not apply to:

    Resignation (except due to health).

    Dismissal on grounds of serious misconduct.

    Same severance payment paid to employees for the same dismissal

    Computing Your LSP Amount

    LSP Formula:

    (Last month’s wages × 2/3) × Years of service

    Maximum Payment Limit:

    The maximum payment of LSP is capped at HK$390,000.

    Example Calculation:

    Last full month’s wages: HK$30,000

    Years of service: 10

    LSP = (30,000 × 2/3) × 10 = HK$200,000

    Step-by-Step Guide to Receiving Long Service Payment from Your Employer

    1: Check Eligibility

    Ensure you meet the minimum service requirement and are qualified under the Employment Ordinance.

    2: Gather Necessary Documents

    Prepare the following documents:

    • Contract of employment
    • Payslips (12 months ideal)
    • Termination letter or resignation letter (if applicable)
    • Medical certificate (if due to sickness)

    3: Notify Your Employer

    Formally apply for LSP in writing and provide supporting documents. Employers typically pay the claim within seven days of termination.

    4: Payment Schedule and Employer Obligations

    Employers must remit LSP within seven days of termination.

    Payment is based on the last full month’s wages.

    5: What to Do If Your Employer Fails to Pay LSP

    If your organization fails to pay, you can pursue the case by reporting the case to the Hong Kong Labour Department.

    What to Do If Your Employer Fails to Pay LSP

    Resolving Disputes via the Labour Department

    File a complaint with the Labour Relations Division.

    Undergo mediation sessions conducted by the department.

    Filing a Complaint or Taking Legal Action

    If unsuccessful, you may refer the matter to the Labour Tribunal for legal determination.

    The tribunal is a low-cost way of resolving disputes.

    Frequently Asked Questions on LSP in Hong Kong

    1. Can I recover LSP if I resign?

    No, with the exception of certified ill health.

    1. What happens if my employer goes bankrupt?

    You can recover compensation under the Protection of Wages on Insolvency Fund.

    1. Is LSP tax in Hong Kong?

    No, LSP is exempt from salaries tax.

    Conclusion

    Application for Long Service Payment is an inherent right of Hong Kong employees. Understanding the eligibility, claim manner, and legal rights can empower personnel to receive their rightful repayment. In the occasion of disputes, employees may additionally technique the Hong Kong Labour Department or lawyers.

    How FastLane HR Can Help

    At FastLane HR, we provide expert guidance on Hong Kong employment legislation, payroll processing, and compliance. If you need help with Long Service Payment calculations, claims, or dispute resolution, our specialists can assist you with ease. Contact us today to enjoy a hassle-free experience with your Long Service Payment claim!