Long Service Payment Claim (Hong Kong)

A Hong Kong Long Service Payment Claim is a formal written demand served by a qualifying employee (or their estate) on a former employer claiming the statutory Long Service Payment (LSP) entitlement under Part VB of the Employment Ordinance (Cap. 57). The claim sets out the employee's years of continuous service, the last monthly wages, the statutory calculation of the LSP amount, and demands payment within a specified period as a precondition for any subsequent application to the Labour Tribunal.

Long Service Payment is a statutory benefit created by Part VB of the Employment Ordinance (Cap. 57), which was modelled on the severance payment scheme in Part VA and designed to compensate long-serving employees for the loss of employment where the loss does not arise from redundancy. The fundamental distinction between LSP and Severance Payment (SP) under Part VA is the triggering circumstance: LSP is payable on dismissal (other than for serious misconduct), resignation on health grounds, death, or retirement at age 65; SP is payable specifically on redundancy. An employee can receive either LSP or SP for any given period of service, but not both.

To qualify for LSP under Part VB of Cap. 57, an employee must satisfy four conditions: (1) the employment must have been under a continuous contract (the 418 test — at least 4 weeks of employment at 18 or more hours per week) for at least five years; (2) the employment must end in a qualifying circumstance (dismissal other than for serious misconduct under section 9 of Cap. 57, resignation on medical grounds certified by a registered medical practitioner, death, or reaching the age of 65); (3) the employee must not be entitled to severance payment for the same period of service (i.e., the termination must not be by reason of redundancy); and (4) the employee must not have unreasonably refused an offer of suitable alternative employment from the same employer.

The statutory LSP formula under Part VB of Cap. 57 is: two-thirds (2/3) of the last month's wages (or average monthly wages over the preceding 12 months, whichever is higher, and capped at HK$22,500 per month) multiplied by the number of completed years of service (with additional months counted proportionally). The maximum LSP payable under the current statutory cap is HK$390,000, a figure adjusted periodically. The MPF offset mechanism — by which employers may offset accrued MPF employer contributions against the LSP payable — has been scheduled for abolition, with government subsidies to assist affected employers during the transition.

The formal written claim (the subject of this document) is the first step in the LSP recovery process. Serving a written claim on the former employer demonstrates that the employee has formally asserted their entitlement, creates a written record of the claim, and gives the employer an opportunity to settle voluntarily before the matter proceeds to the Labour Relations Division of the Labour Department for conciliation or to the Labour Tribunal for adjudication.

The Labour Tribunal — established under the Labour Tribunal Ordinance (Cap. 25) — has exclusive jurisdiction over LSP claims and operates without court filing fees, making it accessible to all employees regardless of income level. The Tribunal's process is designed to be accessible without legal representation, though legal advice before filing is recommended. Where an employer is insolvent and unable to pay LSP, the Protection of Wages on Insolvency Fund (Cap. 380) administered by the Labour Department provides a statutory safety net, covering LSP claims up to the prescribed maximum. The Fund is funded by a levy on employers' Employees' Compensation insurance premiums under Cap. 282. Employees whose former employers are undergoing liquidation or receivership should file their LSP claims with both the former employer and the Official Receiver's Office as creditors in the insolvency proceedings.

A Hong Kong Long Service Payment Claim should be prepared and served on the former employer when an employee who qualifies for LSP under Part VB of the Employment Ordinance (Cap. 57) has not received payment of LSP within a reasonable period after their employment ended in a qualifying circumstance.

An employee who has been dismissed by their employer — otherwise than for serious misconduct under section 9 of Cap. 57 — after completing five or more years of continuous service should serve an LSP claim on the employer. This scenario covers straightforward dismissals for business reorganisation, performance-based terminations that do not rise to the level of serious misconduct, and all other employer-initiated terminations not involving the statutory grounds for summary dismissal.

An employee who has resigned on health grounds should serve an LSP claim accompanied by the medical certificate from a registered medical practitioner confirming that the employee was unfit for employment by reason of ill health. The medical certificate is a statutory condition for LSP entitlement on health-based resignation — without a valid medical certificate, a resignation is treated as a voluntary resignation and does not trigger LSP entitlement.

The estate of a deceased employee who died during employment, having completed five or more years of continuous service, is entitled to LSP. The personal representative of the estate should serve the LSP claim on the employer, attaching the Grant of Probate or Letters of Administration as evidence of the authority to act.

An employee who reaches the age of 65 and whose employment terminates at that time — whether by their own retirement or because the employer terminates the employment at the retirement age — is entitled to LSP for their total continuous service period, provided the employment was under a continuous contract for five or more years. The LSP claim should be served promptly upon retirement.

Where the employer disputes the employee's entitlement to LSP — for example, by alleging that the dismissal was for serious misconduct under section 9 of Cap. 57, or by disputing the calculation of years of service or the last month's wages — the formal written claim establishes the employee's position on record. If the employer rejects the claim or fails to respond, the employee should refer the dispute to the Labour Relations Division for conciliation, and if conciliation fails, apply to the Labour Tribunal.

A Hong Kong Long Service Payment Claim under Part VB of the Employment Ordinance (Cap. 57) must include the following key elements to constitute a complete and legally effective claim.

The identification of the parties must state the full legal name of the claimant employee and their HKID number, and the full legal name of the respondent employer and their business registration number. The address of the employer's principal place of business and the contact details of the HR department or authorised representative should be stated so the claim reaches the appropriate person.

The employment history must confirm the commencement date of continuous employment (the date on which the five-year continuous contract period began), the termination date, and the total calculated period of continuous employment in years, months, and completed days. Where there were breaks in employment during the engagement, the 418 test for each period of continuous employment should be addressed.

The qualifying circumstance for LSP must be identified and described. For dismissal cases, the claim should state the date and manner of dismissal and confirm that the dismissal was not for serious misconduct under section 9 of Cap. 57. For resignation on health grounds, the claim must reference the attached medical certificate. For death, the claim should reference the death certificate. For retirement at 65, the date of reaching the retirement age should be stated.

The last month's wages must be calculated accurately. If wages were variable (including commission, overtime, and bonuses), the average monthly wages over the 12 months immediately preceding termination should be calculated. The statutory wage cap of HK$22,500 per month must be applied if the last month's wages exceed this amount. The calculation methodology should be set out transparently in the claim.

The LSP calculation must apply the statutory formula: (2/3) x [last month's wages or average monthly wages, capped at HK$22,500] x [years of continuous employment]. Each completed year counts as a full unit; additional months beyond completed years are counted as a fraction of a year (months/12). The total LSP figure should be stated in HKD.

The MPF offset position should be addressed. The claim should state whether the claimant acknowledges or contests any proposed MPF offset by the employer. Section 31A of the Mandatory Provident Fund Schemes Ordinance (Cap. 485) governs the employer's right to offset LSP against accrued MPF employer contributions. Given the phased abolition of the MPF offset mechanism under the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Ordinance 2022, the applicable position at the time of the claim should be verified with the Labour Department.

The demand for payment must specify a reasonable payment deadline — typically 14 days from the date of the claim — and state that if payment is not made by the deadline, the claimant will refer the matter to the Labour Relations Division for conciliation or apply directly to the Labour Tribunal under Section 32 of the Employment Ordinance (Cap. 57) and the Labour Tribunal Ordinance (Cap. 25). Section 32 of Cap. 57 requires the employer to pay LSP within seven days of the termination of the contract of employment, failing which the unpaid amount carries interest. Where the employer is insolvent, Section 4 of the Protection of Wages on Insolvency Ordinance (Cap. 380) covers LSP claims up to the prescribed maximum from the Protection of Wages on Insolvency Fund. The forms-legal.com Long Service Payment Claim template is drafted for qualifying employees under Part VB of the Employment Ordinance (Cap. 57) and pairs with the Severance Payment Claim and 418 Continuous Employment Letter available on the platform.