As a reminder to employers and employees alike, Hong Kong’s landmark labour reform abolishing the Mandatory Provident Fund (MPF) offsetting arrangement officially came into effect on 1 May 2025, ushering in a new era of enhanced employee protection. This change ensures that employees will receive their full severance payments (SP) and long service payments (LSP) without deductions from employers’ MPF contributions.
Under the current system, employers can use their mandatory MPF contributions to offset SP and LSP owed to employees. This often results in reduced payouts for workers upon termination or retirement.