Terminating employment in Hong Kong is governed by a well-established statutory framework, but the rules aren’t always straightforward. Notice periods, severance entitlements, and protections against wrongful dismissal all depend on whether the employee qualifies as being under a continuous contract, how long they’ve served, and how the termination happens. If you’re hiring in Hong Kong or letting someone go, here’s what you need to know.
Legal framework
Hong Kong’s Employment Ordinance (Cap. 57) is the primary legislation covering employment and termination. It sets out minimum notice periods, severance and long service pay entitlements, anti-discrimination protections during dismissal, and the rules for summary dismissal. Most of the Ordinance’s key protections only apply to employees who are employed under what’s called a “continuous contract,” so understanding that threshold is the essential starting point.
The continuous contract: the 468 rule
As of January 18, 2026, an employee is considered to be on a continuous contract if they work 17 or more hours per week, or 68 or more hours over any four-week period. This updated threshold replaced the previous “418” rule, which required 18 hours per week or 72 hours over four weeks.
The practical effect is that more part-time and variable-hours workers now qualify for continuous contract status and the statutory protections that come with it. If you’re unsure whether a worker crosses this threshold, it’s worth checking their actual hours carefully before proceeding with a termination, since getting this wrong can expose you to claims for notice pay, severance, or wrongful dismissal.
Notice periods
The notice period that applies to a termination depends on where the employee is in their tenure and what their contract specifies.
During the first month of probation, neither party is required to give any minimum notice. Either the employer or the employee can end the employment without notice at that stage.
Once an employee has passed the first month of probation, the statutory minimum is seven days’ notice. In practice, most employment contracts specify longer periods, and the contractual term will govern as long as it meets or exceeds the statutory minimum.
For employees on a continuous contract with two or more years of service, the minimum notice period rises to one month, unless their contract provides for a longer period, in which case the longer period applies.
Payment in lieu of notice is permitted in all cases. Rather than requiring the employee to work through their notice period, you can pay them the equivalent salary and end the employment immediately.
Severance pay
Employees on a continuous contract who’ve completed at least 24 months of service are entitled to severance pay if they’re dismissed by reason of redundancy. There are three things to understand: how the payment is calculated, what changed with MPF offsetting in 2025, and what the total cap is.
The formula
Severance pay is calculated as two-thirds of the employee’s last full month’s salary, multiplied by the number of years of service. Partial years are prorated. So an employee who earned HKD 30,000 per month and worked for five years would have their calculation based on HKD 22,500 (the capped figure), giving a result of HKD 75,000.
The mpf offsetting change
For many years, employers could offset severance and long service pay obligations against the employer’s contributions to the employee’s Mandatory Provident Fund (MPF) account. That offset has now been abolished for service accrued on or after May 1, 2025. Grandfathering rules apply to service accrued before that date, meaning older MPF contributions can still be used to offset the portion of the entitlement that relates to pre-May 2025 service. Going forward, you’ll need to fund severance and long service pay from your own resources for any service accruing after May 1, 2025.
The total cap
The monthly salary used in the severance calculation is capped at HKD 22,500, regardless of the employee’s actual salary. The total severance payment is also capped at HKD 390,000. Both caps apply equally to long service pay.
Long service pay
Long service pay operates as a parallel entitlement for employees who’ve completed five or more years of continuous service and aren’t eligible for severance pay. It applies in situations where the employee resigns after five years of service, is dismissed for reasons other than serious misconduct, or dies in service.
The formula is the same as for severance pay: two-thirds of the last month’s salary (capped at HKD 22,500) multiplied by years of service, subject to the HKD 390,000 total cap. The two entitlements aren’t paid simultaneously. An employee who qualifies for severance pay doesn’t also receive long service pay, and vice versa.
Summary dismissal
In cases of serious misconduct, Hong Kong law allows employers to dismiss an employee immediately, without notice and without severance pay. This is called summary dismissal.
What counts as serious misconduct includes theft, fraud, dishonesty, wilful disobedience, or behavior that fundamentally breaches the employment contract. The key requirement is that you must be able to demonstrate the misconduct. Summary dismissal without solid evidence is likely to be challenged as wrongful dismissal, which carries its own legal risks and costs.
Before proceeding with a summary dismissal, it’s worth documenting your evidence carefully and, in complex situations, taking legal advice.
Final pay obligations
Regardless of how the employment ends, you’re required to pay all outstanding wages, including any accrued but untaken leave, within seven days of the termination date. This applies whether the termination is by notice, payment in lieu of notice, or summary dismissal. Missing the seven-day deadline is a breach of the Employment Ordinance and can give rise to claims and penalties.
Managing terminations in hong kong through an Employer of Record
If you’re employing someone in Hong Kong through a legal entity you’ve set up yourself, you’re directly responsible for all of the above. For international companies without a Hong Kong entity, an Employer of Record (EOR) is a practical alternative. The EOR employs the worker locally on your behalf, takes on the legal obligations under the Employment Ordinance, and handles severance calculations, notice periods, and final pay when a termination occurs.
That matters particularly right now because the MPF offsetting change adds a new layer of complexity to termination costs. An employer of record that’s current on Hong Kong employment law will account for the May 2025 change correctly when calculating what you owe, without you needing to track the pre- and post-May 2025 service split yourself.
When evaluating EOR services, look for a provider that handles in-country compliance actively rather than relying on you to flag changes.
Book a demo to see how RemotePass handles compliant terminations in Hong Kong.
Protected categories
Before terminating any employee, you should be aware that certain categories of employees have elevated protections. An employee can’t be dismissed during maternity leave. Employees who’ve filed an employment-related complaint are protected from dismissal for six months after filing. Dismissing an employee in either of these situations is presumed to be unreasonable and can expose you to significant liability. If you’re in any doubt about whether a termination falls into a protected situation, take legal advice before acting.
Frequently asked questions
How much notice do I need to give when terminating an employee in hong kong?
During the first month of probation, no notice is required. After the first month of probation, the minimum is seven days. For employees on a continuous contract with two or more years of service, the minimum rises to one month. Your employment contract may specify a longer period, in which case that applies. You can also pay in lieu of notice instead of requiring the employee to work out their notice period.
When does a hong kong employee qualify for severance pay?
An employee becomes eligible for severance pay after 24 months of continuous service, provided they’re dismissed by reason of redundancy. The payment is calculated at two-thirds of their last monthly salary (capped at HKD 22,500) multiplied by years of service, up to a total cap of HKD 390,000.
What changed with mpf offsetting in 2025?
Employers could previously use their MPF contributions to offset severance and long service pay obligations. From May 1, 2025, this offset no longer applies to service accrued on or after that date. Grandfathering rules mean the offset still applies to service accrued before May 1, 2025, but for all service after that date, you’ll need to fund any entitlements directly.
Can I dismiss an employee in hong kong without notice?
Yes, but only in cases of serious misconduct that justifies summary dismissal. You must be able to prove the misconduct. If you can’t, or if the misconduct doesn’t meet the legal threshold for summary dismissal, a no-notice termination will likely be treated as wrongful dismissal. In straightforward redundancy situations or other non-misconduct terminations, you’re required to give notice or pay in lieu.
