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Update on Hong Kong’s Employment Support Scheme (ESS) under the Anti-Epidemic Fund: what we know so far

Hong Kong
Written by
Lewis Silkin, a specialist employment law practice in Hong Kong.
On 18 April 2020, the Hong Kong Government approved funding for wage subsidies from its anti-epidemic fund. This article provides details.

On 18 April 2020, the Finance Committee of the Legislative Council gave funding approval for the second round of the anti-epidemic fund. This HKD 137.5 billion fund is set to be spread out over a variety of industries, with one of the main aims being job retention and job creation.

All employers who have been making Mandatory Provident Fund (MPF) contributions or have set up Occupational Retirement Schemes (ORSO schemes) for their employees will be eligible unless they are on the exclusion list (i.e. government employees, statutory bodies and staff employed by outsourced service contracts to work for Government contracts). The employees may be engaged in full-time or part-time work. The ESS will also cover self-employed persons who have made MPF contributions in the past 15 months. They will be granted a one-off lump-sum subsidy of HKD 7,500.

The subsidy will provide 50% of employee’s wages (with a cap of HKD 9,000 per employee per month). The amount of subsidy that will be provided to employer’s for their employees will be calculated in accordance with the employee’s monthly salary specified by the employer (they may choose to nominate the salary given in any one month from January to March 2020). The first round of applications will be released in May 2020, with payments to be made by the end of June 2020 for the first tranche, for employers to pay June to August wages. The second tranche will be released in September 2020 (with application dates to be announced in due course) to cover the 3 months from September to November 2020. Employers will be expected to distribute 100% of the subsidies they are given to their employees and are prohibited from using it to offset other company expenses. The government have stated they will publish the details of all companies who are granted the subsidy and will try to ensure that employees are aware that their employer has applied for the scheme, and are therefore entitled to their subsidy payments.

Eligible employers will be required to provide an undertaking not to implement redundancies during the subsidy period. If there is a reduction in the number of employees on the payroll within the MPF and/or ORSO framework during the subsidy period, the ESS subsidy will be adjusted with claw backs and other penalties. If employers are found trying to terminate staff after receiving the subsidy, or trying to provide the subsidy to non-employees (i.e. by putting friends or relatives on their payroll), this will be treated as fraud and would induce criminal liabilities.

Catherine Leung
Partner - Hong Kong
Lewis Silkin (Hong Kong)