TNAG-0872-FCO40-1082-Legislation-for-employment-in-Hong-Kong-1979 — Page 64

RESTRICTED

- 4-

{

XCR(79)52

Other ramifications

9

When consulted on the proposals outlined in paragraph 5 above, the Registrar General raised two points:

(a) The proposed extension of the Employment

Ordinance to non-manual workers earning up to $5,000 per month will mean that a further group of employees will be entitled to the pre- ferential payments provided for in the Bankruptcy Ordinance (Chapter 6) and the Companies Ordinance (Chapter 32) in the event of liquidation (i.e. severance payments up to $8,000; and wages in lieu of notice up to $2,000 or one month's actual wages, whichever is the less). In any particular bankruptcy or liquidation case, there is a finite sum of money available for distribution, com- prising the proceeds of realisation of the assets. An increase in the number of employees eligible for preferential payments will mean, firstly, in a case where there is not enough available to meet all the preferential payments, a reduction in the amount available for the lower paid workers and, secondly, in all cases, reduction in the amount available for ordinary creditors who are only paid after all the preferential payments have been made.

(b) The question of whether or not the amount of the

preferential payments should be raised also arises. On previous occasions when the salary limits for non-manual workers in the Employment Ordinance were increased, it was considered desirable to alter the amounts of the preferential payments in the Bankruptcy Ordinance and the Companies Ordinance so that the severance payment represented 4 months' wages at the increased limit and the figure for wages in lieu of notice represented one month's wages at the increased limit. The Registrar General does not favour increases in the amounts of preferential payments in view of the considera- tions advanced in sub-paragraph (a) above.

The Commissioner for Labour has pointed out that with the present wage ceiling of $2,000 per month for non-manual workers, about 93% of wage earners in the private sector are already covered by the Employment Ordinance. If the wage ceiling is raised to $5,000 per month only another 5% of wage earners will be covered. Since

G.S. 84

RESTRICTED