and HKTI as currently proposed for 1 April 1991 does not require prior approval by Government. However, if in the longer term HK Telecom wishes to merge the entire workforces of both Telco and HKTI, including all management and administrative staff, we are advised that this would arguably require Government's prior consent. A separate submission to the Council would be made.
Labour Relations Implications
10
Labour
Department is in contact with both the management and trade unions of Telco and HKTI, and has offered its advisory services. The department's assessment is that the redundancy package offered by the Company, which is more generous than its legal and contractual obligations require, is likely to be acceptable to the bulk of the staff affected; however, given the large numbers involved, the possibility of disputes over retrenchment terms cannot be ruled out.
Telco's Scheme Of Control
11
On a separate issue, Telco's current Scheme of Control is due to expire on 31 March 1991.
We are currently negotiating with the Company on the form of a replacement scheme but these negotiations will not be completed prior to the expiry of the current agreement.
12
Telco has declined to roll over the existing agreement pending completion of the negotiations. Our aim is therefore to reach agreement on a new Scheme of Control before the next round of tariff increase. As Telco's tariffs were revised only recently (on 1 January 1991), we do not expect that another increase would be necessary in the next few months.
13
Notwithstanding the fact that the existing Scheme of Control agreement will lapse on 31 March 1991, Telco's maximum charges for telephone services will still be subject to the approval of the Legislative Council, as provided for under section 26 of the Telephone Ordinance. Furthermore, maximum charges for other telecommunications services provided by Telco under the terms of the Telecommunication (Hong Kong Telephone company) (Exemption from Licensing) Order, e.g. data and facsimile services, will continue to be subject to the approval of the Telecommunications Authority.
14
Hence, should Telco apply to increase its tariffs in the absence of an agreed replacement scheme of control its proposals would still have to be submitted to Government for approval. The temporary absence of an agreed scheme of control after 31 March 1991 should not therefore be a cause of concern.
CONFIDENTIAL