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If the employee is dismissed by redundancy, is the employee entitled to severance payment? How to calculate the amount?

Labour Department

What is redundancy?

An employee is considered to be dismissed by reason of redundancy if the dismissal is due to the fact that:

  1. the employer closes or intends to close his/her business;
  2. the employer has ceased, or intends to cease, the business in the place where the employee was employed; or
  3. the requirement of the business for employees to carry out work of a particular kind, or for the employee to carry out work of a particular kind in the place where the employee was employed, ceases or diminishes or is expected to cease or diminish.


If the employee has been employed under a continuous contract for not less than 24 months years, and is dismissed by the employer for reason of redundancy, he/she is eligible for severance payment.

Please click here for the formula for calculating severance payment.


The is not a legal document. The Ordinance remains the sole authority for the provisions of the law explained.

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Last update: 20 May 2024
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