Paying Severance in Hong Kong

I understand that under Hong Kong Law there is a severance payment to be made to the staff who have worked more than 24 months in the company and are being dismissed due to redundancy.

Can the company issue a conditional notification of employment cessation by giving a 3-month notice (according to their employment contract) to the affected staff due to financial affordability?

In this case, is the company still expected to pay the affected staff the severance pay?

We are in the real estate industry.

Please give your views using the form shown below.

Thank you for your replies in advance.


Does the company have to pay severance?

Yes: 66.67%

Not Sure: 33.33%

Reply from HRAI

Under the Employment Ordinance in Hong Kong, employees who have worked continuously for a period of not less than 24 months and are dismissed due to redundancy are entitled to severance pay. The amount of severance pay is calculated based on the employee’s last full month’s salary multiplied by the number of years of service, up to a maximum of 12 years.

Regarding your question, if the company issues a conditional notice of employment cessation due to financial difficulties, the company may still be obligated to pay the affected staff severance pay if they meet the criteria outlined above.

The notice period stated in the employment contract does not affect the employee’s right to severance pay, as it is a separate entitlement under the Employment Ordinance. Therefore, even if the company gives a 3-month notice period in the employment contract, the affected staff members may still be entitled to severance pay if they meet the criteria.

It’s important to note that in some cases, an employer may negotiate with the employee and offer a mutual termination agreement that includes a severance payment, even if the employee does not meet the criteria for statutory severance pay. This is a voluntary agreement between the employer and employee, and the terms should be carefully reviewed and agreed upon by both parties.

In summary, if the affected staff members meet the criteria for severance pay under the Employment Ordinance, the company may still be required to pay them the appropriate amount, even if the company issued a conditional notice of employment cessation due to financial difficulties.

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