TNAG-1520-FCO40-2081-Employment-in-Hong-Kong-1986 — Page 48

CONFIDENTIAL

16

54.

Severance pay and protection of wages on insolvency. The Employment Ordinance requires a severance payment to be made to an employee who is laid off or otherwise made redundant. In 1974, when severance pay was introduced, the rate was set at 1/3 month's wages for each year of service. The rate

rate has subsequenlty been raised twice, firstly to 1/2 month's wages and recently, in June 1984, to 2/3 month's wages.

55.

Given that employees laid off are normally able to find new employment relatively quickly and that public assistance is available to

to an unemployed worker (subject to a means test and provided that he is registered with his local Employment Office

Office and actively seeking work), the present rate of severance pay is considered adequate.

56.

There have, however, been a number of cases in which severance pay owed has not been paid in full because of insufficiency of assets on conclusion of winding-up or bankruptcy proceedings. This has led to calls for extension of the scope of the Protection of Wages on Insolvency Fund to cover severance payments. At present, the Fund's coverage is limited to wages owed, up to

up to the preferential limit of $8,000

$8,000 specified in the Companies and Bankruptcy Ordinances, but extension of coverage to wages in lieu of notice (up to the preferential limit of $2,000) in the first instance and to severance pay (up to the preferential limit of $8,000) at a later date is being

considered.

57.

and

an

Employees' Compensation. Employment-related injuries and diseases, including pneumoconiosis, are compensated under the Employees' Compensation Ordinance the Pneumoconiosis (Compensation) Ordinance. Compensation is also payable to dependants when employee dies in consequence of a work-related injury or illness. Employees on sick leave and female employees on maternity leave continue to be paid at two-thirds of their normal wages during the period of absence, up to a maximum of 120 days in the case of sick leave and during the period of maternity leave (from four weeks before the expected date of confinement to six weeks after the actual date of confinement.)

58.

retirement

Private Sector provident schemes. In considering benefits available

available to employees, account

account should be taken of various company-run schemes. Many employers do now offer their employees the opportunity to save towards their

through provident funds and superannuation and retirement schemes. At the end of 1985 3,994 schemes

schemes had been approved by the Commissioner of Inland Revenue and thus qualified for tax relief. (An unknown but possibly substantial number of other schemes had not So far sought approval.) It is estimated that approved schemes

cover at least 200,000 employees in the private sector. In addition, a further 200,000 civil servants and employees of subvented organisations are covered by pension or provident fund arrangements.

CONFIDENTIAL