Gratuity Calculator
Estimate end-of-service gratuity from last salary and years of service under the minimum severance/gratuity rules.
Input Data
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At a glance:Gratuity (end-of-service benefit) is a statutory severance/gratuity payout in some jurisdictions, commonly = last salary × years of service × factor, factor ≈ 15 days' wage per completed year (about half a month per year). It rewards long service and protects employees. The formula and caps vary by law — some cap the wage, require a service threshold, or differ by reason of leaving. In Hong Kong it is largely folded into the Long Service Payment / severance under the Employment Ordinance; check the Labour Department for exact rules. This is a generic estimate, not legal advice.
Formula
Gratuity = last salary × years of service × factor.
15-day wage factor: 15 days' wage per completed year (≈ half a month per year).
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- Enter the last drawn salary.
- Enter completed years of service.
- View the estimated gratuity.
Gratuity at 15-day-wage factor (last salary HK$30,000)
| Years of service | 15-day wage | Gratuity |
|---|---|---|
| 5 | 15,000 | 75,000 |
| 10 | 15,000 | 150,000 |
| 15 | 15,000 | 225,000 |
| 20 | 15,000 | 300,000 |
15-day wage = 30,000 ÷ 30 × 15 = 15,000. Gratuity = 15,000 × years. Caps/thresholds vary by law; HK uses LSP/severance.
Case Studies
Case 1: 10 years of service
Last salary HK$30,000, 10 completed years, factor 15 days/year. 15-day wage = 30,000 ÷ 30 × 15 = 15,000.
Gratuity = 15,000 × 10 = HK$150,000.
This is the statutory end-of-service benefit estimate. In Hong Kong the equivalent is the Long Service Payment / severance under the Employment Ordinance; factors, caps and eligibility differ — check the Labour Department.
Case 2: Effect of a wage cap
If the law caps the wage base at HK$22,000 though actual pay is HK$40,000, the 15-day wage uses 22,000: 22,000 ÷ 30 × 15 = 11,000, not 20,000.
For 15 years: capped gratuity = 11,000 × 15 = 165,000, far below the uncapped 300,000 — high earners get proportionally less.
Lesson: wage caps and minimum-service thresholds materially change the result. This calculator is a generic planning estimate; for exact entitlements consult the relevant authority.
FAQ
How is gratuity computed?
Common formula: last salary × years of service × factor; the factor is often 15 days' wage per completed year (about half a month per year). Compute the 15-day wage: monthly salary ÷ 30 × 15, then multiply by completed years. Some jurisdictions use 21 days or a month per year; adjust the factor to your local rule.
Who qualifies?
Typically employees with a minimum completed service period (often 5 years) under the relevant law; the reason of leaving (resignation, retirement, redundancy, dismissal) may also affect entitlement and amount. Check your jurisdiction's threshold and conditions.
How does it work in Hong Kong?
Hong Kong's Employment Ordinance provides severance payment (for redundancy/lay-off) and long service payment (for dismissal after 5 years, death, or resigning at 65+). The old 'gratuity' is effectively covered by these. Eligibility, calculation (based on last full month's wages, capped) and triggers differ — for exact entitlements consult the Labour Department, not this estimate.
Gratuity vs severance vs long service payment?
Three related but distinct concepts. Gratuity (end-of-service) is a generic term — a lump sum on leaving, common in the Gulf and parts of Asia (usually based on last salary × years × a 15-day-wage factor). Severance payment is specifically for redundancy/lay-off — the employer pays when the role is eliminated, often the same formula. Long service payment (Hong Kong's LSP) is for dismissal after long service, death, or resignation at 65+ — a similar idea under the Employment Ordinance. So gratuity ≈ severance broadly; in Hong Kong the statutory equivalents are severance and LSP. Because each system sets its own eligibility, wage base and cap, confirm your local rule — this calculator gives the generic estimate only.
Is the cap and service threshold important?
Yes — they directly change the result. The wage base is usually capped (only salary up to a ceiling counts, excess excluded), so high earners get proportionally less; service is usually counted in completed years (partial years excluded or pro-rated), and a minimum (e.g. 5 years) is required to qualify at all. Some systems also differ by reason of leaving (redundancy vs resignation). So the estimate here is a baseline; before relying on it compare your actual wage, years and the exact rule to avoid over- or under-estimating. Pair with the salary and service-period calculators.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.