Hong Kong’s Legislative Council has passed the second reading of a bill that will see the Mandatory Provident Fund (MPF) offsetting mechanism cancelled. In a vote on 8 June, 72 lawmakers voted in favour of the proposal.
The bill now moves to a third reading to be held today (9 June) and is expected to be given the green light paving the way for the change to come into effect in a few years’ time.
Once the bill takes effect in 2025, employers will no longer be able to offset employees’ severance payments or long-service payments against the MPF derived from the employers’ mandatory and voluntary contributions.
Law Chi-kwong, Secretary for Labour and Welfare said that HK$ 33.2 billion had been earmarked as financial support for small and medium-sized businesses. As the bill will not take effect for several years, it will also allow plenty of time for the commerce sector to make the necessary preparations he added.
Several lawmakers notably abstained or were opposed to the vote as they were concerned that cancelling the offsetting mechanism would affect employment relations between workers and bosses. Others were concerned that the bill would lead to employers hiring more temporary or part-time workers which would cause labour market instability.
Paul Arkwright
Publisher
