Raise the maximum amount of ex gratia payment on severance payment under the Protection of Wages on Insolvency Fund

The level of ex gratia payments granted from the Protection of Wages on Insolvency Fund (the Fund) for employees who are owed severance payment by their insolvent employers was increased.

With the passage of a resolution of the Legislative Council under the Protection of Wages on Insolvency Ordinance on 20 March 2025, the maximum amount of ex gratia payment on severance payment under the Fund was increased from $100,000 plus 50% of any excess entitlement to $200,000 plus 50% of any excess entitlement.

The adjusted maximum amount came into effect on 21 March 2025 upon gazettal of the resolution and applied to severance payment where the liability for payment arose on or after this date. This legislative amendment prepared for the implementation of the abolition of the Mandatory Provident Fund offsetting arrangement on 1 May 2025 and further strengthened the protection of employees who are affected by business closures on their rights on severance payment.

The Fund was set up in 1985 to provide timely financial relief in the form of ex gratia payment to employees of insolvent employers. 

Please click here to view the resolution relating to the Protection of Wages on Insolvency Ordinance published in the Government Gazette.

More information on the Protection of Wages on Insolvency Fund

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