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Following is the speech (English translation) by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, in moving the Second Reading of the Protection of Wages on Insolvency (Amendment) Bill 2011 in the Legislative Council today (July 13):
President,
I move the Second Reading of the Protection of Wages on Insolvency (Amendment) Bill 2011 (the Bill).
The Bill seeks to amend the Protection of Wages on Insolvency Ordinance to expand the scope of the Protection of Wages on Insolvency Fund (the Fund) to cover pay for untaken annual leave and untaken statutory holidays under the Employment Ordinance (EO).
The Fund was set up mainly to provide timely relief in the form of ex gratia payment to employees of insolvent employers in the event of business closures. It is mainly financed by an annual levy on each business registration certificate. With improvements over the years, the protection offered by the Fund has increased from its initial coverage of only $8,000 wages to the current maximum payment of $278,500 to each employee, comprising four months' wages up to $36,000, one month's wages in lieu of notice up to $22,500, and severance payment up to $50,000 plus 50% of the remainder of the entitlement.
The Bill proposes to further extend the protection of the Fund to cover (a) pay for annual leave under the EO not yet taken by an employee, not exceeding his full statutory entitlement for the last leave year (ranging from seven to 14 days' pay depending on the employee's length of employment); and (b) pay for statutory holidays under the EO not yet taken by an employee within four months before his last day of service. Neither the amount of pay for untaken annual leave nor the amount of pay for untaken statutory holidays, nor the total amount of the two, may exceed $10,500.
Upon business cessation, if insolvent employers are unable to pay wages and termination payments, very often the employees are also owed pay for untaken annual leave upon termination. Some employers may also fail to grant timely statutory holidays in accordance with the EO. Therefore, we propose to expand the scope of the Fund to cover pay for untaken annual leave and untaken statutory holidays so as to strengthen the protection of affected employees in this regard.
The proposal has taken into account the long standing and fundamental principles in improving the Fund's coverage in a progressive manner and the relevant requirements under the EO so as to ensure the Fund's sustainability and prevent employers from defaulting on payments of statutory entitlements to their employees on a prolonged basis and shifting their liability to the Fund upon business cessation.
The Bill has already taken into account the views of the Legislative Council Panel on Manpower (Manpower Panel) in 2009, expanding the coverage from only pay for untaken annual leave to pay for untaken statutory holidays as well. The proposal was endorsed by the Fund Board and gained the support of the Labour Advisory Board and the Manpower Panel in 2010.
President, the legislative amendments proposed by the Administration mark an important step in enhancing employee protection. They have taken into consideration the interests of both employers and employees whilst safeguarding the effective operation of the Fund. I hope that Members would support the Bill so that it can be passed as early as possible for the benefit of employees.
Thank you, President.
Ends/Wednesday, July 13, 2011
Issued at HKT 17:39
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