The Protection of Wages on Insolvency (Amendment) Ordinance 2012 (the “Ordinance”) was passed by the Legislative Council on 18 April 2012 and came into force on 29 June 2012.

Under the Ordinance, the scope of the Protection of Wages on Insolvency Fund will be expanded to cover:

  1. pay for untaken annual leave payable to an employee upon termination of the employment contract under the Employment Ordinance (“EO”) including:
    1. pay for any untaken annual leave earned in the employee’s last full leave year; and
    2. pro rata annual leave pay for the last leave year where the employee has at least three but less than twelve months’ service entitlement upon termination of the employment contract; and
  2. pay for statutory holidays under the EO not yet taken by an employee within four months before his or her last day of service.

The Ordinance provides that 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 HK$10,500.

The Labour Department has published a guide to assist employers and employees to understand the amendments. It is entitled “A Concise Guide to the Protection of Wages on Insolvency (Amendment) Ordinance 2012’ and can be downloaded from the Labour Department’s homepage(www.labour.gov.hk/eng/erb/content4.htm).