Hong Kong Government to provide wage subsidies to employers in return for employers undertaking NOT to implement redundancy

Employment Support Scheme

On 8 April 2020, the Hong Kong Government introduced a HK$80 billion Employment Support Scheme to provide wage subsidies to eligible employers to retain their employees, in return for employers undertaking not to implement redundancy. It is estimated to cover 1.5 million employees.

Eligibility: All employers who have been making MPF contributions for employees will be eligible, except those on the exclusion list (employees of the Government, statutory bodies and Government subvented organisations).

Amount: The wage subsidy is calculated based on 50% of the monthly salary, subject to a wage cap of HK$18,000 per month, for a period of six months.

Timing: Payment will be made to employers in two tranches, with the first payout no later than June.

Implementation plan: There has not been a concrete plan on implementation. The Secretary for Labour & Welfare Dr Law Chi-kwong commented today (9 April 2020) that the examination system should not be a complex one as it will take a very long time and incur heavy administrative costs, which would not serve the present purpose.

Undertaking not to implement redundancy: There is no clarity yet on the limits to this general undertaking, and the Chief Executive has only so far announced that "Employers have to promise there will be no redundancy."

Catering sector one-off subsidy

Catering sector one-off subsidy: It has been announced that for any employers in the catering sector (i.e. eligible general restaurants, light refreshment restaurants, marine restaurants and factory canteens) there would be a special one-off subsidy ranging from HK$250,000 to HK$2.2 million based on the size of their premises. This is separate to the above Employment Support Scheme. Not less than 80% of the subsidy has to be used to pay employees' salaries, and a licensee must undertake that there would be no redundancy of staff for 3 months after obtaining the subsidy and it will not apply for the subsidy under the Employment Support Scheme.

We will continue to monitor this and update with any further clarity once we hear more!