Severance Payment-how does it work?

Hi all,

I read the FDHguide and still not sure how it works regarding Severance Payment. Under what conditions do you have to pay it?

If a helper completed 2 years contract and the new contract is not signed does the employer need to pay? If the new contract with this helper is signed with the other family member of the same household - does the helper eligible to severance payment or is it considered as a new employment and the family does not need to pay?

We are a family with 2 kids. Our 2 year contract expires this march and we might be leaving HK a few months later. We are not really happy with the job our helper's doing now, she is relaxed and lazy after 2 years, but the kids are used to her and we do not want to get into trouble finding a new helper for just a few months and getting through all the paperwork. So frankly speaking we do not think we want to pay severance payment. So we are thinking if changing my husband's name to my name - would it be a solution? who has any experience with it?

Just talked to LD officer on the phone and he said that if an employee completes 2 year contract and then his old employer does not sign a new contract with this helper or any other helper it is viewed by LD as a case when the employer must pay severance payment to the old helper. Sounds strange to me since it looks like the helper is the one who should report to LD of the old employer hiring no other new helper to get paid severance payment. Is there anyone who did not sign a new contract with their helper, did not hire another helper instead and did not pay any severance payment to the old helper?

If your helper is not going to have her contract renewed by you when it expires in March you should not have to pay any severance payment, you will just need to inform immigration and the helper, that the contract will not be renewed, wise to do this one month before contract expires.

What you are liable for at the end of a two year contract is the door to door fare from HK to the helpers home town, that is a one way air ticket, plus any internal flights in her home country, and any transport fare ie (bus) from you HK home to the airport, and from her home town airport to her town, and 100 hkd per day while she is travelling. If she has her wages paid up to the day she leaves then that is all you have to pay.

Actually the requirement to pay any severance payment does not occur until an employee has served 24 months under continuous contract. You would only need to pay if your helper had completed two two year contracts and you had signed the third contract. As far as I understand if you do not renew after completion of second contract you do not need to pay it - it only becomes a requirement in the case of redundancy/termination after the commencement of the third contract. For this reason many people do not renew more than twice with the same helper.

If you go to the Labour Dept website you can read the full details under the Employees Ordinance Chapter 57 which has a section summarising details of severance and long service payment requirements.

The redundancy labour law protects all employees, including domestic helper. If you for example work for a company and the position was "deleted", i.e. not needed anymore, your employer needs to pay you a severance pay.


That's exactly the same with domestic helpers. If the contract is finished and you don't re-hire the FDH or don't hire a new helper, the FDH was made redundant and you as the employer needs to pay her severance pay. It sound strange but it's the law.