14 May 2020
Introduction
On 8 April 2020, the Government announced a HK$137 billion package of anti-epidemic measures to be rolled out, including the Employment Support Scheme (ESS) with a proposed budget of HK$81 billion. The ESS aims to provide financial subsidies to employers in two tranches against their undertaking to spend all the wage subsidies on paying wages to their employees and keep them in employment during the COVID-19 epidemic. Eligible employers will receive subsidies calculated at 50% of the wages paid to employees at a specified month[1], with a cap of HK$18,000 per month (i.e. maximum subsidy is HK$9,000 per month per employee), for six months.
On 12 May 2020, the Government further announced implementation details of the ESS, in which the application period for the first tranche of subsidies will commence from 25 May 2020. We set out below the more salient points which employers should note when considering to apply for subsidies under the ESS:
Eligibility
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(1) |
All employers, with the exception stated below, who have been making Mandatory Provident Fund (MPF) contributions for employees (including Master Trust Schemes and Industry Schemes, together the Schemes) or who have set up MPF-exempted Occupational Retirement Schemes Ordinance (ORSO) schemes, regardless of industries, may apply for the ESS. |
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(2) |
The relevant MPF accounts or ORSO schemes must have been set up on or before 31 March 2020 and cannot be backdated. |
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(3) |
Employers such as the Hong Kong Government, specified statutory bodies, specified public organisations, government-owned companies and subvented organisations are not eligible for the ESS. |
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(4) |
A licence holder who has applied for the Catering Business (Social Distancing) Subsidy Scheme in respect of the licensed premises covered by the relevant business registration certificate is not eligible. |
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(5) |
So long as an employer maintains an “employer account” in the MPF system, a business would be regarded as an employer and it matters not whether the business is a parent company or subsidiary. |
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(6) |
Subject to some exceptions[2], a one-off lump sum subsidy of HK$7,500 will be granted to self-employed persons (SEPs) who have set up an MPF account on or before 31 March 2020 and which has not been terminated as of 31 March 2020. If the SEP has more than one MPF accounts, he/she may only apply once for a one-off lump-sum subsidy of $7,500. |
Wage subsidies
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(1) |
The first tranche of payment will cover three months, i.e., June to August 2020, while the second tranche will cover September to November 2020. |
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(2) |
Generally, employers participating in MPF schemes can apply for wage subsidies in respect of their (i) “regular employees”[3] under the Schemes; and (ii) employees aged 65 or above under the Schemes. |
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(3) |
Employers cannot apply for wage subsidies in respect of employees whose salaries are subsidised by the Government[4], nor can they apply in respect of “casual employees” under the Schemes[5] |
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(4) |
To be eligible, the relevant MPF accounts must have been set up on or before 31 March 2020. |
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(5) |
The employer’s MPF contribution data for December 2019 to March 2020 taken on 7 May 2020 will be used for calculating wage subsidies. Mandatory contributions that have not been settled on or before this date will not be taken into account. |
Undertaking required and monitoring mechanisms
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(1) |
When making online applications, employers are required to provide an undertaking (i) to spend all wage subsidies on paying wages to their employees; and (ii) not to implement redundancies during the subsidy period. |
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(2) |
The Government will announce a list of employers who have received the subsidies, the total number of employees benefited and the amount of subsidies received. |
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(3) |
As regards the first tranche of subsidy, the MPF contribution data from June to August 2020 will be used to check whether the subsidies are paid to the employees. |
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(4) |
In the event of abuse or violations, that is, if the number of employees on the payroll (excluding employees on no-pay leave) in any one month of the subsidy period is less than the total number of employees as at 31 March 2020 (including employees on no-pay leave), the employer will have to pay a penalty to the Government. The employer may also be held liable for making false statement. |
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(5) |
No personal data of the employees will be obtained. Hence the identities of employees need not be the same throughout the period. |
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(6) |
If the employer fails to spend all the wage subsidies received for a particular month during the subsidy period on paying wages in the same month, the Government will claw back the unspent balance of the subsidy. |
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(7) |
In calculating the penalty, two factors will be taken into account: (i) seriousness of breach; and (ii) number of employees involved. In response to the concern that time is needed to employ new staff and set up MPF accounts, these would be considered in assessing the penalty amount. The detailed formula for calculation of penalty will be announced next week. |
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(8) |
If employers wish to receive subsidies for the second tranche (i.e., September to November 2020), they have to maintain the headcount after August 2020. |
Administration
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(1) |
Applications shall be made online and employers are required to authorise (i) the ESS processing agent (appointed by the Government) to receive the certificates on the relevant MPF records issued by the MPF trustees; and (ii) MPF trustees to provide the ESS processing agent with MPF record certificates to verify the information related to their MPF contributions. Employers do not have to provide employee/wages related information or proof on their own. |
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(2) |
If the employer has only one single MPF account, the processing time is expected to be shorter. If the employer applies for subsidies for employees who joined the ORSO scheme, the processing time will be longer as additional time is needed to verify the application. |
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(3) |
No administrative fee will be charged. |
As stated above, the first tranche of subsidy will be open for application from 25 May to 14 June 2020. It is expected that most employers will receive the subsidies in three to four weeks after making their applications. The Government will announce more details of the ESS next week, and we shall provide updates accordingly. Meanwhile, employers are advised to pay attention to the details of the ESS and comply with the requirements when making an application for subsidies in order to enjoy the benefit.
For further information, please contact:
Cynthia Chung, Partner, Deacons
[1] Employers may choose any month between December 2019 and March 2020 to be the specified month.
[2] Freelancers who have applied for subsidy under the “School Bus Service Providers Subsidy Scheme” of the Education Bureau or the “Tour Service Coach Drivers (Mainly Serving Tourists) Support Scheme” of Tourism Commission are not eligible for ESS
[3] Employees who are aged 18- 64 and have been employed for a continuous period of 60 days or more.
[4] That is to say, staff in government-funded organisations whose salaries are fully funded by the Government; and dedicated staff engaged by outsourced government services contractors/consultants to provide services.
[5] An employee who is at least 18 but under 65 years of age, and is employed in the construction industry or the catering industry on a day-to-day basis or for a fixed period of less than 60 days.
