THE Labour Advisory Board (LAB) yesterday struck a compromise over the long service and severance payment, raising hopes of an end to the row that triggered the resignation of unionist Lau Chin-shek. As revealed by the South China Morning Post yesterday, the new deal featured a progressive increment of payment for workers starting with a ceiling of $210,000 with an increase of $20,000 each year. It also provided an annual increase of years of service being counted for the payment that starts with 25 years, plus an increase of two years thereafter. The ceiling of years of service will be removed from 2005. Speaking after a LAB meeting, the Commissioner for Labour Ip Shu-kwan hailed the package as a comprehensive and forward-looking improved package that would bring immediate and long-term benefits to the workforce. An employees' representative at the LAB, Leung Fu-wah, representing the influential Federation of Trade Unions, refused to say it was a 'consensus'. He stressed that it was 'acceptable' and they 'did not oppose it'. But Mr Lau, the Democratic Party legislator at the centre of the row, expressed 'grave reservations'. He conceded that the package represented a 'minor improvement' over the original Government bill, which was withdrawn by the administration after Mr Lau successfully amended it in the Legislative Council on December 14. Mr Lau said the present package 'was still conservative', particularly if it took into account the aspirations of Legco. The removal of the upper limit of payment in 10 years' time was too slow, he said. Mr Lau also pointed to the fact that the ceiling of payment would stay, although the cap on years of services would be removed after a decade. He said the LAB should consider allowing people earning $21,000 or less a month to qualify for the compensation rather than the $150,000 salary cap set under the present laws. 'They have not discussed that issue. I think that should be readjusted appropriately,' he said. Mr Lau said he would now consult his colleagues, especially those who supported his earlier proposal. 'I think the new proposal will not easily win their support,' he said. But he added that proposing any further amendments 'would be meaningless' if the latest option was accepted by the majority of his Legco colleagues. Describing the proposal as a 'progressive' package, Liberal Party legislator Henry Tang Ying-yen declared early support for the LAB consensus. He said: 'Since the amendment bill was put to the Legco, there were many twists and turns and unhappy events. Some workers might also have been adversely affected. 'The progressive proposal swiftly agreed by the LAB should be supported.' He said raising the years of service component from 18 to 25 would enable more long-serving workers to benefit from the package. The Executive Council is expected to endorse the LAB proposal when it resumes meeting early next month. The amendment bill will then be forwarded to the Legco about the third week of January. Yesterday's LAB meeting was convened after days of behind-the-scene negotiation between officials, unionists and employers. At present, the current ceiling of payment was $180,000 and the calculable years of service was 18. The formula remained unchanged in that each year of service which exceeded the 25-year limit would be counted as half a year. And only people earning on or below $15,000 a month will qualify for the compensation. Under the new deal, the compensation maximum will be fixed at $390,000 in 2004, and the ceiling on length of service capped at 43 years in 2004. The proposal, even if passed into law, will be subject to review if major changes such as inflation occurred, Mr Ip said. He insisted that the new proposal would benefit workers and that legislators would find it 'fair and reasonable'. He urged the two Legco members proposing their own packages - unionist Tam Yiu-chung and Democrat Michael Ho Mun-ka - to reconsider the issue and cancel their plans to move private members' bills. Under Mr Tam's proposal, the ceiling of payment will be $180,000 but the years of service cap would be removed. Mr Lau proposed a ceiling of $230,000. Mr Ip said the latest package was better than the others. 'The Lau proposal did not map out the future, but our proposal does. In fact, the $210,000 package can jump to $230,000 next year.' He said the $260,000 package as earlier reported was not an alternative fixed by the Government, adding it was only one among many other proposals for consideration. 'For a worker earning the average salary [about $7,500 a month], he can get compensation of $260,000 only after serving the company for more than 60 years,' Mr Ip said. He said the board members agreed to tackle the issue of whether to raise the monthly income of workers from $15,000 to $21,000 in future meetings. Mr Ip urged LAB employer and employee members to lobby legislators to support the present deal. LAB and Democrat Party member Chu Ming said he did not know whether the Democratic Party would support the proposal. A LAB employers' representative, Ho Sai-Chu said the package was better because the 10-year schedule would enable owners of small firms to prepare psychologically for the payment to their employees.