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SLW on the temporary suspension of the Employees Retraining Levy

     The following is the remarks (English portion) made by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, today (July 30) on the implementation of the two-year suspension of the Employees Retraining Levy:

The Chief Executive-in-Council has approved this afternoon the implementation of the suspension of the Employees Retraining Levy (levy) for a period of two years from August 1, 2008 to July 31, 2010.

The suspension will be applicable to all employment contracts, including renewal of existing new contracts, for which visas for foreign domestic helpers (FDHs)/imported labour are issued by Immigration Department during the suspension period, irrespective of the dates on which the contracts are signed. In another words, all employers who are granted visas for FDHs by the Immigration Department before August 1, 2010 will be able to enjoy a full 24-month exemption from the levy.

In this regard, we can clearly see that the design of the scheme is premised upon a prospective, not retrospective, basis, a principle that the Government has long adhered to. For example, the adjustment to the minimum allowable wage of FDHs, and even the obligation on FDH employers to pay the levy since 2003, are only applicable to new contracts signed after the effective date, not pre-existing contracts.

I would like to stress that the suspension demonstrates the Government's greatest sincerity and flexibility in catering for the interests of employers and protecting the rights of employees under the existing legal framework.

We expect that some employers with pre-existing FDH contracts may choose to terminate their contracts prematurely in order to enjoy $0 levy as soon as the suspension takes effect.  There may also be another round of premature termination of contracts towards the end of the suspension period.  Understandably, the FDH community harbours grave concerns about their position in the event that their contracts are terminated prematurely.  We are conscious of the need to introduce mitigation measures as appropriate to protect the rights of FDHs and minimise possible impact of premature termination of contracts on them.

To tackle the problem, as a special arrangement, the Director of Immigration will exercise discretion during the suspension period and allow the advanced renewal of FDHs' contracts with the same employers without requiring FDHs to leave Hong Kong after the existing contracts have been terminated.  We hope that this arrangement can serve to protect the rights of the FDHs.  According to the established guidelines of the Immigration Department, these employers are required to pay the instalment(s) of the previous contract covering the period of employment only.

For existing contracts which are still in force with outstanding levy, employers have to settle the payment in the usual manner according to the schedule as specified by the Director of Immigration in the Payment Note. If the contract is subsequently terminated prematurely with unused levy balance, the balance shall not be refunded or carried forward to a period after the suspension ended.

Inflation has fast become an issue of concern to the public in recent months. The decision to suspend the levy for two years is a temporary measure to alleviate the burden of FDH employers taking into account the healthy financial condition of the Employees Retraining Board.

I wish to point out that the role of the Employees Retraining Board is of paramount importance to Hong Kong. Since its establishment in 1992, the ERB has offered more than 1.3 million training places to assist local workers in acquiring new or enhanced skill so that they may adjust to changes in the economic environment.

I would like to reiterate that in the long run, levy collection is essential in ensuring steady and sufficient financial resources for the ERB to enhance the employability of the local workforce so as to maintain Hong Kong's economic competitiveness.

Reporter: The Government wanted to do some good things but ended up in creating two weeks of confusion and chaos.  Do you feel sorry for the employers and the employees?

The Secretary for Labour and Welfare: We have actually reacted very quickly in the whole thing. We are dealing with an exceptional problem at an exceptional time when, for example, the Legislative Council was near the end of its term.  Even the Executive Council meeting this afternoon was a special session. This underlies the Government'sí@sincerity, determination and commitment to really help the middle class, and at the same time, to protect the rights of foreign domestic helpers. This is very important. We have to be absolutely sure that the scheme benefits the employers and protects the helpers. It is a balancing act.

Reporter: íK. litigation measures. The workers would resort to litigation measures when you know that the íK..  And the other thing is the Immigration Department which have discretionary powers on this pre-termination íK..  Can you explain?

Secretary for Labour and Welfare: In designing the whole scheme, we are very mindful of two things. First of all, the interests of employers is one of the major objectives, but at the same time, to make sure that the rights of the helpers are fully protected in the process. So, it is a balancing act. We have to be very careful to make sure the scheme would benefit the employers, and at the same time, protect the rights of helpers. One of the problems we envisage is that some employers may like to benefit from the scheme as soon as possible, to benefit from the zero levy once the suspension takes effect. This would create a round of premature termination of helpers and it is not something we would like to see from the angle of protecting labour rights.  That is why the Director of Immigration will put in place special arrangements and exercise discretions to allow helpers and also the employers to have advanced renewal contract. In other words, to renew the contract well ahead of the expiry date. This is very important.  Under the present arrangement, the helper would have to leave Hong Kong in premature termination situation. This arrangement will now be waived. In other words, we hope to have a smooth transition for the helper and the employer to start a new contract.

Reporter: (inaudible)

Secretary for Labour and Welfare: We are talking about only covering employee helpers renewing contract with the same employer. In other words, helpers renewing contract with the same employer will enjoy this particular treatment to protect their rights, otherwise they would have to leave Hong Kong and pay all sorts of fees, coming back again and I don't think it is fair. It is not the objective of the exercise. The objective is really to benefit employers, and at the same time, protect the rights of employees. ItíŽs a win-win situation.

Reporter: How about íK.. before August 1?

Assistant Director of Immigration (Visa and Policies): Just now what the Secretary for Labour and Welfare has mentioned is for the advanced renewal of contract with the same employer. What you are saying are those who have been prematurely terminated before August 1 and they are changing employers. Then the two-week-rule still applies.

(Please also refer to the Chinese portion of the transcript.)

Ends/Wednesday, July 30, 2008
Issued at HKT 22:58


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