Last updated: 18 September 2026.
Short answer: employers in Hong Kong contribute 5% of an employee’s relevant income to an MPF scheme, capped at HK$1,500 a month. The employee contributes the same 5%, but is exempt below HK$7,100 a month while the employer still pays. Since 1 May 2025 employers can no longer use those mandatory contributions to offset severance or long service payments for service after that date — which is the change that materially raised the cost of terminating staff.
MPF contribution rates in Hong Kong
| Monthly relevant income | Employer contribution | Employee contribution |
|---|---|---|
| Under HK$7,100 | 5% of income | Not required |
| HK$7,100 – HK$30,000 | 5% of income | 5% of income |
| Over HK$30,000 | HK$1,500 (capped) | HK$1,500 (capped) |
Source: Mandatory Provident Fund Schemes Authority.
The practical planning number: the maximum MPF cost of any single employee to an employer is HK$18,000 a year. Above a HK$30,000 monthly salary, MPF stops scaling with pay.
Enrolment: the 60-day rule
An employer must enrol a new employee aged 18 to 64 in an MPF scheme within 60 days of the start of employment. Contributions themselves begin from the first day of employment, though employees benefit from a 30-day contribution holiday on their own share. Casual employees in construction and catering are covered by separate industry scheme arrangements.
What changed on 1 May 2025: the end of MPF offsetting
Before 1 May 2025, an employer could use the accrued benefits derived from its mandatory MPF contributions to offset severance payment (SP) or long service payment (LSP). That offsetting was abolished on 1 May 2025, known as the transition date.
Service is now split in two:
- Pre-transition portion — calculated on the employee’s monthly wages immediately before 1 May 2025 and years of service up to that date. Offsetting still applies to this portion.
- Post-transition portion — calculated on final monthly wages and years of service from 1 May 2025 onwards. Mandatory contributions cannot offset this portion.
The maximum SP/LSP payable remains HK$390,000, and the monthly wage figure used in the calculation is still capped at HK$22,500. Where the total exceeds the cap, the excess is deducted from the post-transition portion only. Voluntary contributions and service-based gratuities can still be used to offset. Source: Labour Department, abolition of the offsetting arrangement.
There is a government subsidy
The Subsidy Scheme for Abolition of MPF Offsetting Arrangement helps employers with the post-transition portion of SP/LSP. Applications are made through the TransitionEase Portal. Employers making redundancies should check eligibility before paying out, not after.
What this actually does to your hiring budget
For an employee hired after 1 May 2025, every year of service now accrues an unoffset severance or long service liability. That is a real, compounding cost that did not exist in the same form before, and it changes three decisions:
- Permanent versus contract. Fixed-term and project hiring look different once the termination liability is unoffset.
- Getting the hire right first time. The cost of a bad permanent hire has gone up. Structured screening is now cheaper relative to the alternative — see our candidate pre-screening service.
- Headcount planning. Growing through outsourced capacity rather than permanent headcount carries a different risk profile. Our guide to recruitment process outsourcing in Hong Kong covers when that makes sense.
A proposed increase is under review — not yet law
The MPFA has been reviewing the minimum and maximum relevant income levels, with proposals discussed publicly to raise the maximum from HK$30,000 to HK$40,000 a month (which would lift the cap from HK$1,500 to HK$2,000) and the minimum from HK$7,100 to HK$10,000. This is a proposal under review, not enacted law. Treat the current figures in the table above as the operative ones and watch for a formal announcement before changing payroll.
Frequently asked questions
How much does an employer pay for MPF in Hong Kong?
5% of the employee’s relevant income, capped at HK$1,500 per month, which is a maximum of HK$18,000 per employee per year.
Does an employer still contribute if the employee earns under HK$7,100?
Yes. Below the minimum relevant income the employee is exempt from contributing, but the employer’s 5% is still payable.
When was MPF offsetting abolished?
1 May 2025. Service before that date can still be offset; service from that date onwards cannot.
Did the HK$390,000 severance cap change?
No. The maximum severance or long service payment remains HK$390,000, and the monthly wage used in the calculation is still capped at HK$22,500.
When must a new employee be enrolled in MPF?
Within 60 days of the start of employment, for employees aged 18 to 64.
Budget your next Hong Kong hire properly
FuturRecruit is a licensed Hong Kong employment agency (Employment Agency Licence 83821). We help employers scope, cost and fill roles in Hong Kong. Talk to us or see our recruitment services.
General information, not legal, tax or accounting advice. Verify current figures with the MPFA and the Labour Department.
Related guides
- How to Hire Staff in Hong Kong — the full process and cost of a Hong Kong hire
- The 468 Continuous Contract Rule — the test that changed on 18 January 2026
- Statutory Holidays in Hong Kong 2026 and 2027 — all 15 dates and the holiday pay rules
- Recruitment Process Outsourcing in Hong Kong — RPO models, pricing and when it beats agency fees
