Application procedure
- Employers will be able to apply through a centralised government portal from 25 May until 14 June.
- On the portal, employers will be able to select the month from which subsidies will be calculated. They will also need to undertake that they will not make any redundancies during the subsidy period. Finally, they will need to authorise a government-appointed agent to obtain records from the Mandatory Provident Fund (MPF) trustee(s) on their behalf.
- The current procedures will only apply for the first three months in the subsidy period (June, July and August). The Government will monitor the situation and behaviour of all parties and revise the procedures if needed.
- Subsidies are targeted for distribution by around late June and should take three-four weeks in most cases. The precise amount of time required depends on the number of MPF, and MPF-exempted occupational retirement (ORSO) accounts an employer has. Employers that only have one MPF/ORSO account will usually be able to receive the subsidies within the shortest period of time.
- A dedicated website and hotline to handle Scheme related queries will be set up (the hotline number is: 1836122), with the website expected to go live next week.
Eligibility and calculation of subsidy
- Subsidies will be calculated based on the month that employers choose from a wages perspective. This can be either December 2019, January 2020, February 2020 or March 2020. After listening to the views of some of the sectors hard hit by the epidemic, the month for selection has been extended to include December 2019 as this may allow employers to obtain higher subsidies.
- Headcount will be determined based on March MPF records. A snapshot of MPF records has been taken as at 7 May. These records will be treated as determinative, and no subsequent updates (e.g. by employers who were late in making MPF/ORSO contributions) will be considered.
- Generally speaking, employers can apply for wage subsidies in respect of employees in the following categories:
- "regular employees" (i.e. an employee who is at least 18 but under 65 years of age and has been employed for a continuous period of 60 days or more) under the Master Trust Schemes and Industry Schemes, for whom MPF mandatory contributions have been made by their employers; and
- employees aged 65 or above under the Master Trust Schemes and Industry Schemes.
- Employers cannot apply for wage subsidies in respect of "casual employees" under the Master Trust Schemes and Industry Schemes. A "casual employee" is an employee who is at least 18 but under 65 years of age, and is employed in the construction industry or the catering industry on a day-to-day basis or for a fixed period of less than 60 days. This is because casual workers are highly mobile and rarely have fixed positions in the same company. Providing wage subsidies to these employers would not achieve the objective of the Scheme.
- Employers who have set up ORSO schemes can apply for wage subsidies in respect of employees who are members of their ORSO schemes on or before 31 March 2020.
- If an employer has made MPF contributions for both "regular employees" aged 18-64 and employees aged 65 or above, it must choose the same month for calculating subsidies from a wages perspective in respect of all employees.
- There is no upper limit on the total amount of subsidies that each employer can receive (subject to the maximum subsidy of HKD9,000 per employee per month).
Maintenance of headcount
- For the purposes of the undertaking not to make redundancies, the employer's headcount in March 2020 will be used as the starting point.
- The number of employees receiving wages in June, July and August must not be lower than the headcount in March. The March headcount will also include employees that were not receiving wages (e.g. those that were on unpaid leave).
- The Secretary confirmed (in response to questions) that:
- If an employee resigns during the subsidy period, the employer would be expected to rehire (although this does not need to be the same individual). The overriding principle is that the number of employees during the subsidy period (with pay) must not be less than in March 2020 (with or without pay).
- If an employee is rehired within the subsidy period but does not appear on the MPF records because they are still within the first 60 days of employment (and are therefore exempt from enrolment), then there would be a shortage in headcount of 1. In such circumstances, although not confirmed, we believe there would be a proportionate clawback of subsidies awarded. Therefore the prudent approach would be to set aside the wage subsidy received for the departing individual.
- Only those employees actually receiving wages will be counted for the purposes of measuring headcount. This means that employees on unpaid leave in June, for example, will not count towards meeting the March headcount; only employees that are paid wages will count. What is not yet clear is whether employees can be on unpaid leave for these purposes provided that the full subsidy is passed to them (so that they are then receiving at least some level of pay).
- The FAQs clarify that the Scheme does not forbid employers from reducing employees' wages during the subsidy period, but the Government expects that employers would refrain from doing so as far as possible. However, given that the business situation varies among employers, and some enterprises have been hard hit by the epidemic, the Government considers it necessary to allow flexibility to cater for their business operations. The Government hopes that employers will refrain from reducing wages as far as possible, and will maintain their business operations on the one hand, while retaining jobs for employees on the other.
Penalties
- A formula will be used to determine penalties for employers. The exact details are still being finalised and will be provided early next week, but factors are likely to include, e.g. the number of employees involved, the percentage difference between the March headcount and the headcount during the subsidy period.
- The Chief Executive also said the Government would claw back the unspent balance of the wage subsidy and/or impose another form of penalty/surcharge. This appears to confirm our previous understanding that only part of the subsidy will be subject to claw back, not the subsidy in its entirety.
- All subsidies must go towards paying employee wages and cannot be used for other purposes, including non-cash benefits for employees or donation. If they are not, they may be subject to clawback.
Please contact Helen Colquhoun or David Smail if you have any questions.
Watch HR Magazine's Livestream of Helen Colquhoun answering your questions about the ESS here.
Paul Arkwright
Publisher
