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WEDNESDAY, NOVEMBER 12, 1980
SEVERANCE PAY LAW CONSTANTLY REVIEWED
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THE LABOUR DEPARTMENT'S CHIEF LABOUR OFFICER IN CHARGE OF LABOUR RELATIONS, MR DONALD CHAN, SAID TODAY THAT THE SEVERANCE PAY LEGISLATION WHICH WAS ENACTED IN 1974 WAS BEING KEPT UNDER CONSTANT REVIEW IN THE SAME WAY AS OTHER PROVISIONS UNDER THE EMPLOYMENT ORDINANCE.
ADDRESSING A LUNCHEON MEETING OF THE LIONS CLUB OF THE PEAK HONG KONG, HE REFERRED TO CRITICISMS OF THE LAW ON SEVERANCE PAY AND TOOK THE OPPORTUNITY TO CLARIFY A FEW POINTS AND EXPLAIN THE INTENTION OF THIS PIECE OF LEGISLATION.
SEVERANCE PAYMENT, HE EMPHASISED, WAS MEANT TO BE COMPENSATION FOR LOSS OF EMPLOYMENT THROUGH NO FAULT OF THE EMPLOYEE'S OWN AND NOT IN ANY SENSE A REWARD FOR LONG SERVICE OR GOOD WORK. IT AROSE ONLY WHERE DISMISSAL WAS DUE TO REDUNDANCY.
AN EMPLOYEE WAS DEEMED TO HAVE BEEN DISMISSED BY REASON OF REDUNDANCY IF THE DISMISSAL WAS DUE TO ONE OF THE FOLLOWING CAUSES -- AN EMPLOYER'S BUSINESS WAS CLOSED- THERE WAS A REDUCTION IN DEMAND FOR HIS KIND OF WORK AND HIS PLACE OF EMPLOYMENT WAS MOVED FROM ONE SIDE OF THE HARBOUR TO THE OTHER.
IN DETERMINING THE RATES AND METHOD OF SEVERANCE PAY, MR CHAN CONTINUED, CAREFUL CONSIDERATION WAS GIVEN TO THE NEED TO PROVIDE ADEQUATE RELIEF TO REDUNDANT WORKERS ON THE ONE HAND, AND ON THE OTHER THE NEED TO SEE THAT THE NEW LIABILITY SHOULD NOT OVERSTRAIN THE SMALLER EMPLOYER.
WHILE THE NEED TO LEGISLATE SEVERANCE PAY WAS RECOGNISED. IT WAS ALSO REALISED THAT IF THE RATES OF PAYMENT WERE SET TOO HIGH, MANY SMALL EMPLOYERS WOULD BE INCAPABLE OF MEETING THE IR LEGAL OBLIGATIONS AND WOULD BE DRIVEN OUT OF BUSINESS. THIS IN TURN WOULD CREATE FURTHER REDUNDANCY AND DEFEAT THE PURPOSE OF THE LAW.
MR CHAN POINTED OUT THAT THE RATE OF HALF A MONTH'S PAY FOR EACH YEAR OF SERVICE WAS CONSIDERED TO BE THE BEST COMPROMISE.
HE SAID IN ORDER THAT EMPLOYERS WOULD NOT FACE TOO HEAVY AN INITIAL LIABILITY, IT WAS ALSO NECESSARY TO LIMIT THE PERIOD OF SERVICE ELIGIBLE FOR SEVERANCE PAY TO EIGHT YEARS BEFORE THE LAW CAME INTO FORCE.
+UP TO THIS DATE, I AM SATISFIED THAT THIS RATE OF PAYMENT IS IN LINE WITH INTERNATIONAL PRACTICE AND COMPARES FAIRLY FAVOURABLE WITH OUR NEIGHBOURING COUNTRIES, HE NOTED.
HE POINTED OUT THAT THE SEVERANCE PAY LAW MERELY PRESCRIBED THE MINIMUM ACCEPTABLE STANDARDS GIVEN THE SOCIAL-ECONOMIC REALITY OF HONG KONG. IT SHOULD NOT THEREFORE BE REGARDED AS THE AGREED OR EVEN THE MOST DESIRABLE FORMULA.
/+THE INTENTION