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Following is a written reply by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, to a question by the Hon Wong Kwok-hing on wage defaults in the Legislative Council today (June 4):
Question:
Relevant groups and individuals have expressed concern about employers defaulting on wages in recent years. In the Chief Executive's Question and Answer Session on May 15 this year, the Chief Executive undertook to expeditiously address the problem of employers not complying with the awards made by Labour Tribunal ("LT") in which they were required to pay the outstanding amount of money owed to the employees concerned. In this connection, will the Government inform this Council:
(a) given that this Council's Panel on Manpower passed a motion in December last year urging the Government to amend section 64B of the Employment Ordinance on the criminal liability of the responsible persons of a body corporate with regard to wage offences, whether the authorities will make the relevant amendments expeditiously; if they will, when they will put forward the amendment proposal;
(b) besides the seven options proposed at the meeting of the Panel on Manpower in April this year, whether the authorities have considered taking other practicable and feasible options to combat the problem of employers defaulting LT awards; if they have, of the details; and
(c) besides the above options, whether the authorities have other options to ensure that employees, upon obtaining LT's judgement in their favour and irrespective of whether or not their employers have defaulted LT awards, can receive LT awards as soon as possible, if so, of the details, and when such options can be implemented at the earliest?
Reply:
Madam President,
(a) The Labour Department (LD) has conducted a review of section 64B of the Employment Ordinance (EO) and examined the feasibility of various scenarios to amend the provisions, if necessary. The advice of the Department of Justice has also been sought.
The legal advice is that the addition of the two elements as proposed by some labour groups, i.e., "act without reasonable excuse", or "failure to act without reasonable excuse", would not in any way lessen the burden of proof on the prosecution for invoking section 64B offences to prosecute the responsible persons of a body corporate. The elements of offences in the existing provisions namely "consent", "connivance" or "neglect" of responsible persons already cover all scenarios under which wage offences committed by a body corporate should be attributable to the unreasonable acts of its responsible persons. In other words, it would be redundant to add the two additional elements. This is because "consent" and "connivance" should have adequately dealt with the scenarios where the responsible persons' acts were "without reasonable excuse", whereas "neglect" should have already covered the scenarios where such persons "failed to act without reasonable excuse". The removal of the existing elements of offences, i.e. "consent", "connivance" or "neglect" is also not feasible, as the amendment would likely be in conflict with the Hong Kong Bill of Rights Ordinance (Cap. 383) and the Basic Law.
Meanwhile, LD has revised its investigation strategies and deployed more resources to target enforcement action against responsible persons of the body corporate for wage offences. First, we have stepped up publicity not only to encourage more employees to be prosecution witnesses in section 64B cases, but also to alert the responsible persons to the relevant penalty clauses. Second, LD has employed seven ex-police officers to strengthen its capability in evidence collection and intelligence gathering. In handling section 64B cases, these officers conduct investigation proactively at an early stage.
As a result of such measures, the number of convictions has increased sharply. In 2007, there were 126 convicted summonses on wage offences against the responsible persons, an increase of 83 per cent over 69 in 2006. Moreover, five company directors were given jail or suspended jail sentence in 2007. Between January and April 2008, the number of convicted summonses on wage offences against responsible persons was 69, an increase of 92 per cent over 36 in the corresponding period of 2007.
The encouraging outcome arising from the change in enforcement strategy indicates that there is no need for amending section 64B. LD would continue to monitor wage offences closely and take vigorous enforcement action.
(b) The Administration takes a serious view on the non-compliance of Labour Tribunal (LT) awards by some employers, and is actively exploring effective and feasible measures to improve the situation. If breaches of EO are detected, LD will take vigorous enforcement action against the employer.
LD's experience reveals that some employers failed to honour the awards because of insolvency. But if the employer is solvent or still in operation, upon receipt of the employee's complaint on default of LT awards, LD will conduct follow-up investigation and, with sufficient evidence of breach of EO requirements in payment of wages and other statutory benefits, take out criminal prosecution against the employer.
To enhance the deterrent effect, the maximum penalty for wage offences under EO has, with effect from March 30, 2006, been substantially increased from a fine of $200,000 and imprisonment for one year to a fine of $350,000 and imprisonment for three years. In 2007, LD secured 960 convicted summonses on wage offences, an increase of 22 per cent over 785 summonses in 2006. Among them, seven employers were given custodial sentence and one case recorded heavy fine of $114,000. Where the employer is a limited company, LD will, apart from prosecuting the company for wage offences, also prosecute the responsible persons if the offences are committed with their consent, connivance or neglect. The relevant prosecution figures have been provided in the reply to part (a) above.
We believe that our stringent enforcement effort will strengthen the deterrent effect and send a strong message to employers that violating EO is a serous offence, thereby helping reduce the incidence of defaulting LT awards.
(c) Employment claims concern the enforcement of contractual terms between employers and employees. If a party fails to honour the contractual obligation, the other party may pursue by means of civil remedies. The establishment of LT is to provide a fast, inexpensive and simple mechanism for employers and employees to resolve civil claims. After an award on an employment claim is made by LT, the losing party has to pay the awarded sum within the time limit as specified in the award. In the event that the employer fails to pay as ordered, the employee can, as in the case of all other civil remedies, enforce the award through the execution modes applicable to other civil judgments, or pursuing the sum as a civil debt.
The Administration is very concerned about the difficulties of some employees in obtaining the sum awarded by LT. We have taken multi-pronged measures to assist employees recover payments promptly.
Upon receipt of complaint by employees on defaulted LT awards, LD will refer the employees concerned to the Legal Aid Department (LAD) for assistance in instituting winding-up or bankruptcy proceedings against the insolvent employer. LD will also assist the employees to apply for ex-gratia payment of wages in arrears and other termination payments from the Protection of Wages on Insolvency Fund (PWIF).
To speed up the processing of applications, LD has adopted a series of measures with a view to streamlining and improving PWIF application procedures. The average time for processing an application and making ex-gratia payment has been shortened from 7.4 weeks in 2002 to 3.2 weeks in 2006, and further down to 2.7 weeks recently.
The issue of enforcement of LT awards relates to the overall mechanism of enforcing civil judgments and any change will have far-reaching implications on judicial and other policy areas. To explore how to further combat defaulting employers and to assist employees with defaulted LT awards, we consulted the Labour Advisory Board (LAB) and the Panel on Manpower of the Legislative Council (LegCo) at their meetings of April 16 and 24, 2008 respectively on the possible improvement measures put forward by stakeholders in the past. The Labour and Welfare Bureau and LD are closely examining the proposed measures in consultation with policy bureaux and government departments concerned. Given the complexity of the proposals and the far-reaching implications, the Administration has to carefully examine the feasibility of each proposed measure. We will try our best to reach a decision on the way forward as soon as possible.
Ends/Wednesday, June 4, 2008
Issued at HKT 14:49
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