UNIONISTS have warned that an emergency fund to protect workers from insolvent employers could itself go into bankruptcy because of inconsistent laws on fund payments.
The Protection of Wages on Insolvency Fund, which has been established to pay advance cash to victims of company bankruptcies, will have to cover discrepancies resulting from two different regulations, they claim.
The first rule, the Protection of Wages on Insolvency Fund Ordinance, will be amended by the Legislative Council next month to allow maximum compensation of $32,000 for wages in arrears, severance and payment in lieu of notice for a worker.
The second, the Bankruptcy Ordinance, requires the receiver of a bankrupted company to pay maximum compensation of $18,000 to each worker directly or through the fund.
The insolvency fund, which is funded by an annual levy of $250 on each business registration, now stands at more than $200 million, with payments of $46.5 million made last year.
Most workers would have applied for advance cash from the fund before the receiver could liquidate assets to repay the fund, fund board member Ms Li Fung-ying said.
The current laws would prevent the fund from fully recovering payments from company receivers.