What is Average Monthly Wage (LSP/SP)

This Average Monthly Wage (LSP/SP) is applied to: 

• Long Service/Severance Payment 

For Monthly Rate employees,

• Average Monthly Wage = Last 12 months' Monthly Full Wages / 12

Monthly Full Wages refer to the employee’s average monthly wages earned in the 12 months immediately preceding the termination date. It generally includes:

• Basic salary

• Overtime pay

• Commissions

• Shift allowances

• Productivity bonuses

• Regular payments for work performed

Regarding "No Pay Leave Deduction", “Sickness Allowance” and “Injury Leave Allowance", "Maternity Leave Allowance”, according to the Employment Ordinance Section 2(3), if for any period of that contract the employee had not been paid his wages, or his full wages, by reason of any leave taken by him in accordance with the provisions of this Ordinance or the Employees’ Compensation Ordinance or with the agreement of his employer, or by reason of his not being provided by his employer with work on any normal working day, then the employee shall be deemed, for severance payment / long service payment and notwithstanding any other provision of this Ordinance, to have been paid, for that period, his full wages under, and at the frequency required by, that contract as if he had continued in the normal course in the employment to which that contract relates, and any calculation of severance payment / long service payment shall be made accordingly. 

The response confirms that deductions for no-pay leave or sick leave cannot be used to reduce an employee's SP/LSP payout. When calculating these payments, the employer must use the normal, un-deducted contractual monthly wage rate (or an average that treats those leave days as fully paid).

For Daily/Hourly Rate employees, 

The Average Monthly Wage is 18 times the Average Daily Wage over the last 12 months.

Reference: Labour Department - The Employment Ordinance, Cap. 57 

You can find the Full Wages (LSP/SP) and Average Monthly Wage (LSP/SP) from the Regarded Wage Worksheet.

Long service payment / Severance Payment is not included in the statutory entitlements that shall be calculated on the basis of the average daily (or monthly) wages earned by an employee in the 12-month period preceding the specified dates. 

For Average Monthly Wage for Wages in lieu of Notice, please refer to What is Average Monthly Wage.