In the event that one of your employees decides to leave the company either by choice or layoff, having the proper paperwork will ensure a seamless transition. Release letter document is one of the most critical in this process.
In this guide, we will help you understand everything that Hong Kong employers, as well as employees in this region, including foreign workers, need to be aware of in relation to release letters.
What is a Release Letter?
A release letter is a formal undertaking that is signed by the employer of a given employee as a confirmation of the completion of service between the employee and the company. It is mainly used to release both the employee as well as the employer from any further commitment.
In particular, in Hong Kong, a release letter can greatly benefit:
- To demonstrate that the term of service has concluded (in respect of taxation matters).
- Avoiding misunderstanding or conflict relating to compensation or claims.
- Offering supporting documentation for the next step in the employee’s career.
In simple terms, a release letter benefits both the employer and the employee by maintaining professionalism and goodwill.
Release letter vs. Termination letter: what is the difference?
Despite the similarities of the two in that they both pertain to matters of ending employment, they differ in purpose in that
|
Aspect |
Termination Letter |
Release Letter |
|---|---|---|
|
Purpose |
Informs the employee that employment is being terminated. |
Confirms that the employment has officially ended and all dues are settled. |
|
Timing |
Issued before or on the date of termination. |
Issued after all final settlements and clearance are complete. |
|
Tone |
Often formal and directive. |
Neutral and professional — focuses on closure. |
|
Includes |
Termination date, reason (optional), notice or payment in lieu. |
Final working day, settlement confirmation, release clause, and signatures. |
Pro Tip: A release letter is not required under Hong Kong laws, but is advisable in order to avoid any future dispute over the Employment Ordinance (Cap. 57).
Who should Write a Release Letter?
Generally, this letter is prepared and signed by the employer or human resource personnel.
In some situations, including a mutual separation agreement or a foreign employee leaving Hong Kong on a permanent basis, the agreement can be signed by both parties to indicate that the employment relationship has come to a legal ending, and that any kind of obligation (whether in taxation, visas, or company property) has been settled.
Release letters drafted by employers can help in canceling visas, getting tax clearance, as well as verifying employment of foreign employees.
What is a Release Letter?
Confirms End of Employment: It is used to verify the last day of employment.
Acknowledges Payment: Confirms that salary, leave payment, and any dues are settled.
Releases Both Parties: This is designed to prevent either party from making any claims in the future once the process of settling is over.
Support Future Usage: Employees can use this document as a reference in future organizations or government agencies (e.g., Visa issues).
Professionalism: Helps in maintaining goodwill during termination.
How to Write a Release Letter (Step-by-Step)
Preparing a release letter is not a complicated process. This is a simple structure that you can use:
- Print on company letterhead
This is to ensure that the document is formalized.
- Add employee details
Add the employee’s full name, title, and dates of service.
- Specify the purpose of writing the letter
Point out that this is a letter to confirm the release from employment effective as of a certain date.
- Ensure that all dues are cleared
Please ensure that salary payments, leave payments, as well as any benefits, are as of the last working day.
- Add a release clause
Both of them will not bring any claims against each other after this agreement.
- Conclude with gratitude
In a friendly leaving, a message of thanks and best wishes in the employee’s future career endeavors is added.
- Include signatures
Both the employer (and representative of HR) will sign. Optional: the employee will sign as a confirmation of receipt.
Example Release Letter Template (Hong Kong)
[Company Letterhead]
Date: [Insert Date]
To: [Employee Name]
Position: [Job Title]
Department: [Department Name]
Dear [Employee Name],
This letter is to confirm that your employment with [Company Name] is formally ended as of [Last Working Day, eg, 30 November 2025].
As of the above date, all dues in respect of salary, leave salary, as well as any other relevant dues, if any, are paid. We hereby clarify that no dues of any kind are outstanding between the parties.
By signing this document, the Company as well as the Employee agree that the employment relationship comes to a close as of the given date, with no claims arising out of the employer-employee relationship.
We would also like to use this moment to thank you for your contribution during the time that you spent with us, as well as wish you well in your future.
Sincerely
[Name of Authorized Signatory
[Position, example: HR Manager]
[Company Name]
Acknowledged and Agreed
[Employee Name & Signature]
Date: __________
Common Mistakes to Avoid
In writing a release letter, one should not fall into the following pitfalls:
Not defining the final working date — May cause issues in calculating payments and MPF contributions.
Lack of a mutual release clause — this could lead to claims against you post-employment.
Employing a generic template without legal review – this template may not comply with Hong Kong employment laws.
Foreign employee duties – ensure release is consistent with IRD Tax Clearance & Visa Exit Requirements.
Q&A: Common Questions about Release Letters
No. The employment contract marks the beginning of the labor relationship, whereas the release letter marks the completion of the labor relationship between the employer and employee.
It is usually drafted by the employer/HR manager. In mutual agreements, both parties can sign to accept the completion of the agreement.
Termination letter is a notice of ending a job, while a release letter is a confirmation of ending a job, with everything settled between the employer and employee.
Employees can request their employer formally to issue one, including the ending date and compensation amount. Employees can apply for a release letter thereafter.
It gives legal certainty that all dues are cleared, and no claims are left between the two parties — which shields both the employer and the employee.
Why Hong Kong Employers Need to Take This Seriously
Although release letters are not required under the Employment Ordinance, they form a crucial element in a professional exit process, particularly in a globally networked environment such as that of Hong Kong. As for foreign employees, release letters are linked to matters of tax clearance/cancellation of visa with the Inland Revenue Authority (IRD) and Immigration. Failure to obtain one will cause a delay in the process of re-employment. Thus, a well-drafted release letter is a safety measure that will ensure a clean exit.
Need Help Writing or Reviewing a Release Letter?
As a business owner in Hong Kong, if you’re dealing with employee departures, FastLane HR is there to help ensure a smooth process.
They help in the following ways: Preparing release and termination correspondence Calculating Final Pay & Entitlements Processing IRD Tax Clearance and Visa issues relating to foreign employees HR advice on employees’ data post-compliant offboarding
Contact us today to gain expert HR advice that will ensure a professional and compliant process in every way. For expert help in employee release/exit management, contact FastLane HR.