CONFIDENTIAL
Two separate compensation schemes, funded by the Hong Kong Government, have been set up for those directed to retire from especially sensitive positions, and for those passed over promotion to make room for local staff. It is possible that the Hong Kong Government will introduce
will introduce a general right of early retirement, which would benefit HMOCS staff along with others. But the FCO judge it inconceivable that they would contribute to funding any compensation and safeguard scheme. That would be seen as spending Hong Kong money to provide favourable treatment for expatriates, and risk Chinese complaints of asset stripping.
Compensation
7.
The FCO initially envisaged a scheme designed both to compensate staff for loss of career prospects and removal of the Foreign Secretary's protection and, by limiting the amount of compensation payable at the time of transfer of sovereignty, to give an incentive to continue serving after 1997. But the HMOCS Association in Hong Kong argued successfully that it was unfair to put pressure on staff to continue serving an alien administration. Consequently it is now the intention that all staff committed to serve up to the transfer in mid-1997 should qualify for full compensation.
8.
The FCO propose that compensation payments should be calculated by reference to salary, age and length of service, using the same Government Actuary-calculated multipliers as have been used in previous cases. But the payments would be subject to a cap of £120,000 (at 1992 prices). The principle of a cap is not new, although the Governor considers the proposed level artificially low, since
low, since it would affect some 75 per cent of staff. The Treasury agree with the methodology and the cap. But they would cut the multipliers by half.
The Treasury base their case for half-factors on three arguments:
9.
a. The Joint Declaration with China enables staff to stay in their jobs after 1997 on the same terms and conditions (save that some 30 of the most senior posts will be reserved for local officers). Since their careers are not lost altogether, there is less to compensate for.
b.
Staff in Hong Kong, unlike those in other Dependent Territories have always been aware of the date on which the
CONFIDENTIAL
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