************************************

Following is a speech by the Secretary for Education and Manpower, Mrs Fanny Law, in moving the second reading of the Employment (Amendment) Bill 2001 in the Legislative Council today (June 6):

Madam President,

I move that the Employment (Amendment) Bill 2001 be read the Second time. The principal amendments of the Bill aim to clarify that an employer's contribution to a relevant mandatory provident fund (MPF) scheme may be set off against any severance payment or long service payment due to the employee, irrespective of whether or not the employee has already withdrawn the accrued benefit in the MPF scheme.

Sections 31I and 31Y of the Employment Ordinance provide for the offsetting arrangements. However, the existing provisions are worded in such a way that offsetting can only occur if the MPF scheme benefit is still being held in an MPF scheme. Under normal circumstances, employees are not allowed to withdraw their accrued MPF benefits without leaving employment and hence are covered by the existing provisions. There are however exceptional cases. For example, if the employee has already withdrawn his entire accrued MPF scheme benefits upon reaching the age of 65, the retirement age prescribed under the Mandatory Provident Fund Schemes Ordinance, but continues employment with the same employer, then when the employee eventually leaves the employment, the employer would not be able to offset his contribution to the employee's MPF Scheme against the severance payment or long service payment due to the employee. Also, some MPF scheme rules do allow the flexibility for employees to withdraw the accrued benefits in respect of the employers' voluntary contribution before leaving employment.

This is not in line with the original policy intent. We therefore propose to amend the relevant provisions so as to reflect fully and clearly the original policy intent which is to allow offsetting of severance payment or long service payment against MPF scheme benefits attributable to employer's contribution in all circumstances.

Although there have not been any reported cases of double payments, to effectively preserve the original policy intent, we propose that the Bill should take effect from the date of gazettal. This is necessary to avoid the possibility, however remote, of any employee taking advantage of the unintended loophole in the Ordinance and withdraw his accrued MPF scheme benefits before the Bill is passed.

Madam President, the Bill contains amendments which are purely technical in nature. I commend the Bill to Honourable Members and urge that Members approve the Bill as soon as possible.

End/Wednesday, June 6, 2001

NNNN