TNAG-0966-FCO40-1185-Legislation-for-employment-in-Hong-Kong-1980 — Page 4

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XCR(80)305

These proposals were discussed, and unanimously agreed, at a meeting of the Labour Advisory Board on 5th August 1980. In addition, the employees' representatives suggested that the wage ceiling for non- manual employees should be reviewed annually and necessary action should be taken if there was a real need to revise the ceiling.

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The four main employers' associations were subsequently consulted on these proposals. While the Chinese Manufacturers' Association of Hong Kong reiterated their view in favour of the complete removal of the wage ceiling, the other three associations agreed to the proposed raising of the wage ceiling to $6,000 per month. All four associations, however, objected to setting the same wage ceiling for severance pay on the grounds that this would impose too heavy a liability on employers. As the objective of raising the wage ceiling for non-manual employees under the Employment Ordinance is to restore comparable protection to them at about the same level generally applicable in September 1968 when the wage ceiling was set at $1,500, the reasons put forward by the employers' associations to introduce a separate wage ceiling for the calculation of severance pay cannot be accepted.

Proposals

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Having regard to the situation outlined above, it is now proposed

(a) to raise the wage ceiling for non-manual employees from

$3,500 to $6,000 per month in sections 4(2)(a) and 31G(2) of the Employment Ordinance to keep it in line with the increase in the cost of living;

(b) not to introduce a separate maximum level of monthly

wages for calculation of severance payments;

(c) to review the wage ceiling for non-manual employees in

the Employment Ordinance every year and if there is a real need, to amend the ceiling by resolution of the Legislative Council published in the Gazette. Any such proposed resolution would be considered by the Executive Council before it was introduced into the Legislative Council.

The amendments at (a) and (c) (amendment of wage levels by Legislative Council) are contained in the Employment (Amendment) Bill 1981 as annexed and are explained in the Explanatory Memorandum to the Bill.

Economic Implications

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The economic implications of the proposals should be minimal because they merely restore protection to non-manual employees at a level equivalent to that which applied in 1968.

G.S. 84

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