On 10 October 2018, the Chief Executive of Hong Kong, Carrie Lam, announced her 2018 Policy Address. The Policy Address notably addressed some key developments in the labour and discrimination law regimes in Hong Kong, which are briefly summarised below:

Abolishing the "Offsetting" Arrangement under the Mandatory Provident Fund (MPF) Scheme

Under the current statutory regime, an employer's liability to make statutory long service payment or statutory severance payment can be offset by the accrued benefits derived from the employer's contributions made to the employees' MPF over the relevant years of service.

There have been years of active discussions around abolishing this “offsetting” arrangement, and in March this year the Government put forward a preliminary proposal on how to progressively scrap the mechanism. The proposal was reiterated in the Policy Address but revised with enhanced support for employers (especially small and medium-sized enterprises). In a nutshell, the Government proposed to:

  • Provide subsidies to employers for 25 years through a two-tier subsidy scheme, with a financial commitment of around HK$29.3 billion; and
  • Set up designated savings accounts to assist employers in saving up early so as to reduce the financial pressure on them in making the relevant payments

The Government also confirmed that it would keep the statutory formula at 2/3 of monthly wages (rather than reducing to 1/2 of monthly wages as had been proposed previously).

The Government intends to secure the passage of the relevant legislation by 2022, and implement the abolition of the "offsetting" arrangement in 2024.

Paternity Leave and Maternity Leave

The Government also confirmed that it is likely there will be an increase in the statutory entitlements to paternity leave and maternity leave. In the Policy address, the Government:

  • Pledged to secure early passage of the Employment (Amendment) Bill 2018 to implement the proposal of increasing statutory paternity leave from the existing 3 days to 5 days; and
  • Proposed to increase statutory maternity leave from 10 weeks to 14 weeks. Under the proposal, if a female employee is entitled to statutory maternity leave pay (SML) under the Employment Ordinance, the employer shall also provide her with SML for the additional 4 weeks' statutory maternity leave, the rate of which shall be maintained at four-fifths of the employees' average daily wages but subject to a cap of $36,822 per employee (which may be adjusted from time to time). Employers may apply to the Government for reimbursement of the additional 4 weeks’ SML. The Government will seek the views of the Labour Advisory Board on the proposal within this year.

Useful Takeaway: Internal policies will need to be reviewed and updated in due course to ensure they are consistent with the proposed amendments.

Discrimination Law Review

The Government will seek to introduce the Discrimination Legislation (Miscellaneous Amendments) Bill by the end of this year to amend the current discrimination laws in Hong Kong, with the view to implement the 8 prioritized recommendations previously raised by the Equal Opportunities Commission under the Discrimination Law Review.

These recommendations include (but are not limited to) introducing express provisions to prohibit direct and indirect discrimination on grounds of breastfeeding, prohibiting racial discrimination and harassment by imputation that a person is of a particular race or member of a particular racial group, and expanding the scope of protection from sexual, disability and racial harassment.

Useful Takeaway: Be mindful of any latest developments, raise employees' awareness of the changes when the relevant legislation come into force and update internal policies or employee handbook to ensure they are consistent with the new protections.

The proposed amendments are briefly summarized below:

Recommended Amendments

Useful Takeaways for Employers

Proposal to prohibit direct and indirect discrimination on the grounds of breastfeeding in SDO.

Employers should increase awareness for their employees. Employers should also be aware of possible risks that current internal company policies may be indirectly discriminating against breastfeeding employees.

Replacing references to "near relative" in the RDO with references to "associate".

This has a wider definition. It includes:

  • A spouse of the person;
  • Another person living with the person on a genuine domestic basis;
  • A relative of a person;
  • A carer of the person, and
  • Another person who is in a business, sporting or recreational relationship with the person.

It will be unlawful to discriminate against or harass another person because of the race of the latter's "associate" in employment.

Employers should increase awareness for their employees. Employers should also review their current diversity policies, and consider whether these policies address exposure to these new scenarios of potential liability.

Amendments to RDO to cover direct and indirect racial discrimination and harassment by imputation that a person is of a particular race or member of a particular racial group

Amendments to SDO, RDO and DDO prohibiting sexual, racial and disability harassment between workplace participants at a place that is a workplace of both workplace participants.

This covers the situation where the harasser and the victim are working in a common workplace, but have no employment or employment-like relationship with each other.

Employers should review whether their internal workplace policies and ensure that both employees and non-employees are protected from discrimination. Close monitoring and increase in awareness should also be instituted.

Aligning provisions in the RDO and DDO to offer express protection for a person providing goods, facilities or services from racial and disability harassment by a customer.

Employers should take note of these new amendments where relevant, and ensure that their staff are aware of these protections.

Amending RDO and DDO to provide protection from racial and disability harassment of service providers by service providers by service users, where such harassment takes place outside Hong Kong, but on Hong Kong registered aircrafts and ships.

Amending SDO and DDO to safeguard sexual and disability harassment by a club or its management against its members or prospective members.

Repealing existing provisions in SDO, RDO and FSDO so that a victim of unlawful indirect discrimination will be entitled to damages, even though there was no intention to treat the victim unfavourably with the requirement or condition.

This will expose employers to new risks. Where there is a claim against the employers for unlawful indirect discrimination, employers can no longer argue that they have no intention of treating employees unfavorably with the requirement or condition.

The text to the Policy Address can be accessed at: https://www.policyaddress.gov.hk/2018/eng/pdf/PA2018.pdf