Brokers brace for big bill as salesmen prepare for holiday windfall
Stockbrokers, their profits already under assault from banks moving into the wealth management field, are being forced to come to grips with another perceived threat to the bottom line. It comes from the government's attempt to finally define 'paid leave' for people who earn most of their livelihood from commissions.
At present, the law is vague about how much money commission-earners should receive when they go on holidays or maternity leave or receive payment in lieu of notice. Now the Labour Department wants to make it crystal clear that all such payments should be based on the individual's commission income for the latest month.
The Hong Kong Stockbrokers Association has organised a forum for this Thursday to discuss the issue, which also affects commission-based industries such as insurance and real estate.
Chim Pui-chung, the Legco representative for the securities industry, will chair the meeting. Government officials have also been invited along to explain the current Employment Ordinance and to discuss the proposed changes.
Brokers' association chairman Tony Espina says that if the Labour Department gets its way, brokerage houses will face a big increase in their wage bills.
The way it works now is that salespersons - known formally as account executives or AEs - receive a monthly base salary in the area of $5,000 to $10,000. When they take holidays or some other form of paid leave, this base salary is used to calculate their entitlement.
Imagine, however, that paid leave was totted up on the basis of commission earnings. The fees that brokers charge clients are usually split between the brokerage and the AEs, who in a good market can easily earn $100,000 to $200,000 a month in commission.
If paid leave is tied to commission earnings, argues Mr Espina, AEs will be tempted to take their holidays after a good month, especially if they don't think that the next month is going to be prosperous.
red carpet treatment
Tai Ping Carpets International, a local firm, has long been known for luxury handmade carpets that grace the floors of hotels, even royal palaces. Now, says chief executive James Kaplan, the company is determined to become just as big a force in the home carpeting market.
'We hope that in future commercial customers and residential customers will contribute an equal share of our revenue. At present, a majority of the revenue arises from the commercial lines,' he said in a podcast interview while hosting the opening of a Tai Ping showroom in Prince's Building, Central, last week.
The company is yet another feather in the cap of the Kadoorie family, better known as the owners of electricity giant CLP Holdings and the Peninsula Hotel chain. They established Tai Ping 50 years ago with the intention of providing job opportunities for refugees from the mainland.
Half a century on, the firm has manufactured bespoke custom carpets for Britain's Queen Elizabeth and royalty in Saudi Arabia and Thailand.
Mr Kaplan, who joined the company three years ago, has been behind attempts to rebrand Tai Ping as the first Chinese luxury brand in the world of home and hospitality furnishings.
'There are not many Chinese luxury brands overseas. By expanding our sale teams and setting up more showrooms around the world, we are taking the best of the history and moving forward.'
To listen to the interview, go to podcasting.scmp.com.