Hong Kong employer and worker representatives fail to agree on provident fund offsets

Employers want abolition of long-service payments, while unionists say long-service and severance payments should not be reduced

PUBLISHED : Thursday, 06 April, 2017, 8:01am
UPDATED : Thursday, 06 April, 2017, 8:01am

The first meeting of the Labour Advisory Board to discuss the abolition of the Mandatory Provident Fund’s offsetting mechanism ended without consensus.

Employee and employer representatives remained divided over the formula for calculating compensation. Business groups want the abolition of long-service payments, a proposal rejected by labour unions.

It’s time to strike a deal on MPF offset mechanism

Currently, sacked employees are entitled to long-service or severance payments under the law. But a mechanism in the MPF allows employers to offset this amount using money deposited into employee accounts. This arrangement has drawn fierce criticism from labour groups.

Chief Executive Leung Chun-ying proposed in his policy address in January that the proportion of employer contributions to the MPF that could be used to offset the other payments should be gradually reduced over a 10-year period. A HK$6 billion fund to help employers absorb the financial burden would also be set up.

Jimmy Kwok Chun-wah, an employer representative, said after the board’s meeting on Wednesday that both sides hoped the amount could be raised, subject to the study of related statistics.

But unionist Bill Tang Ka-piu, who represents employees, said their side’s bottom line was that the formula for which long-service and severance payments are calculated must remain unchanged so employee compensation would not be reduced.

A three-month public consultation on the proposal ends on April 18, with a final plan to be presented to the public before the current administration ends its term on June 30.

Comprising six members on each side representing employers and employees, the Labour Advisory Board advises the government on labour matters, with agreements usually being adopted by the government.