When terminating employment contract, what is the deadline for employer to make termination payments to employee? If employer fails to pay by deadline, how to claim for the payment?Labour Department
According to the Employment Ordinance, the items and amount of payments payable to an employee on termination of employment or expiry of the contract depend on a number of factors such as the length of service, the terms of employment contract and the reason for termination of contract. For quick reference, termination payments usually include :
1. Wages and Other Payments, including -
- Outstanding wages
- Any outstanding sum of end of year payment, and pro rata end of year payment for the current payment period, for details please click here
- Long service payment or severance payment (if applicable), for details please click here
- Other payments under the employment contract, such as, gratuity, provident fund, etc.
2. Payment in lieu of notice (if applicable), for details please click here
3. Payment in lieu of any untaken annual leave, and any pro rata annual leave pay for the current leave year, for details please click here
An employer shall pay all the termination payments as soon as practicable. The time limit is as follows -
If the employer does not follow the requirements above, the penalties are as follows-
- If an employer fails to pay wages to the employee within 7 days after the termination or expiry of contract, he/she is required to pay interest on the outstanding wages due to the employee.
- An employer who wilfully and without reasonable excuse fails to pay termination payments when they become due is liable to prosecution and, upon conviction, to a fine of $350,000 and to imprisonment for 3 years.
If employee is owed termination payments or severance payment, please seek help from the Labour Relations Division near the place of work as soon as possible.
The is not a legal document. The Ordinance remains the sole authority for the provisions of the law explained.