Grants that cover unpaid wages for insolvent employers could see higher payment caps from next Friday at the earliest after stagnating for 26 years, Labor Law and Welfare Secretary Chi-kwong said.
A resolution proposing to raise the cap on ex gratia payments to employees will be tabled in the Legislative Council next Wednesday, Law said.
Payments that may be drawn from the Wage Protection Fund in the event of insolvency include arrears, wages in lieu of notice, severance pay, and pay for unused vacation and statutory holidays.
The authorities are proposing that the ceiling for payment of arrears be increased to HK$80,000 from the current HK$36,000.
The cap on wages in lieu of notice was also increased from HK$22,500 to HK$45,000.
In addition, the cap on annual leave and unused public holidays will rise to HK$26,000 from the current HK$10,500 if the resolution passes, Law said.
Payment caps haven’t been adjusted in 26 years for good reason, Law said, citing the 1997 financial crisis and the 2003 SARS outbreak in particular as major factors.
During these periods, Law said, the number of applications to the fund skyrocketed, causing the fund’s finances to decline for seven years after 1997.
In addition, a 2013 court review of methods for calculating ex gratia severance also delayed an adjustment to the caps, Law said, noting that the court case went all the way to the court of final appeals. .
The judgment – which was delivered three years later – sparked a discussion around the cancellation of the mandatory provident fund compensation mechanism.
This has caused further delays in raising payment caps, Law said.
“As such, the Bureau of Labor and Welfare, the Department of Labor and the fund’s board immediately began [working on a revision of the caps] as the legal work to undo the compensation mechanism was coming to an end.”
However, Law said “adjustment of payment caps must be made after the mechanism is cancelled”, adding that he hopes the bill to cancel the mechanism will be passed at the Legco meeting on Wednesday to to pave the way for resolution. spend June 15.
There won’t be any more delays after that, Law said, because the new payment caps can go into effect as early as June 17.