Plan to have contractors pay bond to cover wages

PUBLISHED : Tuesday, 04 April, 2006, 12:00am
UPDATED : Tuesday, 04 April, 2006, 12:00am

Idea seeks to avoid repeat of Dickson collapse that left 400 workers unpaid

Government contractors may be required to put up security when bidding for projects in future to ensure employees' wages are paid.

The proposal has been put forward as about 400 workers continue to seek unpaid wages after contractor Dickson Construction was removed from three public housing projects because of delays.

It was outlined by Permanent Secretary for Housing, Planning and Lands Thomas Chan Chun-yuen at a Legislative Council housing panel meeting yesterday.

He said contractors may be required to purchase bonds or bank guarantees to cover unpaid wages in the event of companies going into liquidation.

But the proposal was criticised by a legislator as coming too late.

Housing Department deputy director Ada Fung Yin-suen said the bond would be used to cover any expenses incurred by project delays should the company's assets become frozen during a lawsuit.

'Under the new policy, contractors will pay the bank a sum of money which the bank can use to settle unpaid wages even if the company undergoes litigation,' she said.

Ms Fung said the government would consult the industry and the banks later this month before coming to a conclusion.

Legislator Albert Ho Chun-yan said the move had come too late.

'The private sector has had such a practice for a long time,' he said. 'The government is always late in adapting to the market.'

Nearly 400 construction workers appealed to the government for help over unpaid wages after the Housing Authority terminated main contractor Dickson Construction's contracts on three public estate projects and took them over in January due to serious delays in progress.

In February, the Housing Department agreed to settle $2 million of the $8.43 million in unpaid wages, with Dickson Construction's $35 million retention money - a surety paid to the department against failure to complete a project satisfactorily. But the decision was later overruled because a winding-up petition was filed against Dickson and its assets were frozen.

Meanwhile, 1,460 residents of Wong Chuk Hang Estate, whose rehousing has been held up due to delays in Shek Pai Wan estate - one of the three projects - said their lives had been gravely affected.

'I am scared every night I go home, most of my neighbours were moved and the estate is deserted, there are strangers living in those flats which were supposed to be vacated,' Ng King-hoi said.

Another Wong Chuk Hang resident, Ip Chiu, said: 'Shops closed down and the remaining population, many of them elderly, have to buy necessities in Aberdeen.'

Ms Fung said the retendering procedure would be compressed to make sure the three projects would be finished by next March.