When the Mandatory Provident Fund (MPF) Scheme launched in Hong Kong in December 2000, foreign domestic helpers were explicitly excluded. This exemption remains in force today. Unlike most employed persons in Hong Kong, FDH employers are not required to make MPF contributions for their helpers, and helpers are not required to contribute either. However, this does not mean employers have no long-term financial obligations — the Employment Ordinance creates separate obligations for Severance Pay and Long Service Payment that most employers underestimate.
Exempt
FDHs from MPF Scheme
HK$15,000
Max severance pay per year
May 2025
MPF offset abolition (non-FDH)
Why Are FDHs Exempt from MPF?
- The MPF Scheme was designed for long-term Hong Kong residents building retirement savings
- FDHs work on fixed 2-year contracts and typically return to their home countries after employment
- The government determined that MPF contributions would not serve the retirement needs of FDHs in the same way
- The exemption covers both the employer contribution (normally 5% of wages) and the employee contribution (5%)
- This exemption has been in place since MPF's inception and has not changed despite multiple policy reviews
💡 What this means in practice: As an FDH employer, you do NOT make monthly MPF contributions. Your helper does NOT contribute either. There is no MPF account to manage for your helper. This is one area where FDH employment is significantly simpler than employing local staff.
What Changed in May 2025: The MPF Offset Abolition
On 1 May 2025, the Hong Kong government abolished the controversial MPF-Severance Pay offsetting mechanism for most employees. Previously, employers could deduct their MPF contributions from any Severance Pay or Long Service Payment owed to an employee. This is no longer permitted for employees covered by the MPF Scheme.
Important: This change does NOT directly affect FDH employers, because FDHs were never in the MPF Scheme in the first place. There was no offsetting mechanism to abolish for FDH employment. However, the May 2025 change is significant context for understanding the broader landscape of employee protections in HK — and it makes Severance Pay and Long Service Payment even more important to understand correctly.
Severance Pay: What FDH Employers Must Know
Severance Pay applies when you terminate a helper's employment (not when the helper resigns). The eligibility conditions and calculation are:
| Condition | Requirement |
|---|---|
| Minimum service | 24 continuous months with the same employer |
| Reason for termination | Employer-initiated dismissal (not due to misconduct), OR redundancy |
| Calculation | 2/3 of last month's wages × years of service (capped at HK$22,500/year) |
| Maximum per year | HK$15,000 (2/3 of cap) |
| Payment timing | Must be paid on the last day of employment or within 7 days |
| Resignation | Not eligible — only employer-initiated termination or redundancy |
Severance Pay example
A helper who has worked for 3 years at HK$5,100/month is made redundant: • 2/3 × HK$5,100 = HK$3,400 per year of service • 3 years × HK$3,400 = HK$10,200 total Severance Pay • No MPF offset applies (FDHs exempt from MPF)
Long Service Payment: The 5-Year Obligation
Long Service Payment (LSP) applies when a helper who has served 5 or more years leaves employment. Unlike Severance Pay, LSP applies to a broader range of termination scenarios:
- Helper dismissed by employer (non-misconduct) after 5+ years
- Helper resigns due to ill health (certified by registered medical practitioner)
- Helper dies in service
- Employment contract not renewed at the end of the 2-year term (after 5+ years of continuous service)
- Same calculation as Severance Pay: 2/3 of last month's wages × years of service, capped at HK$15,000/year
- LSP and Severance Pay are not both payable — whichever applies, only one is paid
⚠️ IMPORTANT: If you choose not to renew a helper's contract after she has served 5+ continuous years, you may owe Long Service Payment even though you are not terminating her employment mid-contract. Many employers are surprised by this at the contract renewal stage.
What Benefits DO Apply to FDH Helpers?
| Benefit | Applies to FDH? | Notes |
|---|---|---|
| MPF contributions | ❌ No | FDHs explicitly exempt |
| Severance Pay | ✓ Yes | After 24 months, employer-dismissed |
| Long Service Payment | ✓ Yes | After 60 months of service |
| Paid sick leave (120 days max) | ✓ Yes | Cap. 57 Employment Ordinance |
| Annual leave (7–14 days) | ✓ Yes | Scaling with years of service |
| Maternity leave (14 weeks) | ✓ Yes | After 40 weeks of service |
| 12 statutory holidays/year | ✓ Yes | As specified in Standard Contract |
| Rest day (1/7 days) | ✓ Yes | Continuous 24 hours |
| Employees' Compensation Insurance | ✓ Yes | Mandatory under Cap. 282 |
Planning for Severance Pay from Day One
- Budget HK$3,400/year of service into your long-term employment cost estimate
- If you are renewing a helper for a third 2-year term (6+ years total), LSP becomes a real possibility — plan accordingly
- Voluntary redundancy packages: some employers offer enhanced payments to maintain goodwill
- All Severance Pay and LSP calculations use the average wages over the last 12 months — if you've given salary increases, this affects the final calculation
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