Salary calculation methods for long service payment and contract termination for foreign domestic helper
In a previous article, we shared the arrangements for terminating contracts with foreign domestic helpers, along with details about other salary and insurance arrangements. However, we did not elaborate on the qualification criteria and calculation methods for end-of-contract, termination, or payment in lieu of notice, as well as the calculation of long-service payment. The question arises: do foreign domestic helpers qualify for long-service payment if they resign? In this two-part series, we will introduce relevant information and methods.
1. Is there any probation period and payment in lieu of notice for foreign domestic helpers?
According to the Hong Kong Employment Ordinance (Chapter 57), when terminating an employment contract, and if the contract is continuous, notice or a notice fee must be provided. Foreign domestic helpers(FDHs) in Hong Kong are also covered by this protection, but the arrangements for the probation period are slightly different.
i) Is there a probation period for foreign domestic helpers?
FDHs employed in Hong Kong do not have a probation period. Efforts were made by legislators in 2018, but the proposal was rejected by the Labour and Welfare Bureau (Source: Oriental Daily). Therefore, all provisions related to probation periods in the Employment Ordinance do not apply to FDHs.
ii) Notice period and payment in lieu of notice for foreign domestic helpers
Standard Employment Contract for FDHs state that if either the employer or the FDH proposes termination, the proposing party must provide a notice period of no less than one month or a notice fee equivalent to one month's salary. It is advisable for such arrangements to be confirmed in writing. If the notice fee option is chosen, the contract can be terminated immediately upon receipt of the relevant payment.
iii) Calculation method for the amount of payment in lieu of notice
The notice fee is calculated as follows: Average monthly wage of the FDH over the 12 months preceding the "notice date" multiplied by the number of months of the notice period. It is important to consider any salary increases or decreases over the past 12 months and not just base the calculation on the previous month or the current month's salary.
If the foreign domestic helper's salary is HK$4,870 for the first 3 months and HK$5,000 for the subsequent 9 months, the calculation would be:
(HK$4,870 x 3) + (HK$5,000 x 9) / 12 x 1 = HK$4,957.50-
iv) Other payments besides the payment in lieu
In terminating the contract, the employer must adhere to the standard employment contract and make the following payments:
Any outstanding wages
Wages in lieu of any untaken annual leave, and the proportionate annual leave pay for that leave year
Wages in lieu of any untaken statutory holidays
Long-service payment or severance payment (if applicable)
Other payments specified in the standard employment contract that are required to be made to the FDH, such as the cost of repatriation, food, and transportation allowances for returning to the home country.
That’s all for part 1, in part 2, we will cover long-service payment or severance payment and its calculation formula.
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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
