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A spokesman for the Education and Manpower Branch said the amendment was introduced because there were cases where the employees had failed to apply to the Fund within the four-month application period due to ignorance or misplaced trust in their employers.
"During 1992 to 1995, the average number of such cases known to the Labour Department was 120 a year.
"Besides, in 500 cases or eight per cent of the applications handled every year, the applicants could only recover arrears of their wages in part because they had failed to apply to the Fund in the first instance," the spokesman said.
He said the proposed extension would benefit employees while at the same time still discourage delayed applications by some employees.
The Bill also provides that the coverage period for arrears of wages of four months should count from the last day of service rendered instead of from the date of application.
"These proposals give an employee longer time to make application to the Fund. They also ensure that an employee's four months' wages (subject to the maximum payment for arrears of wages of $36,000) will be fully covered provided that he applies to the Fund within six months of his last day of service.
"We estimate that the annual additional payment arising from the proposals will be about $6.8 million," the spokesman said.
Under PWIO, the Protection of Wages on Insolvency Fund Board which manages the Fund may recover payment to an employee out of the assets of the insolvent employer by way of subrogation.
According to the Bankruptcy Ordinance and the Companies Ordinance, payments from the Fund have priority over all other debts in case of bankruptcy or winding up of a company.
"To retain the preferential status of ex-gratia payments made by the Fund, we propose to make consequential amendments to the Bankruptcy Ordinance and the Companies Ordinance," the spokesman said.
The Bill will be introduced into the Legislative Council on November 6.
End