Frontline: APAC Employment Law Update May 2018

In this issue of Bird & Bird's Frontline APAC, we will look back at the significant changes that came into effect in the last quarter across Australia, Hong Kong, the People's Republic of China (PRC) and Singapore.

Our Case Update examines an Australian decision in which the Fair Work Commission took a tough stance on legal representation.

We will also look at recent legal updates which include: 

  • Workplace Gender Equality reporting in Australia; 
  • Updates on the Employment (Amendment) (No.2) Ordinance 2018 regarding the Labour Tribunal's rights to order reinstatement and re-engagement in Hong Kong; 
  • Updates on the new government agencies established amid the State Council overhaul in the PRC; and 
  • Major employment law changes announced in Singapore.

Case Updates

Fair Work Commission takes a tough stance on legal representation

The Fair Work Commission (FWC), Australia's employment and industrial relations tribunal has, in two recent decisions, rejected Qantas' right to be represented by external legal representatives in proceedings involving the airline. 

The Fair Work Act 2009 (the "Act") and the FWC's ethos are based on efficiency and fairness and it is those factors which most heavily influenced the Commission's decisions in these cases.


Legal Updates - Australia

By Kristy Peacock-Smith and Leila Moddel

Workplace Gender Equality Reporting

A reminder for organisations with Workplace Gender Equality reporting obligations i.e. non public sector with 100 or more employees, that the deadline for reporting is 31 May 2018.  The Workplace Gender Equality Agency (WGEA) released statistics for the previous reporting year in February 2018. The key gender pay gap statistics are:

  • Australia's full time gender pay gap is 15.3%;
  • the average full time weekly earnings for a woman are $1,409.00 compared with $1,662.70 for men;
  • the state with the highest pay gap disparity is Western Australia with 22.5%;
  • the state with the lowest pay gap disparity is South Australia with 10.3%; and
  • the industry with the highest disparity is the financial and insurance services industry.


New licensing regime for labour-hire service providers

On 16 April 2018, the Labour Hire Licensing Act 2017 (Qld) (the "Act") came into effect as the first of its kind in Australia. The Act aims to protect those working under labour hire agreements from exploitation and to restore confidence in the labour hire industry.

This issue is not unique to Queensland, with similar Bills being tabled in Victoria and South Australia.

The Act is a response to industry concerns over 'sham-contracting', whereby employees are not treated as such and are instead contracted via a third party as a means of employers avoiding their obligations to pay various employee entitlements.


Legal Updates - Hong Kong

By Pattie Walsh, Stephanie Wong and Sarah Blennerhassett

Employment (Amendment) (No.2) Ordinance 2018

On 17 May 2018, the Legislative Council passed the Employment (Amendment) (No.2) Ordinance 2018 (the "Amendment Ordinance"). The Amendment Ordinance was gazetted on 25 May 2018.

The Amendment Ordinance empowers the Labour Tribunal to make an order for reinstatement or re-engagement, if such remedy is requested by employees following unlawful or unreasonable dismissal, without the need to obtain the employer's agreement if the Labour Tribunal takes the view that making such order is appropriate and practicable.

If an employer fails to reinstate or re-engage the employee as required by the Labour Tribunal's order, the employer will need to pay a further sum to the employee, which is three times the employee's average monthly wages, subject to a cap of HK$72,500. This amount is in addition to the statutory termination payments and compensation payable to the employee. If an employer wilfully and without reasonable excuse fails to pay this further sum, this will constitute a criminal offence.

The Amendment Ordinance will come into force on a day to be appointed by the Secretary for Labour and Welfare and notice of its commencement will be published in the Gazette.

Updates regarding the proposed abolition of Mandatory Provident Fund offset mechanism

According to recent press reports, controversial plans to abolish the Mandatory Provident Fund (MPF) offset mechanism are moving forward. At present the mechanism allows employers to offset their contributions made to the MPF against statutory severance and long-service payments on termination and therefore greatly reduces the costs of termination for employers and reduces the pay out to the employee. In a signal that the Government plans to move forward with the proposal, in March this year, the Hong Kong Welfare Chief stated that the Government was finalising its preliminary proposal regarding abolition of the mechanism.

It is estimated that the cost to abolish the offset mechanism could be in excess of HK$15 billion. The high cost, (which is anticipated to increase the longer the process takes), is a result of the Government's plan to subsidise companies paying the long service and severance payments over a 10 year period. The Hong Kong Financial Secretary stated that the Government would "consult major stakeholders in coming up with a proposal acceptable to those involved as soon as possible."

Legal Updates - PRC

By Ying Wang and Lorraine Sun

New agencies are established amid the State Council overhaul

In March, the National People's Congress (NPC) approved the State Council Institutional Reform Plan of 2018. As part of the overhaul, three new departments, the Ministry of Veteran Affairs, the State Medical Security Administration and the State Immigration Administration, were established; these departments are of particular relevance to employment in China.

Read more > >

Shanghai unveils its minimum wage and social average salary

From 1 April 2018, the statutory minimum wage of Shanghai has increased by 5.2% to RMB 2,420 per month. The hourly rate has been increased from 20 yuan to 21 yuan per hour.

In addition, the average monthly salary (used for the purposes of calculating social insurance and severance payments) has been adjusted. The figure now is RMB 7,172, and accordingly, the minimum monthly contribution to social insurance is RMB 4,279 (comprising RMB 449.4 for the employee and RMB 1,347.9 for the employer), and the maximum monthly contribution is RMB 21,396 (RMB 2,246.7 for the employee and RMB 6,739.8 for the employer). The Employee and the Employer contribute 10.5% and 31.5%, respectively, to the social insurance.

New measures are issued to lower enterprise costs by RMB 300 billion

On 4 April 2018, the State Council executive meeting decided on measures to further lower enterprise costs, among which, the following are employment related:

  • The interim policy of reducing enterprises’ payment rates for employees’ pension insurance, unemployment insurance and employment injury insurance will be extended to 30 April 2019, and similar policies on public housing accumulation funds will be extended to 30 April 2020. Starting 1 May 2018, eligible regions might lower work-related injury insurance premium rates by another 20% or 50%. The disabled employment security fund payable by employers will also be reduced, from a maximum of 300% of the average local social salary to 200%.
  • Construction fund contributions for major water conservancy projects that some companies are required to pay will be cut by 25% starting 1 July 2018; internet data roaming charges will be cancelled starting 1 July 2018; the cost of mobile internet services and household broadband will be cut by 30%, and internet services for small and medium-sized enterprises will be reduced by 10 to 15%; electricity costs for general industries and businesses will be lowered by 10%; the nominal fee for the initial application for identity cards has been cancelled starting 1 April 2018; and patent registration fees will be cancelled starting 1 August 2018.

These measures are expected to collectively lower enterprise costs by RMB 300 billion (USD 47.6 billion) annually.

Legal Updates - Singapore

By Seow Hui Goh, Susan de Silva, Rachel Lim and Shu Yi Chye

Major employment law changes announced

Significant changes to the Employment Act (EA) were announced in Parliament in March 2018. Details of the amendments are likely to be made public later this year, and these amendments are expected to become law by 1 April 2019 (the "Effective Date").

The key major changes are:

  1. Senior managers and executives will be covered under the EA.
  2. Statutory protection against unfair dismissal will be expanded.
  3. Part IV of the EA on working time protections will cover more employees

More details on these upcoming changes are set out below.


New Tripartite Standards released

Three new tripartite standards have been released recently, covering (i) unpaid leave for employees' unexpected care needs; (ii) contracting with self-employed persons; and (iii) age-friendly workplace practices.



Upcoming Events

Hong Kong 

7 June 2018

Employment Essentials Part 6 – Exiting Poor Performers

8:00am – 9:30am


13 June 2018 

Employment Essentials Part 4 – Wage Remuneration Issues

12:30am – 2:00pm

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