The Legislative Council Finance Committee approved the funding of HKD 80 billion for the Employment Support Scheme (ESS) on 8th April 2020. The package includes measures to encourage employers to retain staff through the provision of a wage subsidy (The Employment Support Subsidy) which is expected to benefit 1.5 million employees.
The Government is liaising with Mandatory Provident Fund (MPF) trustees and relevant stakeholders to work out the implementation details which will be announced before application for the first tranche is invited.
The Government will provide wage subsidies to eligible employers who undertake not to make workers redundant during the subsidy period, and to spend 100% of the subsidy on paying wages for their employees.
Who is eligible?
All employers who have been making Mandatory Provident Fund (MPF) contribution or have set up Occupation Retirement Schemes (ORSO) for employees are eligible. It’s not currently clear whether this will be assessed on an individual employee basis or whether it will be sufficient that the employer operates an MPF scheme as a whole.
The subsidy can only be claimed for employees who receive a salary (i.e. for those on unpaid leave are excluded).
How much can the employers claim?
Wage subsidies for each employer are calculated on 50% of the salary on a “specified month”. This is capped at HKD 18,000 per month for a maximum period of six months. Employers may choose any one of the months from January to March 2020 taking into account their own circumstances. If the numbers of employees and payrolls in January are higher than the subsequent months, the wage subsidies to be disbursed by the Government will enable employers to rehire employees to meet their operational needs. Our interpretation is that only one month can be selected for the purpose of the application and not separate months for separate employees.
The Government will grant a one-off lump sum subsidy of 7,500 HKD to about 215,000 self-employee’s persons who have made MPF contributions in the past 15 months.
When will the subsidy be paid?
The subsidy will be disbursed to employers in two tranches, with the first disbursement to occur no later than June 2020. The first disbursement will cover wages for the months of June, July and August 2020, the second will be issued in September to cover wages for September, October and November 2020.
Can the employers still go ahead with planned cost-cutting measures?
The ESS is conditional upon the employer undertaking that they will not implement any redundancy. It is confirmed that this undertaking applies during the subsidy period of 6 months.
Other job creation and measures
The HKSAR Government has announced a series of measures that are expected to create jobs, develop skills, and relieve the financial burden on SMEs and Hong Kong residents.
- Invest HKD 6 billion to create around 300,000 jobs in the public and private sectors for people of different skill sets and academic qualifications, benefitting professionals and technicians, fresh
graduates, middle level and grassroots workers.
- The Government will recruit about 10,000 civil servants and create about 5,000 short terms intern positions for young people in the coming year.
- Increasing rental and fee concessions for government premises;
- Temporary 20% fare reduction for MTR travel for six months from 1 July 2020 to 1 January 2021;
- Extending the deadline for payment of tax for the 2018/2019 year of assessment by three months.
The Employment Support Scheme should be a relief for many employers who have struggled over the past months and for this reason It is now important for employers in Hong Kong to review the terms of the Scheme to determine whether they are eligible to claim relief.
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Manager Italian Desk