[LSP] - Severance Payment or Long Service Payment

04-Mar-2025 · Felix Fung

What is this?

"LSP" stands for "Long Service Payment", but we use this for Severance Payment as well as they shared the same calculation.

This payroll variable returns Severance Payment/Long Service Payment amount as calculated according to Labour Ordinance.

What will the Value be Returned?

Returns the amount of Severance Payment/Long Service Payment as calculated according to Labour Ordinance when meeting all of the following condition:

  • Is Terminated within the current Pay Period
  • With Termination Reason has enabled "Is Qualified For Long Service Payment?"
    • If the staff should not have LSP/SP for some of the termination reasons, please go to Master Data -> Termination Reason to disable it, and recalculate the payroll after the update
  • Reckonable Years of Service >= 2
    • If the staff should have LSP for more Years of Service, please update the amount to 0 manually

You can check the calculation details by going to Analytic -> Placement -> Severance Payment/Long Service Payment (SP/LSP) Calculation.

SP/LSP Calculation = Last Month Wages* x 2/3 x Reckonable Years of Service

*Can be used Average Monthly Wage from the previously 12 months. use whichever is higher

Usage

Payroll Variable Description
[LSP] Basic Form Calculate the Amount of Severance Payment/Long Service Payment
[LSP(ADW)] Use ADW as the pay rate to calculate the amount
[LSP(LARGER)] Compare Last Month Wage and ADW, use the higher rate as the pay rate

Reference:

https://www.labour.gov.hk/eng/public/wcp/ConciseGuide/11.pdf