Following is a question by the Hon Lee Kwong-yu and a written reply by the Secretary for Labour and Welfare, Mr Chris Sun, in the Legislative Council today (January 28):

Question:

     With the full commencement of the Construction Industry Security of Payment Ordinance (Cap. 652) in August last year, unfair contract terms such as "pay when paid" (i.e. the liability of a party to pay money that is owed to another party under a contract is contingent or conditional on receipt of payment under another contract (usually an upper-tier contract)) have been expressly prohibited in the Ordinance. However, there are views that the current application of the abovementioned protection mechanism to the construction industry only and the lack of similar statutory protection for other service industries that may be involved in outsourced contracts (such as labour services including security, cleaning and property management services and the information technology industry) (other outsourced service industries) may lead to problems such as delayed wage payment to workers and inadequate protection of workers' rights and interests. In this connection, will the Government inform this Council:

(1) of the following information on wage default complaints received by the Labour Department in each of the past three years involving outsourced service industries (such as security, cleaning, property management and information technology industries): (i) the number of such cases and the total amount of wages in default involved; (ii) the number and percentage of cases with successful wage recovery and the total amount of wages successfully recovered; and (iii) the number and percentage of cases involving outsourced service contracts of the Government or public bodies, with a tabulated breakdown by outsourced service industry;

(2) whether it will consider drawing reference from the "mechanism on the liability of an upper-tier contractor to pay wages in default on behalf of its subcontractors" in the construction industry (meaning that an upper-tier contractor shall be liable for the unpaid wages of employees who are employed by its subcontractors, and the wages in default so paid may be regarded as a debt owed by the subcontractors to the upper-tier contractor) and examining the formulation of a "mechanism on the liability to pay wages in default on behalf of subcontractors" that may be applicable to other outsourced service industries; if so, of the details (including the timetable); if not, the reasons for that, and whether the Government has studied other alternative options;

(3) whether it has plans to introduce specific regulatory measures for other outsourced service industries other than the construction industry, including but not limited to standardising the payment process under outsourced contracts and establishing an early warning mechanism for wage defaults (such as monitoring employers' payment of their Mandatory Provident Fund contributions through big data); if so, of the details (including the timetable); if not, the reasons for that; and

(4) regarding those outsourced service posts with regular service demands in the Government (such as security, cleaning and property management services), whether the Government will conduct in-depth studies on the feasibility of adopting other employment systems or modes (such as the engagement or provision of related services through public municipal service units or non-governmental organisations, and the adoption of the public-private partnership mode), or set up permanent posts for services with long-term actual demands for the direct employment of workers, so as to fundamentally resolve problems such as wage defaults and inadequate protection of workers' rights and interests arising from the outsourcing system; if so, of the details (including the timetable); if not, the reasons for that?

Reply:

President,

     Irrespective of the industry or nature of service, all employers must strictly comply with the provisions of the Employment Ordinance (Cap. 57) (EO) on payment of wages and employment benefits. The Labour Department (LD) provides free consultation and voluntary conciliation services to assist employers and employees in resolving disputes arising from the EO and employment contracts. If both parties cannot reach a settlement after conciliation, the LD may refer the claimants to the Labour Tribunal or the Minor Employment Claims Adjudication Board for adjudication. For cases involving outstanding wages and other payments due to employers' inability to pay debt, the employees concerned may apply for ex gratia payments from the Protection of Wages on Insolvency Fund which cover wages in arrears and other compensation. On the enforcement front, the LD adopts a multi-pronged strategy of intelligence collection, proactive inspection, in-depth investigation and prosecution on cases involving suspected offences under the EO for protecting employees' rights and benefits.

     ​In response to the Member's question, after consulting the Financial Services and the Treasury Bureau, the reply is provided below:

(1) From 2023 to 2025, the numbers of claims involving wage disputes and handled by the LD, and the numbers of complaints involving wage defaults received by the LD each year with a breakdown by Administrative and Support Service Activities (including security and cleaning), Real Estate Activities (including property management) and Information and Communications (including information technology) sectors are at Annex 1 and Annex 2 respectively. The LD has not maintained the statistics on other items of the question.

(2) The EO stipulates that a principal contractor (PC) and superior subcontractors (SSC) are vicariously liable to pay the arrears of the first two months' wages of employees owed by the subcontractors (SCs) under their supervision. This provision has taken into account that a PC of the construction industry generally has greater control over its SCs in relation to building works at its site and relevant employment arrangements made by the SCs. Their division of responsibilities is also relatively clear. In other words, the arrangement has reflected the unique mode of subcontracting in the construction industry. For other industries where subcontracting exists, the practices of regulating or sharing the responsibilities among contractors and lower-tier subcontractors vary across different industries. The Government currently has no plan to apply the requirement of PCs and SSCs of the construction industry on assuming the vicarious liability for paying the arrears of wages to other industries.

(3) The Labour Relations Division of the LD has been maintaining close liaison with working partners and relevant stakeholders, gathering and assessing the intelligence from different sources on wage defaults. If knowing an individual employer with wage default, the LD will proactively reach out to the persons-in-charge of the establishment, remind and urge them to settle employees' wages in accordance with the EO and the terms of employment contracts; and keep track of the status of wage payment. Labour Inspectors of the LD also conduct proactive workplace inspections in various sectors to check employers' compliance with the requirements of relevant labour laws, including timely payment of wages. For individual industries with more serious wage defaults and low-income industries including cleaning, security, the LD stages targeted enforcement campaigns from time to time to detect offences on non-payment of wages and takes follow-up actions.

(4) Outsourcing is one of the ways adopted by the Government to deliver public services. Departments will, having regard to factors such as operational needs, service nature and cost-effectiveness, adopt the most suitable mode of public service delivery, including appointing civil servants or non-civil service contract staff, as well as delivering services through subsidising non-governmental organisations, adopting public-private partnerships or outsourcing. Regardless of the mode of service delivery, as the use of public funds is involved, departments should ensure proper and cost-effective use of public resources. The rights of employees working under outsourced services by government departments are safeguarded by relevant labour legislation and service contracts.

Ends/Wednesday, January 28, 2026
Issued at HKT 11:10

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