Hong Kong’s Employment Support Scheme: further updates and expansions
13 May 2020
On 12 May 2020, the Chief Executive announced further details on the newly implemented Employment Support Scheme as well as further expansions.
This announcement was followed by a technical briefing provided by the Secretary for Labour and Welfare along with the Head of Policy Innovation and Co-ordination office, which aimed to shed light on the much-awaited Employment Support Scheme.
The scheme which originally cost HKD80 billion, but due to further expansions might now be worth more, is focused on helping employers retain their employees by subsidising wages. These expansions include extending the coverage of the subsidy to employees aged 65 or above, along with two MPF Industry Schemes (the construction and catering industry). Applications for the scheme are set to be released on 25 May, with payments expected to be received by employers within 3 to 4 weeks from the date of application. The application period will last 3 weeks, until the 14 of June, and will be applicable to the first tranche of the scheme which will cover wages from June to August. The application will be based on an employer’s MPF account or any other pension scheme account that they hold for their employees, and will be used as the foundation for the calculation of the subsidy they receive. However, it has been advised that if employers have multiple MPF accounts or are only enrolled in ORSO schemes, it may take longer for them to receive the subsidy (possibly 4-5 weeks from the date of application).
The application will require employers to choose any one month from December 2019 to March 2020 as the “specified month”. The subsidies will be calculated based on the number of employees and their respective wages in that “specified month”. The government has on 7 May 2020 taken a snapshot of individual employer’s MPF contribution data for December 2019 to March 2020, which will be used for calculating wage subsidies. This means that no changes to the relevant MPF contribution data after 7 May will be allowed for the purpose of ESS. To further clarify eligibility, the government has stated that MPF accounts of the relevant employers and employees applying for the wage subsidy should have been set up on or before 31 March 2020. Any employers with MPF accounts that have been set up after this date will not be eligible for the first tranche of the subsidy.
To streamline the administrative procedures, the Government has appointed ESS processing agents to receive certificates of relevant MPF records issued by MPF trustees on behalf of the employers. The MPF trustees will provide the ESS agents with all the information necessary such as the number of employees the companies have within their scheme and their wages. When submitting the ESS application, employers will be giving these parties the authorisation to do so.
Employers will also be required to provide an undertaking not to make redundancies during the subsidy period. The Government have specified that the employer’s headcount during the subsidy period i.e. June, July and August, may not be less than it was in March 2020. If the headcount is reduced, the Government may ‘claw-back’ the relevant amount of subsidy for the former employee. More details are to be released by the Government on the implementation of these penalties next week.
The ESS also does not forbid employers from reducing employees’ wages during the subsidy period but expects 100% of the subsidy given to them to go to the employee. The Government have asked employers to refrain from reducing wages if possible, but are aware that this may be difficult given the current situation.
More details on the scheme are set to be released next week. There is currently a dedicated hotline for ESS enquiries which you may contact within Hong Kong at 183 6122, alternatively you may contact them by email on email@example.com.
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