TNAG-2790-FCO40-4029-Future-of-Hong-Kong-1993 — Page 5

CONFIDENTIAL

XCX(93)55

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To interpret the attachment as being applicable under Annex III of the Basic Law would mean that the number of holidays in Hong Kong would decrease dramatically after June 30 1997. This would not be well received by the general public, and would be seen as running contrary to the spirit of provisions in the Joint Declaration on the continuation of Hong Kong's existing lifestyle.

The Preferred Approach

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The preferred way forward should maintain as far as possible the existing lifestyle while incorporating the changes made necessary by the change of sovereignty. It is therefore proposed to exchange the birthday of Her Majesty The Queen and the Monday following the birthday of Her Majesty The Queen for 1 July and 1 October, and to exchange Easter Monday for 1 May.

Reducing the Gap between the Numbers of Statutory and General Holidays

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We believe that this is also the right time to examine the gap between the numbers of statutory and general holidays. As mentioned in paragraph 5 above, there are 11 statutory holidays provided under the Employment Ordinance and 17 general holidays under the Holidays Ordinance. The difference between the two types of holidays is that employers are required by law to provide the former type, and failure to do so could result in a fine upon conviction. From time to time there have been calls to combine the two, or at least to reduce the numerical difference between them. However, if the two sets of holidays were to be combined, it would mean either -

(a)

(b)

increasing the number of statutory holidays to 17 which would have cost implications for employers who would claim that it would increase labour costs and reduce Hong Kong's competitiveness; or

reducing the number of the general holidays to 11, which would meet with very strong objection from employees in establishments which observe general holidays.