UPDATE: Hong Kong wage subsidy subject to employers undertaking not to implement redundancy during 6-month subsidy period

By Pattie Walsh, Jeannete Tam

04-2020

The Hong Kong Government has issued further clarifications on its relief measures today, 16 April 2020, contained in a report titled "HKSAR Government's package of measures to support individuals and businesses affected by COVID-19" (Report).

Of the many subsidies introduced, only two specific subsidies (as reported previously) have a requirement on employers to undertake not to implement redundancies. We now have further clarification on how long the undertaking not to implement redundancies must last.

Employment Support Scheme

Criteria:

  1. The Government will provide wage subsidies to eligible employers who undertake not to make workers redundant during the subsidy period (i.e. during the 6 months employers are receiving the wage subsidies); and
  2. Employers are to spend 100% of the subsidy on paying wages for their employees.

Eligibility: All employers who have been making MPF contributions or have set up ORSO schemes for employees are eligible, except those on the exclusion list (employees of the Government, statutory bodies and Government subvented organisations).

Amount: Wage subsidies for each employer calculated on 50% of salary at a “specified month” (capped at a salary of HK$18,000) for 6 months.

With regards to a "specified month", employers may choose any one month from January to March 2020 taking into account their own circumstances. If the number of employees and payrolls in January are higher than those in subsequent months, the wage subsidies to be disbursed by the Government will enable employers to rehire employees to meet their operational needs.

Timing: Payment to be disbursed in two tranches, with the first before end of June 2020.

Penalties for non-compliance: The Report does not mention penalties, however the Chief Secretary for Administration, Mr. Matthew Cheung Kin-chung mentioned at a media session on 11 April 2020 that the Government are considering imposing a penalty for any deviation from rules imposed by the Employment Support Scheme. Further, any outstanding sum of subsidy that has not been used will be clawed back.

Catering Sector One-off Subsidy

There appears to be a change to the criteria of this subsidy as provided under the Report.

Criteria:

  1. Catering outlets receiving the subsidy are required to undertake not to implement redundancy of staff during the subsidy period (i.e. during the 6 months employers are receiving the wage subsidies) (instead of the previously mentioned 3 months after obtaining the subsidy); and
  2. Not less than 80% of the subsidy for the respective months would be used for paying staff salaries.

Amount and timing: Subsidy ranging from HK$250,000 to HK$2.2 million (paid in two tranches during a 6-month period).

Eligibility: For licensed catering outlets selling or supplying food for consumption on their premises.

There is no mention in the Report that the employer will need to undertake not to apply for the subsidy under the Employment Support Scheme.

We will continue to update on this when we receive more information.