Wage-protection fund miscalculated severance: 21 drivers short-changed HK$550,000 over MPF offset order

While helping 20-plus container-terminal drivers recover wage arrears, the Hong Kong Federation of Labour Societies found the Protection of Wages on Insolvency Fund had botched severance calculations: by deducting employers’ MPF contributions last instead of first, 21 drivers received about HK$550,000 less in severance compensation combined.

How should severance be calculated? The heart of the dispute

The law lets the fund cover the first HK$50,000 of severance in full, plus half of the remainder — while employers’ MPF contributions may offset severance. The fight is over order: the union says deduct the employer’s MPF first, then compute the payout; the Labour Department deducts it last. Take 姚先生, a 21-year driver claiming HK$200,000 severance against HK$130,000 in employer MPF: the union’s math deducts 130,000 first, claims 70,000 (50,000 in full plus half of 20,000 ≈ 60,000 total); the department’s math takes 50,000 of the 200,000, halves 150,000 to 75,000, totals 125,000 — then deducts the 130,000 MPF last, leaving 姚先生 with nothing.

Longer service, bigger damage

Union vice-chair 吳慧儀 said the ordinance was unclear on calculation steps, and the department’s “understanding” of putting the offset last shrank payouts — unfairest to long-serving workers with larger MPF balances. 鍾先生, a 14-year driver, should have received over HK$60,000 by the union’s math but got about HK$5,000 by the department’s. Across 21 drivers, the two methods differed by more than HK$550,000.

Labour Department: dissatisfied applicants may seek review

The department said its wage-security division vetted applications per guidelines, and unhappy applicants could request review by the fund’s committee. The union demanded the method be corrected and the ordinance amended to spell out the calculation steps.

What workers can do

The case exposes the offset mechanism’s other face: employer contributions can offset severance or long-service payments, and the calculation order directly affects what lands in your pocket. When made redundant, ask for the employer’s MPF contribution figure, check the calculation steps, and seek review if in doubt. The MPF education hub explains the offsetting mechanism.