LCQ14: Employers defaulting on MPF contributions
************************************************ Following is a question by the Hon Albert Chan and a written reply by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, in the Legislative Council today (October 19):
Question:
Since the implementation of the Mandatory Provident Fund (MPF) Scheme in 2000, some employers still have not made MPF contributions for their employees in accordance with the relevant legislation. In this connection, will the Government inform this Council whether:
(a) it knows the number of complaints received by the Mandatory Provident Fund Schemes Authority (MPFA) against employers defaulting on MPF contributions in each of the past two years;
(b) it knows, in each of the past two years, the number of warning letters issued by MPFA to employers defaulting on MPF contributions, the number of prosecutions instituted by MPFA against employers suspected of defaulting on such contributions and the number of successful ones; and
(c) it will adopt measures to improve the situation of employers defaulting on MPF contributions, such as increasing the powers of MPFA, stepping up prosecution action and imposing higher penalties; if so, of the details of such measures; if not, the reasons for that?
Reply:
Madam President,
(a) In 2003/04 and 2004/05, the Mandatory Provident Fund Schemes Authority (MPFA) received 9,373 (involving 3,872 employers) and 8,079 (involving 3,707 employers) complaints against employers defaulting on contributions respectively.
(b) In response to the complaints received by MPFA in 2003/04 and 2004/05 against default on mandatory provident fund (MPF) contributions, MPFA issued 2,302 and 2,225 letters respectively, warning the employers concerned of the requirement to comply with the MPF legislation (Note).
In 2003/04 and 2004/05, MPFA applied to the Police for issue of 1,000 (involving 107 employers) and 1,027 (involving 125 employers) summonses respectively to employers defaulting on MPF contributions. Out of these, 801 and 835 summonses were successfully prosecuted. The remaining summonses are either withdrawn because of service failing or in the process of prosecution.
(c) MPFA is currently taking the following enforcement measures in accordance with the Mandatory Provident Fund Schemes Ordinance (Cap 485) against employers in breach of the legislation:
(1) A surcharge is imposed on employers defaulting on MPF contributions. Under the existing legislation, the amount of contribution surcharge is equivalent to 5% of the arrears.
(2) If there is sufficient evidence, MPFA will suggest to the Department of Justice for instituting prosecution. In addition to prosecuting the companies, MPFA has also applied for prosecution of the executive directors/managers of the companies. MPFA issued summonses to eight directors in 2004/05 and to 16 directors and one manager between April and September 2005.
(3) Depending on the amounts of contributions in arrears, MPFA will make claims to the High Court, District Courts or the Small Claims Tribunal on behalf of employees. The number of claims made to the High Court and District Courts increased from one in 2003/04 to 48 in 2004/05, and reached 44 up to September in 2005/06. The total number of claims made to the Small Claims Tribunal in 2003/04 and 2004/05 was 2,298. The number of Small Claims from April up to September 2005 stood at 522 cases.
(4) If a claim is awarded and the defaulting employer has not settled the arrears within the specified period, MPFA will make an application requesting a bailiff to execute the court judgement, or apply to the court for a charging order or a garnishee order for the recovery of the arrears on behalf of the employees. The number of applications for a garnishee order increased from one in 2003/04 to nine in 2004/05, and reached 74 up to September in 2005/06.
(5) MPFA has the power to impose fines on defaulting employers. In the past two years, a total of 17 employers were imposed a fine of $5,000 each.
(6) MPFA takes the initiative to conduct inspections to monitor employers' performance of their duties under the Mandatory Provident Fund Schemes Ordinance. In 2003/04 and 2004/05, MPFA inspected 3,115 and 3,254 companies respectively covering all districts and sectors in Hong Kong.
MPFA will review and improve the enforcement measures from time to time in the light of its practical operating experience.
Note: The remaining complaints are unsubstantiated cases or cases in which the employers have failed to rectify their irregularities, necessitating other follow-up enforcement measures by MPFA. For details of such enforcement measures, please refer to part (c).
************************************************ Following is a question by the Hon Albert Chan and a written reply by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, in the Legislative Council today (October 19):
Question:
Since the implementation of the Mandatory Provident Fund (MPF) Scheme in 2000, some employers still have not made MPF contributions for their employees in accordance with the relevant legislation. In this connection, will the Government inform this Council whether:
(a) it knows the number of complaints received by the Mandatory Provident Fund Schemes Authority (MPFA) against employers defaulting on MPF contributions in each of the past two years;
(b) it knows, in each of the past two years, the number of warning letters issued by MPFA to employers defaulting on MPF contributions, the number of prosecutions instituted by MPFA against employers suspected of defaulting on such contributions and the number of successful ones; and
(c) it will adopt measures to improve the situation of employers defaulting on MPF contributions, such as increasing the powers of MPFA, stepping up prosecution action and imposing higher penalties; if so, of the details of such measures; if not, the reasons for that?
Reply:
Madam President,
(a) In 2003/04 and 2004/05, the Mandatory Provident Fund Schemes Authority (MPFA) received 9,373 (involving 3,872 employers) and 8,079 (involving 3,707 employers) complaints against employers defaulting on contributions respectively.
(b) In response to the complaints received by MPFA in 2003/04 and 2004/05 against default on mandatory provident fund (MPF) contributions, MPFA issued 2,302 and 2,225 letters respectively, warning the employers concerned of the requirement to comply with the MPF legislation (Note).
In 2003/04 and 2004/05, MPFA applied to the Police for issue of 1,000 (involving 107 employers) and 1,027 (involving 125 employers) summonses respectively to employers defaulting on MPF contributions. Out of these, 801 and 835 summonses were successfully prosecuted. The remaining summonses are either withdrawn because of service failing or in the process of prosecution.
(c) MPFA is currently taking the following enforcement measures in accordance with the Mandatory Provident Fund Schemes Ordinance (Cap 485) against employers in breach of the legislation:
(1) A surcharge is imposed on employers defaulting on MPF contributions. Under the existing legislation, the amount of contribution surcharge is equivalent to 5% of the arrears.
(2) If there is sufficient evidence, MPFA will suggest to the Department of Justice for instituting prosecution. In addition to prosecuting the companies, MPFA has also applied for prosecution of the executive directors/managers of the companies. MPFA issued summonses to eight directors in 2004/05 and to 16 directors and one manager between April and September 2005.
(3) Depending on the amounts of contributions in arrears, MPFA will make claims to the High Court, District Courts or the Small Claims Tribunal on behalf of employees. The number of claims made to the High Court and District Courts increased from one in 2003/04 to 48 in 2004/05, and reached 44 up to September in 2005/06. The total number of claims made to the Small Claims Tribunal in 2003/04 and 2004/05 was 2,298. The number of Small Claims from April up to September 2005 stood at 522 cases.
(4) If a claim is awarded and the defaulting employer has not settled the arrears within the specified period, MPFA will make an application requesting a bailiff to execute the court judgement, or apply to the court for a charging order or a garnishee order for the recovery of the arrears on behalf of the employees. The number of applications for a garnishee order increased from one in 2003/04 to nine in 2004/05, and reached 74 up to September in 2005/06.
(5) MPFA has the power to impose fines on defaulting employers. In the past two years, a total of 17 employers were imposed a fine of $5,000 each.
(6) MPFA takes the initiative to conduct inspections to monitor employers' performance of their duties under the Mandatory Provident Fund Schemes Ordinance. In 2003/04 and 2004/05, MPFA inspected 3,115 and 3,254 companies respectively covering all districts and sectors in Hong Kong.
MPFA will review and improve the enforcement measures from time to time in the light of its practical operating experience.
Note: The remaining complaints are unsubstantiated cases or cases in which the employers have failed to rectify their irregularities, necessitating other follow-up enforcement measures by MPFA. For details of such enforcement measures, please refer to part (c).
Ends/Wednesday, October 19, 2005
Issued at HKT 12:40
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