MPF & Gratuity

MPF contributions are paid on "relevant income", defined to include wages, salaries, leave pay, fees, commissions, bonuses, gratuities* and other perquisites or allowances.


If your "gratuity" is paid based on completition of the contract, it is not gratuitous and is just deferred compensation or a performance bonus. Definitely subject to MPF contributions.


*The term "gratuities" in this context means tips as a waiter or doorman may earn.


This assumes that your contract is one of employment and not as an independent contractor. If you are an independent contractor, invoicing the company monthly, then you are like any other service provider and your fees (including any payment for specific performance of completing the term) should not be subject to MPF.

Employer takes "their" contribution out of your money (ie employer contribution)? Could be possible but not common in HK, look at your contract to confirm if this is how you are compensated, i.e. 95% + 5%.


However, if in fact it is your (employee) contribution, as per drm888, plus keep in mind mandatory employee contributions limited to HK$1,000 (though you should call MPFA for specific details for this - google for their site and contacts).

Some employers do deduct their mandatory MPF contribution (i.e. 5% or $1,000 max per month) from the annual gratuity. Strictly this is not unlawful, but it is certainly a 'sharp' practice. THe employer mandatory contribution is, as the name suggests, mandatory, by law. The amount of gratuity is not set by law, so if the terms of the employment agreement allow the employers to deduct their MPF contributions- then nothing stops that. It is really just a part of the calculation adopted in deciding how much gratuity.