Does abolishing MPF offsetting leave employers paying only HK$3,000 per employee? It depends on the relevant termination date, the employer’s eligible payments for that subsidy year and where the case falls against the HK$500,000 threshold.
This guide covers the scheme’s first three years: 1 May 2025 to 30 April 2028. Employers must settle the employee’s full entitlement before applying. Paying HK$3,000 and asking the employee to wait for the government to cover the rest is not how the scheme works. Scheme arrangements
Start with the eligible post-transition net amount
The subsidy supports eligible severance or long service payment expenditure attributable to employment from 1 May 2025 onwards.
Calculate the post-transition portion, then deduct any amounts still lawfully available for offsetting, such as applicable employer voluntary contribution benefits. The calculation uses the lower of the actual post-transition net amount paid and the statutory post-transition net amount. Additional ex gratia payments are not automatically covered.
We call this amount N below. If the statutory post-transition portion is HK$15,000, there are no other offsets and the employer has paid it in full, N is HK$15,000. Net amount and subsidy rules
First three years: check the HK$500,000 threshold
The threshold is the cumulative eligible post-transition net amount across the employer’s relevant employees in the same subsidy year. It is not company turnover or a separate allowance for each employee.
For a case falling entirely within the threshold:
Government subsidy = the higher of N × 50% and N − HK$3,000
The equivalent employer budgeting formula is:
Final employer share = the lower of N × 50% and HK$3,000
For a case falling entirely outside the threshold, the government pays 50% of N and the employer bears 50%, without the HK$3,000 cap. First-three-year rates and threshold
Example 1: HK$15,000, entirely within the threshold
- Percentage calculation: HK$15,000 × 50% = HK$7,500.
- Capped-share calculation: HK$15,000 − HK$3,000 = HK$12,000.
- Take the higher subsidy: HK$12,000.
- Final employer share of this portion: HK$15,000 − HK$12,000 = HK$3,000.
The employer pays HK$15,000 first and subsequently receives HK$12,000 in subsidy. Any outstanding pre-transition payment must be budgeted for separately.
Example 2: HK$4,800, entirely within the threshold
- Percentage calculation: HK$4,800 × 50% = HK$2,400.
- Alternative calculation: HK$4,800 − HK$3,000 = HK$1,800.
- The higher amount gives a subsidy of HK$2,400.
- The employer’s final share is HK$2,400.
HK$3,000 is a cap on the employer’s share, not a fixed charge for every case.
Example 3: one case crosses the threshold
Assume cases ranked ahead of this one under the scheme already account for HK$480,000 in the same subsidy year. This case has N of HK$40,000:
- Remaining room within the threshold: HK$500,000 − HK$480,000 = HK$20,000.
- Amount outside: HK$40,000 − HK$20,000 = HK$20,000.
A. Within the threshold: apportion the cap
Proportionate cap = HK$3,000 × HK$20,000 ÷ HK$40,000 = HK$1,500
Compare HK$20,000 × 50% = HK$10,000 with HK$20,000 − HK$1,500 = HK$18,500. The subsidy for this portion is the higher amount: HK$18,500.
B. Outside the threshold: apply 50%
HK$20,000 × 50% = HK$10,000
C. Add the two portions
Government subsidy = HK$18,500 + HK$10,000 = HK$28,500
Final employer share = HK$40,000 − HK$28,500 = HK$11,500
Neither applying the HK$3,000 cap to the whole case nor treating it all as outside the threshold gives the correct result. Cross-threshold calculation
Threshold positions are not first come, first served
The service centre ranks approved cases for the same subsidy year by eligible post-transition net amount, from largest to smallest. New approvals can change the ranking and earlier subsidy amounts; an adjustment may be deducted from a subsequent subsidy.
The HK$480,000 in the example is therefore the cumulative amount after ranking, not simply the value of applications submitted earlier. Ranking and adjustments
Check the year, eligibility and application deadline
Each subsidy year runs from 1 May to 30 April, determined by the relevant termination date rather than the payment or application date. Year 2 runs from 1 May 2026 to 30 April 2027. Rates and caps change from year 4; do not carry the first-three-year formula into later years.
The employee must qualify for statutory severance or long service payment. During all or part of the post-transition employment, the employer must have been required to enrol the employee in and contribute to MPF, or fall within the corresponding exempt occupational retirement scheme arrangements. The relevant termination date must fall between 1 May 2025 and 30 April 2050. The post-transition expenditure must not already be, or be due to be, fully covered by other government funding. Full eligibility and application requirements
Apply within three months after full payment. Late applications are not accepted. Prepare:
- Employer registration information and bank account evidence.
- Employment and termination records, wage records and the calculation breakdown.
- MPF or retirement scheme records and evidence of permitted offsets.
- Proof of full payment and the required employee consent and authorisations.
Check the figures with the government calculator, then assemble the required documents. In your cash-flow forecast, allow for the full settlement first and record the subsequent subsidy separately.
Updated: 15 October 2026.