Severance Payment (SP) Report 

Severance Payment (SP) Report  is under Master ⇒ Master Reports. For Long Service Payment, please see Long Service Payment (LSP) Report.

This report is for reporting the severance payment (SP) liable to the employer after the transition date (2025/05/01). For employees hired before the transition date, their SP is divided into pre-transition and post-transition portions. The pre-transition portion can still be offset using MPF contributions, but the post-transition portion cannot.

Reference: 

• Arrangement for employees whose employment commences before 1 May 2025 🡕

• Arrangement for employees whose employment commences on or after 1 May 2025🡕

Report Columns

• • Employee No.: The unique identification number assigned to each employee.

  • Employee Name: The full name of the employee.

  • Department: The department within the company where the employee works.

  • Division: The division within the company where the employee works.

  • Work Location: The physical location where the employee performs their work duties.

  • Employer: The name of the employing organization.

  • Salary by: The method or frequency of salary payment, such as monthly, daily, hourly, etc.

  • Join Date: The date when the employee started working with the employer. If Group Join Date is defined, it is Group Join Date.

  • Transition Date: The date marking the shift in the MPF offsetting arrangement, specifically 1 May 2025.

  • As of: The date on which the data is effective.

  • Serving Months: The total number of months the employee has been with the employer. For SP,  employees typically become eligible after 24 months (2 years).

  • Years of Service: The total number of years the employee has been with the employer.

  • Years of Service before the transition date: The number of years the employee served before the transition date.

  • Years of Service starting from the transition date: The number of years the employee served after the transition date.

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• • Last month's wages immediately preceding the transition date: The employee's wages for the last month before the transition date. See the Last month's wage definition below.

  • Eligible wages immediately preceding the transition date (Last month's wages): The wages eligible for severance payment calculation for the last month before the transition date.

  • Pre-transition portion of SP (Last month's wages): The portion of the severance payment calculated based on the last month's wages before the transition date.

  • Pre-transition SP Formula (Last month's wages): The formula used to calculate the pre-transition portion of the severance payment based on the last month's wages.

  • Last month: The final month of an employee's employment before termination. If the "As Of Date" falls at the end of a month, this would be that particular month.

  • Last month's wages immediately preceding the termination of employee: The employee's wages for the last month before termination. See the Last month's wage definition below.

  • Eligible wages immediately preceding the termination of employee (Last month's wages): The wages eligible for severance payment calculation for the last month before termination. This figure is considered the maximum of $22500.

  • Post-transition portion of SP (Last month's wages): The portion of the severance payment calculated based on the last month's wages after the transition date.

  • Post-transition SP Formula (Last month's wages): The formula used to calculate the post-transition portion of the severance payment based on the last month's wages.

  • SP entitlement (Last month's wages): The total severance payment entitlement based on the last month's wages.

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• • 12-month average wages immediately preceding the transition date (12-month average wages): The average wages over the 12 months before the transition date.

  • Eligible wages immediately preceding the transition date (12-month average wages): The wages eligible for severance payment calculation based on the 12-month average before the transition date. This figure is considered the maximum of $22500.

  • Pre-transition portion of SP (12-month average wages): The portion of the severance payment is calculated based on the 12-month average wages before the transition date.

  • Pre-transition SP Formula (12-month average wages): The formula used to calculate the pre-transition portion of the severance payment based on the 12-month average wages.

  • 12-month average wages immediately preceding the termination of employee: The average wages over the 12 months before termination.

  • Eligible wages immediately preceding the termination of employee (12-month average wages): The wages eligible for severance payment calculation based on the 12-month average before termination.

  • Post-transition portion of SP (12-month average wages): The portion of the severance payment is calculated based on the 12-month average wages after the transition date.

  • Post-transition SP Formula (12-month average wages): The formula used to calculate the post-transition portion of the severance payment based on the 12-month average wages.

  • SP entitlement (12-month average wages): The total severance payment entitlement based on the 12-month average wages.

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• • Final SP: The final severance payment amount due to the employee. Which is the SP entitlement (Last month's wages) or SP entitlement (12-month average wages) whichever is higher.

  • Final SP Formula: The formula used to calculate the Final SP.

Last month's wage

Last month's wages are the sum of the full pay wage items (No Pay Deduction, Sickness Allowance, Maternity/Paternity Allowance must count as full pay wages) of the last complete service month.

For the monthly-rated employees, for example, if the monthly salary is $30,000, and the employee took 2 days AL, 3 days SL & 1 day no pay leave. Then the wages of November is

In this case, for the last month's wages, the sick leave (SL), and no-pay leave, should be based on the full-pay wages. The wages for the 3 SL days amount to $1000 per day, totaling $3000, and no pay leave should not reduce the wages. The final wages calculation is as follows: (Salary + Annual Leave Pay + Full Pay Wages for SL) = $25000 + $2260 + $3000 = $30260.

For daily-rated employees, the last salary is the 18 days wages of the last complete service month. 

Please be aware that the calculation of Severance Payment (SP) provided here is an approximation intended for regular-pay employees. Given the complexity of LSP calculations for different types of employees, this data should be used for reference purposes only.

You can use EasyCal from the Labour Department to reconcile the SP.

• "EasyCal" ~ A Calculating Tool for the Abolition of MPF Offsetting Arrangement🡕 from the Labour Department

• 取消「對沖」計得掂🡕 (勞工處)

You can enter the Severance Payment (SP) amount into the standard Pay Type: "Long Service Payment/Severance Payment" during the final payment process of the employee payroll batch, provided that the "Long Service Payment/Severance Payment" option is visibly checked in the Payroll Module Setup, Pay Type tab after verification. Additionally, the SP can optionally be applied to the final payment during the Employee Termination Process.