XN000022-1996-05-17 — Page 6

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On wage protection, the Government proposes to require an employer to pay interest on wages owed to an employee if the wages are not paid within seven days of the due date.

The rate of interest adopted should be the same as that fixed by the Chief Justice under the District Court Ordinance now being followed by the Labour Tribunal and the Minor Employment Claims Adjudication Board.

To strengthen protection for employees against non-payment of wages, the Government also proposes to entitle an employee who has been owed wages for over one month to deem his employment contract to have been terminated by his employer without notice.

The employee will then be entitled to all termination payments arising from this scenario under the Employment Ordinance.

Coming to proposals on the definition of wages, Mr Chan explained that although the existing definition of wages was fairly all-embracing, the issue of whether or not certain payments (like commission and overtime pay) were wages had cropped up in the context of labour disputes from time to time.

The Government therefore proposes to amend the definition of wages as follows:

to include commission, attendance bonus, attendance allowance, travelling allowances and overtime pay, subject to some specified exclusions, such as payments or reimbursements which are of a non- contractual and gratuitous nature, or payable at the discretion of the employer; and

to include regular overtime pay in the calculation of wages for the purpose of calculating accrued employment benefits and, in the case of irregular overtime pay, to include the average overtime pay in the last 12 months, which amounts to 20 per cent or more of the employee's average wages.

"This will help prevent unscrupulous employers from reducing their liabilities for severance payment and long service payment by designating a substantial portion of wages as overtime pay, travelling allowance and attendance bonus," said Mr Chan.

He emphasised that the proposed amendments would not create a new liability on employers to pay commission, attendance bonus, attendance allowances, travelling allowance and overtime pay.