On 11 October 2017, Chief Executive Carrie Lam in her maiden Policy Address made the following proposals on labour policies.

Abolishing the Mandatory Provident Fund (MPF) Offsetting Mechanism

Scrapping the MPF offsetting mechanism has been a topic of discussions between the Government and representatives of both the labour sector and the business sector even before Carrie Lam took office in July 2017. While pledging to abolish the arrangement for offsetting severance payment and long service payment with MPF contributions, the current Government indicates its willingness to mitigate the impact of the abolition in small and medium enterprises by increasing its financial commitment. The Government is also studying how to assist employers to devise a saving scheme to meet any potential expenses that may arise from severance payment and long service payment to their employees in the future when the Government ceases to provide financial subsidy. A proposal covering the interests of both employers and employees will be announced in the coming months.

Maternity Leave and Paternity Leave

Under existing Hong Kong law, employers are required to provide up to ten weeks paid maternity leave, and three days paid paternity leave at four-fifths of the employee’s average daily wages. In response to the Labour and Welfare Bureau’s proposal to increase paternity leave from three days to five days, and the labour and women sectors’ repeated calls for the Government to bring the maternity leave laws into line with the 14-week standard adopted by the International Labour Organisation, the Government will commence a study and work on improving maternity and paternity benefits.

Occupational Safety and Health

The Government proposes to adopt a three-pronged approach to enhance occupational safety and health of the construction industry by stepping up (a) inspection and enforcement; (b) publicity and promotion; and (c) education and training. The Government also proposes to impose heavier penalties against breaches of the occupational safety and health legislation in order to provide greater protection for workers.

Comment

With the business and labour sectors becoming more willing to explore viable options to abolish the MPF offsetting mechanism, the current Government’s stance to increase its financial commitment for mitigating the impact of the abolition will no doubt expedite the process for scrapping the offsetting mechanism. Yet, it remains unclear what amount of “savings” employers are required to make and how frequent such savings will have to be made.

Improving employee’s benefits has always been a difficult task requiring careful balance between the interests of employers and employees. To bring about an enhancement of employees’ benefits, the Government will need to get a consensus between the labour sector and the business sector.

The Labour Department announced in March this year that it will step up enforcement efforts to deter unsafe work activities in the construction industry. The broad directions of the proposed legislative amendments to be released within this year as mentioned in the Policy Address is therefore likely to reflect what the Labour Department has announced.

The Policy Address indicates the Government’s desire to widen protection of employees’ rights and benefits in the areas of MPF, maternity leave, paternity leave as well as occupational safety and health of employees. The result of further studies by the Government may well lead to more amendments to labour legislations, bringing them in line with relevant International Labour Conventions. Employers are advised to keep track of the latest development of these imminent changes to ensure timely compliance and housekeeping.