Redundancy can be very stressful, both if you are a manager and are having to make difficult decisions or if you are an employee and are losing your job unexpectedly. In Hong Kong, redundancy is a special type of job loss with its own rules and rights in law.
Understanding your legal rights is required to receive fair treatment and avoid costly misunderstandings. This guide explains who qualifies for redundancy pay Hong Kong, how it is calculated, and what the law provides for in terms of employee entitlements and employer obligations.
What is Hong Kong redundancy payment?
Redundancy pay is a compensation to workers who are terminated because the company is cutting down on personnel, restructuring, or closing shop.
According to Hong Kong’s Employment Ordinance (Cap. 57), redundancy happens in certain situations.
- The employer ceases to carry on business
- The job is no longer needed.
- Or there is a workforce reduction.
Redundancy is not the employee’s fault, unlike being dismissed for underperformance or misconduct. The payment enables employees to settle in as they look for new jobs.
Who Can Get Redundancy Pay in Hong Kong?
Not every redundant employee receive redundancy pay. The Employment Ordinance says that you have to meet these conditions:
You are eligible if:
- You have been working for at least 24 months on a full-time contract.
- Your dismissal is because of redundancy, not resignation or misconduct.
You are not eligible if:
- You voluntarily resign.
- You’re fired for cause (e.g., gross misconduct).
- Your contract has a set duration that expires on its own.
Example Situation:
Emily was a marketing executive in a company that had just automated her department. She had been working full-time for three years. Since her work became redundant and she did not resign, she can apply for redundancy pay.
For all the legal details, go to the Hong Kong Labour Department official site.
How do you calculate redundancy payment in Hong Kong?
The calculation uses a straightforward formula:
(Last full month’s salary × 2/3) × Years of service
Limited to HK$22,500 for each year of service.
Example Calculation:
- Last month’s total salary: HK$30,000
- Years of work: 4
Redundancy pay = (30,000 × 2/3) × 4 = HK$80,000
Important Note on MPF Offsetting:
Employers can lower the statutory amount of redundancy pay by using their share of MPF contributions. Look for announcements on the MPFA website.
Employer Obligations on Redundancy
In dismissing an employee, employers must follow these legal requirements:
Your Duties Include:
- Payment in lieu of notice (according to agreement) or notice.
- Giving a written notice of termination and paying all final entitlements on time.
- Keeping proper records and using official forms, like Form IR56F or IR56G, for tax clearance.
Non-adherence will result in
- Legal claims
- Penalties from the Labour Department
- Damage to employer reputation
What to Do If You Don't Receive Your Redundancy Pay
If your employer does not provide you with your redundancy payment, follow these steps:
Action Plan:
- Approach your employer first to find out what has happened.
- Record all correspondence and applicable employment records.
- Lodge a complaint with the Labour Relations Section of the Labour Department.
- If not settled, you can refer the matter to the Labour Tribunal for formal hearing.
Final Thoughts
Redundancy can be easy to understand and fair. As an employer or employee, knowledge of the laws helps to ensure that everyone is treated equally. Do you have a right to redundancy pay in Hong Kong? If you do, the law is on your side—and this guide will give you the confidence to take the next step.
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