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

Following is a question by the Hon Wong Sing-chi and a reply by the Secretary for Health and Welfare, Dr E K Yeoh, in the Legislative Council today (December 6):

Question :

At present, employers are not required to make Mandatory Provident Fund Scheme ("MPFS") contributions in respect of staff who are employed for less than 60 days (hereinafter "short-term") but who are not "casual employees". Given that some publicly-funded non-governmental social welfare agencies ("social welfare agencies") employ short-term contract staff, will the Government inform this Council:

(a) whether it knows which social welfare agencies have signed short-term employment contracts with employees in the half-year before and the half-year from 1 April this year, and the respective numbers of posts involved;

(b) of the measures in place to safeguard the interests of the short-term contract staff employed by the social welfare agencies, including their interests under the Mandatory Provident Fund Schemes Ordinance; and

(c) whether it has studied if social welfare agencies can evade their obligation to make MPFS contributions by using non-successive short-term contracts; if the study concludes that they can, of the countermeasures in place?

Reply :

Madam President,

(a) In 2000/2001, altogether there are about 28,000 posts in 181 Non-Government Organizations (NGO) which are subvented by Social Welfare Department (SWD). Under the existing subvention system, individual NGOs may at their discretion, employ staff on long, short term or temporary basis, having regard to the needs of the service units, funds available, the number and ranking of the recognized posts. NGOs are given the autonomy to decide on the kind of contracts to be used for employing their staff as such matters are part of their human resource management. They are not required to report to SWD the details of the contracts on which their staff are employed. As such, SWD does not have the records of the NGOs' employment contracts with their employees;

(b) SWD has already issued a circular to all those NGOs which have opted to join Lump Sum Grant reminding them of their obligations as an employer after the implementation of the Mandatory Provident Fund (MPF) Schemes Ordinance. Under the existing subvention system, expenses related to employer's provident fund contribution are regarded as recognized items and will be subvented. As regards situation under the Lump Sum Grant system, for those existing staff who occupied recognized posts as at 1 April 2000, their provident fund contribution will be subvented on an actual basis. For staff who are employed after the above date, SWD will subvent the employer's contribution at 6.8% of the mid-point salary of the post. In addition, subvention earmarked for provident fund can only be used to meet provident fund expenses. NGOs are required to keep unspent provident fund allocation, if any, in their provident fund account which cannot be deployed to meet other expenses. We believe that with the foregoing measures, subvented NGOs staff's interests including those under the Mandatory Provident Fund Schemes Ordinance can be safeguarded. Furthermore, as part of the welfare subvention reforms, we aim to facilitate NGOs to strengthen their governance and management functions. They will be required to ensure good management practices including compliance with all relevant requirements under different legislations e.g. the MPF Schemes Ordinance and the Employment Ordinance etc in providing their subvented services; and

(c) Item 7 of Part I of Schedule 1 to the Mandatory Provident Fund Schemes Ordinance exempts relevant employees (other than casual employees) who have been employed for a period of less than 60 days. An amendment to the exemption provision was made with the approval of the Legislative Council in June 2000 to put it beyond doubt that the exemption does not apply to relevant employees who have been employed for more than 60 days and under a continuous contract. ¡§Continuous contract¡¨ has the same meaning as in section 3(1) of the Employment Ordinance. Whether a contract of employment is a continuous contract must be considered by reference to the First Schedule to the Employment Ordinance. If employers break up the employment contract and employ staff on the basis of several short-term contracts, they may not be able to circumvent the MPF contribution requirement, because in accordance with the First Schedule to the Employment Ordinance, non-successive contracts with the same employer do not necessarily break the continuity of employment.

By virtue of section 3(2) of the Employment Ordinance, in case of dispute as to whether a contract of employment is a continuous contract, the onus of proving that it is not a continuous contract shall be on the employer. The final decision rests with the court.

Besides, it should also be noted that under both the existing subvention system and the Lump Sum Grant system, SWD will provide adequate funding provisions to meet expenses for provident fund contribution so as to ensure that the interests of NGOs staff under different type of employment contracts are protected. We therefore do not see any reason for NGOs to evade their obligations to make MPFS contributions.

End/Wednesday, December 6, 2000

NNNN