'There is no reason I could think of for my dismissal,' said Mr Yeung, a father of two. 'If there's really a serious fault, they didn't need to give me a month's salary as required by law. They could have just asked me to leave,' he said.

Ms So, 38, asked to see her personnel files, which the company had kept confidential during her nine-year service.

'There's not a single unfavorable matter. There has been more praise than criticism in the record,' she said.

'The only reason I can think of [for the sacking] is a financial one. I was one of the highest paid staff in my division. After I leave, they can save more money under the Government's new funding system.' Both workers have reached the top salary point for their grades under a scale similar to that used by the civil service. But this system will be scrapped if the organisation joins the Government's new Lump Sum Grant (LSG) system, under which NGOs will be given a fixed amount of public money and have complete discretion over how it is spent.

The Government is expected to give further details of LSG to Hong Kong's 186 NGOs within weeks. The NGOs will then have three years to prepare for the new system. During that time any NGOs experiencing financial difficulties could be given more than the initial money allocation.

The total sum given to an NGO is based on the organisation's average expenditure on staff salary and pension funds on a set date - April 1 this year. Under the new system, there will no longer be restrictions on the number of qualified social workers in any service. An NGO can hire anyone it finds suitable for a job, and set its own salary scale.

The aim of LSG is to 'shift the emphasis from input to output control', states the Social Welfare Department. The NGOs need only produce an auditor's report every year, and will get the freedom to spend money on anything they deem suitable. The Government will measure NGO performance against a set of standards to justify continued funding.

But there are concerns among social workers that NGO directors will switch to cheaper staff once the new system is in place.

Although Yan Oi Tong has not officially announced its participation in LSG, the sequence of events leading to the dismissal of the two workers has aroused suspicion among staff.

During the last week of March, Yan Oi Tong announced a pay freeze for all staff and cited LSG as the reason. Two days before the dismissals - on April 1, the day when LSG took effect - a job similar to Ms So's, but offering a third of her salary, was seen advertised by Yan Oi Tong in a social service newsletter.

'It showed that the company was planning the dismissal, but waited until after April 1 so that they could have a bigger operating cost to present to the Government,' Ms So said.

The new powers that will be given to NGO directors, without the Government exercising any greater control over them, have worried many social workers.

Cheung Kwok-chu, chairman of Hong Kong Social Workers General Union, gives a hypothetical example: 'Without LSG, a director who wants a less significant project done, say landscaping, may try to raise donations or simply donate the money because money cannot be deployed from other areas.

'But with LSG, projects to the director's personal liking will have priority. This means that the extra money an NGO would have when there is no LSG may not be available when there is LSG.' Ironically, the call for more flexibility came from the NGOs themselves during the early 1990s. Organisations under the traditional system reimbursed every item that was purchased, leading to a sequence of administrative procedures forcing social workers to do very menial tasks.

Another problem with the old system was it encouraged the NGOs to obtain as much money as they could from the Government, even if this meant purchasing items they did not need.

A typical scene at many NGOs a few months prior to Budget day would be account staff at their desks finding ways to wipe out every cent from the balance sheet. This could result in unnecessary spending, like an extra chair or dried foods for future functions.

Wong Chi-sum, associate professor in the Department of Management at the Chinese University, said: 'The NGOs are not used to thinking that management is part of their responsibility. Under the traditional system, they don't need to think too much about financial and personnel planning.

'They hold no money in their hands as it goes straight into their bank account. They have always been passive in financial and personnel management, but they have had no choice.' He said the advantage of the old system was that the NGOs could concentrate on producing quality service. But they also inherited the bad points of the civil service system, such as unreasonable salary points and personnel structure.

'Some posts are not really necessary in some NGOs, such as [hiring] a certain number of clerks for a certain number of social workers. With the new system, the NGOs can cut redundant posts and use the resources in other areas. But they have a lot to do to catch up, as they are so used to the old system.

'It is very tricky of the Government to say it will only help financially in the coming three years. The Government needs to do more than that, including training the personnel and mapping out the financial and personnel plans for each NGO.

'So long as they don't have a long-term plan, incidents of sacking and other disputes will continue to emerge,' he said.

Uncertainty has reigned in most NGOs over the past few months of consultation with the approach of LSG deadline. As one veteran social worker put it: 'Morale has been at an all-time low. I have never seen such uncertainty felt by the staff in my career.

'There are rumours and signs of pay cuts and redundancies. Everybody is waiting for announcements from the board about some kind of revamp,' he said.

Another senior social worker said: 'Our concern is that the scheme would serve as an advantage only if the organisation is healthy. The board of directors should include members who are social workers, instead of the directors' friends. Some NGO directors are ignorant of social work, but they are friends of existing directors so they were asked to join.' To some newer voluntary agencies which have not yet been funded by the Government, the implementation of LSG marks a new beginning.

A chief of one non-subsidised agency said: 'It changes the concept [held by] many in the field that 'whatever we need, the Government should give, or it is not helping'. But what the Government should give to the NGOs is really the power, not money.

'And I don't understand why the senior workers do not try to start their own agencies if they don't have faith in the directors.' Another senior official at a non-subsidised agency echoed her views: 'Look at the bright side of things, LSG will put more pressure on the 'privileged' to improve their ability. It forces the board of directors to think carefully about resources and staff efficiency.

'However, now that the NGOs can pay their staff discounted wages and pension funds, I'm afraid it would be difficult for them to achieve the ultimate spirit of the scheme. The NGOs have to find people whose enthusiasm in the profession is bigger than their desire to earn money,' he said.

The traditional value of NGOs has been to supplement services that the Government falls short in providing. NGOs also bring to society a spirit to initiate projects which meet social needs. And they have flexibility and give the public more choice. LSG may enhance this role.

However, without a well-planned changeover and an effective monitoring system, cases like the abrupt dismissals of So Yuk-ling and Yeung Kai-hong could become an unwelcome occurrence within the NGO community.