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Hong Kong's Legislative Council to consider Cancellation of MPF Offsetting

06 October 2021. Published by Andrea Randall, Partner

Under the Employment Ordinance, employers can offset long service payment or severance payment due to an employee against the employer's mandatory and voluntary contributions to the Mandatory Provident Fund (MPF), Hong Kong's pension system.

This MPF offsetting mechanism has long been controversial and has been exacerbated during the pandemic with a wave of business closures leading to a drain on workers' retirement funds.

After much debate in recent years, the Chief Executive's 2021 Policy Address announced that a draft bill to abolish the MPF offsetting mechanism will be introduced into the Legislative Council in the next legislative session. The bill would seek to amend several pieces of legislation which permit MPF offsetting, including the Employment Ordinance, the Mandatory Provident Fund Schemes Ordinance and the Occupational Retirement Schemes Ordinance.

Considering the complexities of the legislative amendments, the Legislative Council's papers predict that the abolition of MPF offsetting would come into effect in around 2025 at the earliest.

Further details will be revealed in the next legislative year.

Our team at RPC are widely recognized as leading employment lawyers in Hong Kong. We are of the few specialist employment law practices in Hong Kong and we act for both employers and employees on contentious and non-contentious matters.

Please do not hesitate to contact our Partner and Head of the Employment Practice in Hong Kong, Andrea Randall (andrea.randall@rpc.com.hk / +852 2216 7208) for any queries regarding the issues raised in this article or any employment law related queries you may have. 

All material contained in this article is provided for general information purposes only and should not be construed as legal, accounting, financial or tax advice, or as opinion to any person or specific case. RPC accepts no responsibility for any loss or damage arising directly or indirectly from action taken, or not taken, which may arise from reliance on information contained in this article. You are urged to seek legal advice concerning your own situation and any specific legal question that you may have.