Any sound social policy requires the delicate balancing of countervailing interests, such that it would serve the greater good of the greatest number of people. On the minimum wage issue, we know that some 300,000 of the Hong Kong working poor are expected to benefit from this new law. But let's not forget that Hong Kong's total working population is 3.6 million. That means that over three million workers have no dog in this fight. Nevertheless, many workers may be adversely affected by the new legislation, and I am not even referring to those displaced as a result of employers' increased overheads.
For low-wage earners, the law is definitely a boon. They need protection from exploitative employers, some of whom are already stooping to unethical subterfuges, from discounting bathroom breaks to circumventing the law by coercing workers into surrendering their employee status to become 'self-employed'. To these unscrupulous employers, the law must show no mercy.
Not so straightforward are situations where workers may be the losers now that the cards are being reshuffled. Since becoming law, a nagging and intractable side issue has surfaced: should employers pay for rest days and lunch breaks? This matter, not addressed in the new legislation, was previously discussed with both labour and management representatives. Leaving it out of the new law was a decision made with their tacit approval. One might ask: if this is the case, why is labour now clamouring for its inclusion?
Customarily, over 90 per cent of employers pay by the month. Here, there is a divergence of practice among employers. For some, employees are paid for a 30-day month, in which case, the question of lunch breaks or rest days doesn't come up. Others exclude rest days, basically paying their staff for 26 working days. This divergence has major implications for calculating leave pay. If the monthly pay is divided by 26 days, the payout for leave is higher; if divided by 30 days, it is lower.
If we legislate for rest days, we would have to force employers to change their ways, and these changes could not be brought about without changes to the Employment Ordinance. Thus, there would be unexpected repercussions for both employers and employees. I suggest that a sensible approach is to let sleeping dogs lie and refrain from legislating on pay for rest days and lunch breaks. We should just ask employers to be faithful to their prior practice. As long as they are consistent, they should not be labelled 'unconscionable' whether rest days are included in monthly pay cheques or not.
The government's original non-restrictive approach was correct. Its original calculations were that the lowest wages in Hong Kong should be no less than HK$5,824, that is, HK$28 x eight hours x 26 days. When the administration, under pressure, decided to pay for the rest days of workers whose employers are government contractors, this equation was thrown into disarray.
A key issue, of great concern to both workers and bosses alike, is the calculation of overtime pay and, more importantly, pay in lieu of leave. As we have seen, when pay is calculated on 26-day cycles, the hourly rate is considerably higher. Now that it is divided by 30 days, it drops significantly. Workers who depend on hefty overtime pay and compensatory pay for unused leave entitlements end up getting less take-home pay. This is especially unfair to workers whose basic hourly pay already exceeded HK$28, pre-legislation. Let us not forget that their numbers far exceed the 300,000 low-earning intended beneficiaries.
By the same token, if meal breaks and rest days were excluded by law from pay calculations, companies that have been using the 30-day month to work out wages would have to switch to a 26-day month. This would mean a higher hourly rate, which would vastly increase their company's overtime payroll, possibly threatening the survival of some.
We now understand the government's rationale for deliberately leaving this area unregulated. Leaving out rest days and lunch breaks was not an oversight; they were excluded from regulation by intent. If both had to be included in pay calculations, some workers adversely affected would cry foul; if the law required their exclusion in calculations, some employers would be saddled with burdensome compensatory pay. This being so, it calls for a more flexible and nuanced approach. I favour the flexibility that comes with Labour Department mediation efforts in cases of dispute. Flexibility doesn't mean giving employers a free rein. The intent of the new law must be respected and upheld, that is, there must be an improvement in the income of low-wage earners. The overriding principle is that a worker must not earn less than his or her pre-legislation level, if it was already above the minimum wage.
Within this broad principle, employers should be held to their past behaviour. The only justification for tampering with their pay pattern is if it results in financial hardships and threatens the survival of the business.
In a complex modern society, social legislation is never a cut-and-dried matter amenable to a simplistic black-and-white treatment. As long as the net result is the improvement in pay for low-income workers,
I favour maximum flexibility in the handling of the minimum wage issue. From my vantage point as an employer, a rigid imposition of a one-size-fits-all measure may do more harm than good.
Michael Tien Puk-sun is vice-chairman of the New People's Party and chairman of G2000, an international garment retailer