Cash value of accrued untaken leave when you leave.
Leave encashment
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Accrued days
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Average daily wage
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Leave you earned but never took
When a job in Hong Kong ends, the law does not let earned annual leave simply vanish. Any leave you have accrued but not taken is converted to cash in your final settlement. The Employment Ordinance sets the rule: the payment equals the number of accrued leave days multiplied by your average daily wage. This tool does that single multiplication, so it is deliberately simple, but the value sits inside a larger termination payment that can also include outstanding salary, payment in lieu of notice and, for longer-serving staff, a long service or severance payment. Getting the leave figure right matters because employers and staff often disagree on both halves of the sum.
How the entitlement builds up
Paid annual leave under the Employment Ordinance starts at 7 days a year and rises with length of service, adding a day for each further year until it reaches a maximum of 14 days a year. Many employers offer more than the statutory floor by contract, and the encashment is based on whatever you have actually earned but not used at the point you leave. If you joined part way through a leave year, your accrued days are pro-rated for that incomplete period. The exact figures should be confirmed with the Labour Department, since the statutory schedule is the authority here, not the tax office.
Ten days at a $1,200 daily wage
Suppose you leave with 10 days of accrued annual leave untaken and your average daily wage is $1,200. The encashment is 10 multiplied by $1,200, which is $12,000. The calculator uses exactly this method, the rates this calculator applies, so the result is your gross leave pay before any tax.
| Accrued untaken leave | 10 days |
| Average daily wage | $1,200 |
| Leave encashment | $12,000 |
The chart shows the encashment building one day at a time, each bar adding another $1,200 until the tenth day reaches $12,000.
Getting the average daily wage right
The daily wage in the formula is not simply your last day's pay. The Employment Ordinance uses a 12-month average that includes wages and many allowances earned over the period immediately before you leave, and it requires you to exclude periods when you were not paid full wages, such as statutory leave or sick days, so they do not drag the average down. For someone with steady pay the average roughly equals monthly salary divided by the days in the month, but if your income swings with commission or overtime, work out the true 12-month average rather than guessing. An understated daily wage is the most common way leave pay comes out too low.
How the tax office treats this money
Leave pay you receive on leaving a job is generally taxable as part of your salaries income, because it is pay for work you performed. This is different from a genuine statutory severance payment or long service payment, which is typically not chargeable to salaries tax. So when you plan your final settlement, treat the leave encashment as taxable and the statutory termination payment as usually tax-free, and confirm any borderline item with the Inland Revenue Department. Hong Kong has no separate tax on the money once you save or invest it, since there is no capital gains tax and no tax on bank interest, so only the receipt itself is in scope.
One practical caution: if you are dismissed and your employer refuses to pay what you are owed, the leave encashment becomes part of a claim you can take to the Labour Tribunal, and unresolved wage and termination claims may be supported by the Protection of Wages on Insolvency Fund where an employer becomes insolvent. Keep your own record of accrued leave throughout your employment so you can prove the figure if it is ever disputed.
Can my employer make me take leave instead of paying it out?
During employment an employer can require you to take annual leave with proper notice, which reduces the balance left to encash. But once employment ends, any leave still outstanding must be paid in cash. They cannot force you to forfeit earned leave on departure.
Do I get leave pay if I am dismissed for misconduct?
Earned annual leave is generally still payable even where notice entitlements are not, but summary dismissal for serious misconduct can affect parts of a final settlement. The leave you have already accrued is your earned entitlement, so seek advice from the Labour Department if an employer tries to withhold it.
Does unused sick leave get paid out too?
No. Statutory sickness days are a benefit you draw on only when you are actually ill, not an entitlement that accrues into a cash balance. Unlike annual leave, untaken sick leave is not encashed when you leave a job.