Leaving-work and employment-entitlement guides
For redundancy, resignation, termination or closure, check average wages, notice pay, severance, long-service payment, holiday pay and final payments item by item.
Start with the short answer
Why can final entitlements not always use one month's salary?
Some statutory entitlements use a 12-month average-wage concept. Commission, allowances, unpaid leave and incomplete wage periods may matter, while severance and LSP eligibility depends on the reason for leaving.
- Keep the contract, payslips, leave records and termination notice.
- Severance and LSP are generally not both payable for the same service period.
- A calculator cannot determine an employment dispute or replace Labour Department guidance.
Need a step-by-step route?
When resigning, being laid off or facing closure, check each amount due
Follow the decision routeFinal payments should be reconciled item by item
One total from an employer is not enough. Different payments may use different wage bases, eligibility and deadlines and should be itemised.
| Item | Calculation focus | Records needed |
|---|---|---|
| Final wages and commission | Final wage period, earned commission and contract terms | Payslips, sales records and commission policy |
| Payment in lieu of notice | Notice period, terminating party and applicable wage basis | Employment contract, termination notice and last working day |
| Severance or LSP | Reason for leaving, service, wage cap and offsetting transition | Start date, reason for leaving, MPF and wage records |
| Leave and other payments | Untaken annual leave, statutory holidays, bonus and contractual benefits | Leave records, staff handbook and written arrangements |
Worked planning example
Example: a fixed salary does not mean every item uses the same monthly figure
Assume an employee has a fixed salary plus commission, unpaid leave and bonus over the past 12 months. Some statutory entitlements use a 12-month average-wage concept with prescribed exclusions, so the latest payslip cannot simply be multiplied by days.
- Build a 12-month wage schedule before calculating entitlements.
- Eligibility for severance or LSP comes before amount; a formula does not create entitlement.
- If the employer's figure differs, request an itemised written calculation.
What is the '713' average-wage concept?
Several statutory entitlements use average wages over the preceding 12 months, with prescribed treatment of incomplete wage periods and periods for which wages are disregarded. The result may differ from contractual salary, especially with commission, allowances or variable bonus.
A calculator can organise figures, but payslips and the nature of each payment still need review. Treating every bank credit as wages—or ignoring commission—can distort the result.
How do severance and long-service payment differ?
The amount formulas are similar, but eligibility reasons differ, and both are generally not payable for the same service period. Redundancy, lay-off, contract expiry, age, health, death and resignation require separate consideration.
Abolition of MPF offsetting has an effective date and transition treatment. Employment spanning the transition should not be reduced to one simplified formula.
What should you do first if the employer's calculation differs?
Request a written breakdown of each payment, wage basis, service period, notice period and deduction. Keep the contract, payslips, MPF records, leave schedule, termination notice and correspondence.
A calculator cannot determine a dispute. For eligibility, unpaid wages or factual disagreement, contact the Labour Department or a qualified adviser promptly and note applicable claim deadlines.
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Primary references for this topic include Hong Kong Labour Department and the Employment Ordinance.
Common questions
Does resignation always exclude long-service payment?
Ordinary voluntary resignation does not automatically create LSP, but statutory arrangements exist for specified age, health and other cases. Check the full facts and current Labour Department guidance.
Can severance and LSP both be received?
They are generally not both payable for the same service period; determine which eligibility reason applies first.
Is notice pay always one month's salary?
No. It depends on the contractual notice period, actual notice arrangement and applicable average-wage basis.
Is bonus included in average wages?
It depends on the payment's nature, conditions and statutory definition, not merely its label. Keep the contract, policy and payment records.
Can a calculator result be used directly as a claim against an employer?
It can organise figures and identify differences, but it is not a legal determination. A formal claim depends on records, law and procedure.
Official and authoritative references
Content reviewed: 2026-07-27