MPF can offset severance or long-service payments

Employers may use the accrued benefits from their MPF contributions to offset severance payments or long-service payments under the Employment Ordinance — one of the system’s most controversial features.

How does offsetting work?

The employer first pays the full severance or long-service payment, then applies to the trustee for reimbursement. Employers must also comply with the ordinance’s other requirements on these payments.

What if the employer won’t pay?

The employee can apply to the trustee directly for the employer-contribution portion. If the employer hasn’t paid the full amount due, the employee can apply in writing to the scheme trustee, with supporting documents, for release of the relevant employer-contribution benefits. If those benefits don’t cover the full amount, the employee can still claim the shortfall from the employer.

What are the procedures?

Contact your scheme’s trustee directly. Employers and employees can ask their trustees about the offsetting administration.

For MPF and employment rights, visit the MPF education centre, or compare schemes at MPF fund comparison.