Hi,
You can renew her contract but it will be for another 2 years and you will need to pay severance, which is calculated exactly the same as long-term service.
[(Monthly wages x 2/3) x reckonable years of service Note]
Note Service of incomplete year should be calculated on a pro rata basis.
Taken from the FDH Guide
Q8.1 Under what circumstances should an employer pay severance payment to
a helper?
A An employer should pay severance payment to the helper if he/she:
- is dismissed or the fixed term contract is not being renewed* by reason of
redundancy; and
- has not less than 24 months of service with the same employer
immediately prior to the termination.
Q8.2 Under what circumstances should an employer pay long service payment
to a helper?
A An employer should pay long service payment to the helper if he/she has
worked continuously for not less than five years, and :
- is dismissed or the fixed term contract is not being renewed* by reason
other than serious misconduct or redundancy;
- is certified by a registered medical practitioner or registered Chinese
medicine practitioner as permanently unfit for the present job and he/she
resigns;
- is aged 65 or above and he/she resigns; or
- dies in service.
http://www.labour.gov.hk/eng/public/wcp/FDHguide.pdf