On 2017/6/23, the Executive Council of HK Government agreed to end the current offset arrangement between MPF, and Serverance Payment or Long Service Payment. Once effective, employers are not allowed to deduct the amount of Servance Payment or Long Service Payment, from the balance of employers' contribution in the MPF fund.
In the 10-year period of implementation, the government will set aside an amount around HKD 7.9B as subsidy in view of financial burdens of employers, due to the end of the offset arrangement.
At the same time, the calculation of Severance Payment and Long Service Payment will be lowered from (Last Monthly Wage) x (2/3) x (Year of Service), to (Last Monthly Wage) x (1/2) x (Year of Service)
The proposal is subject to the approval of Legislative Council.
You may refer to our HR Guide for details of Severance Payment and Long Service Payment:
http://www.carbonik.com/en-hk/hr-guide/hong-kong/severance-payment-and-long-service-payment
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