20 May 2020
Introduction
On 18 May 2020, the Government introduced the detailed implementation plan for the Employment Support Scheme (ESS), the application of which will start at 7:00 am on Monday, 25 May 2020 via the ESS Online Portal (www.ess.gov.hk). Further to the information in our previous publications (here), we set out below the latest updates.
1. Online application for the first tranche of ESS
Eligible employers and self-employed persons (SEPs) may submit online applications via the ESS Online Portal starting from 7:00 am, 25 May until 11:59 pm, 14 June. The ESS Online Portal has already been launched today, 19 May at 9:00 am.
For employers, wage subsidies will be disbursed within 3-4 weeks in most cases. Applications involving Occupational Retirement Schemes Ordinance (ORSO) Schemes may require a longer processing time. For SEPs, the one-off lump sum subsidy will be disbursed in 3-4 weeks after application.
2. Application method
When making online applications, MPF applicants shall authorise the ESS processing agent (agent) to receive MPF records from their MPF trustees. Upon the applicants' authorisation, MPF trustees will send the MPF record certificates to the agent direct to facilitate processing and calculation of subsidy amount. Applicants may request their MPF trustees to provide a copy of the certificates for reference.
The Government announced on 17 May that it appointed PricewaterhouseCoopers Advisory Services as the central processing agent for the implementation of the ESS.
3. Information/documents required for online applications
1. Employers with MPF schemes
Information required includes the following:
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Business Registration Number or other registration numbers;
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Name of the MPF Trustee;
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Name of the MPF Scheme (to include all MPF schemes participated from 1 December 2019 to 31 March 2020) and Scheme Registration/ Participation Number; and
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Bank account number of the employer.
Documentation required includes the following:
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Scanned copy of the bank statement.
2. Employers MPF-exempted ORSO Schemes
Information required includes the following:
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Business Registration Number or other registration numbers;
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Name of the MPF-exempted ORSO Scheme, MPF Exemption Number and ORSO Registration / Exemption Number;
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Bank account number of the employer; and
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Number of eligible employees in March 2020 and use the designated form to provide information on eligible employees, including the wage of each employee in the “specified month”.
Documentation required includes the following:
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Scanned copy of the exemption certificate issued by MPFA;
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Scanned copy of the bank statement; and
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The completed designated form.
3. SEPs
Information required includes the following:
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Name of the MPF Trustee;
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Name of the MPF Scheme (to include all MPF schemes) and Scheme Registration/ Participation Number; and
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Bank account number of the employer.
Documentation required includes the following:
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Scanned copy of the bank statement.
4. Calculation of monthly subsidy
1. Employers with MPF schemes
For "Regular employees" aged between 18 and 64,
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based on 50% of actual wages paid to each "regular employee" in the "specified month" (either December 2019, January, February, or March 2020 at the choice of the employers)
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wage cap at HK$18,000 per month (max. subsidy per employee at HK$9,000 per month)
For employees aged 65 or above,
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if employers have provided employees' basic salaries when making MPF voluntary contributions:
– wage subsidies will be calculated based on 50% of the basic salaries actually paid in the "specified month", wage cap at HK$18,000 per month per employee (max. subsidy HK$9,000 per month) -
if employers have not provided employees' basic salaries when making MPF voluntary contributions:
– wage subsidies will be calculated by multiplying the amount of employers' voluntary contributions in the "specified month" by 10 times, with a cap at HK$9,000 per month per employee
2. Employers with MPF-exempted ORSO Schemes
The amount of wage subsidies will be calculated based on 50% of the actual wages paid in the "specified month", with a wage cap at HK$18,000 per month (max. wage subsidy per employee at HK$9,000 per month).
5. Consequences of breaching the undertaking
1. Claw back
If an employer fails to use all the wage subsidies received for a particular month during the subsidy period (June to Aug) to pay the wages of employees in the same month, the Government will claw back the unspent balance of the subsidy.
Calculation:
Claw back for a particular month (June/July/August 2020) = Subsidies received – Total actual wages paid to employees
2. Penalty
If the number of employees on the payroll in any one month of the subsidy period is less than the number of staff (whether paid or unpaid) in March 2020, the employer will have to pay a penalty to the Government.
Calculation:
Penalty of making redundancies in June/July/August 2020 = Subsidies received x Headcount reduction percentage* x Penalty percentage**
*Headcount reduction percentage = (Total no. of paid and unpaid staff (as of March 2020) – Total no. of paid staff in June/July/August) / Total no. of paid and unpaid staff (as of March 2020) x 100%
**The penalty percentage varies from 10% to 80%, depending on the total no. of paid and unpaid staff (as of March 2020).
Examples of penalty calculations can be found in Slide 29 and 30 of the Government released PowerPoint (here).
6. Auditing and monitoring mechanisms
Should an employer be found to have abused or violated the conditions of ESS, the employees concerned or members of the public may report to relevant authorities.
They may approach the Labour Department for labour dispute issue.
Making of false statements/declarations or furnishing false documents is guilty of criminal offence and subject to prosecution.
7. Remarks by the Secretary for Labour & Welfare Dr Law Chi-kwong
Dr Law made the following remarks during a press conference to introduce the ESS's implementation details on 18 May 2020.
I can add one very minor point in terms of the procedure. Because there will be two tranches of the subsidy, the penalty or the claw back for administration can be applied to the second tranche subsidy.
Instead of getting the money back directly, we can deduct them in the second tranche. But for the second tranche, the claw back or penalties, we will definitely have to go back to the employers and ask them to give us back the money. It is slightly different in the first and the second tranche arrangement." (emphasis added)
Jeannette Tam, Bird & Bird
jeanette.tam@twobirds.com
Sources:
Government news:
• https://www.news.gov.hk/eng/2020/05/20200518/20200518_181706_214.html?type=category&name=covid19
