Part 2: Salary calculation methods for long service payment and contract termination for foreign domestic helper

In Part 1, we covered the notice period for foreign domestic helpers, arrangements for termination payments, and their calculation methods. In part 2, we will also discuss long-service payments or severance payments and their respective formulas. Visit our blog for more details!

1. Eligibility for Long-Service Payments or Severance Payments for Foreign Domestic Helpers:

i) Criteria for Long-Service Payments:

Foreign domestic helpers(FDHs) must have worked continuously for the same employer for at least 5 years. They are not eligible if termination results from serious misconduct, dismissal, a doctor certifies permanent unsuitability for the current job, retirement at the age of 65 or above, or non-renewal of contract. In such cases, the employer is required to provide long-service payments.

ii) Criteria for Severance Payments:

If termination occurs due to redundancy reasons, the FDH is entitled to severance payments if they have worked continuously for the same employer for at least 24 months.

iii) Formula for Calculating Severance Payments or Long-Service Payments:

It's important to note that FDHs do not receive both long-service payments and severance payments simultaneously. Employers typically calculate and provide one of the payments based on the situation. The formula is the same for both:

(Monthly salary x 2/3) x Recognized years of service (proportionally calculated if less than one year)

For example, with a monthly salary of HK$5,000 and 6.5 years of service:

(5000 x 2/3) x 6.5 = HK$21,667

2. Calculation Methods for Other Items:

Unpaid Wages: Calculate any outstanding wages based on the monthly salary ratio up to the last working day.

Compensation for Unused Annual Leave: If the FDH has worked for at least one year, compensation for unused annual leave is calculated proportionally. For instance, if the helper worked for 90 days:

(90 x 7) / 365 = 1.73 days

Compensation for Public Holidays: Payment for any unused statutory holidays.

Other Payments as per Employment Contract: Such as the cost of the return ticket to the home country, meal allowances, and transportation allowances. Return ticket costs can be provided in cash, but the Labor Department recommends offering a direct flight ticket. Other payments should be made as per the employment contract.

Conclusion

It is crucial to carefully calculate these payments. Sometimes, foreign domestic helpers or agencies may provide documented calculations. Employers should review them thoroughly and raise any concerns immediately. Failure to comply with the Employment Ordinance and the standard employment contract regulations in paying the statutory entitlements may lead to legal consequences and potential claims from the employee. For further information, employers can refer to the Labor Department's website (https://www.labour.gov.hk/eng/index.htm) or contact their inquiry hotline at 2717 1771 regarding the Employment Ordinance.

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The information provided in this article is for general reference only and should not be considered as any form of advice. Our company assumes no responsibility for its use