Offsetting of Severance and Long Service Payments

If you are an employer, you can offset severance payment (“SP”) and long service payment (“LSP”) as required under the Employment Ordinance (“EO”) by the accrued benefits derived from contributions you have made to the employee in the MPF scheme. You can apply to the trustee for payment of the relevant amount to you for this purpose, but only after you have paid the employee his or her due severance payment and long service payment.

Please note that in offsetting this type of compensation, you need to follow other requirements set out in the EO concerning such payments.

However, if an employer has not paid the whole SP/LSP to an employee in accordance with the EO, an employee may make an application in writing and provide supporting evidence to the MPF trustee to withdraw the accrued benefits deriving from the employer's contributions in the employee's MPF account at a sum equivalent to the unpaid SP/LSP.  When accrued benefits deriving from the employer's contributions are insufficient to cover the SP/LSP payable by the employer, the employee is entitled to recover the difference from the employer. Regarding the offsetting arrangement, employers and employees are advised to approach their MPF trustees directly for assistance.