Wage subsidy penalty set

August 23, 2020

The Government today introduced a penalty clause in the second tranche of the Employment Support Scheme (ESS) to boost deterrence against employers from significantly laying off employees.


It made the statement in response to media enquiries about the ESS.


The statement said that if the ESS Secretariat considers that the magnitude of redundancies during the subsidy period, from September to November, is substantial, and if employers fail to prove their intention to hire new employees, or there are no reasonable explanations for the redundancies, the Government reserves the right to claw back the second tranche of wage subsidies disbursed, in full or in part.


Moreover, if employers receiving the first tranche of wage subsidies made redundancies during the subsidy period from June to August, and if the magnitude of redundancies is substantial, and the employers fail to prove they will hire new employees or have no reasonable explanations for the lay-offs, the Government reserves the right to reject the employers’ applications for the second tranche of the ESS.


The Government said that employers applying for the second tranche can choose any one month from December 2019 to March as the specified month.


The amount of wage subsidies will be calculated based on 50% of the actual wages paid to each employee in the specified month, with a wage cap of $18,000 per month.


The maximum wage subsidy per employee is $9,000 per month.


The amount of wages paid in the specified month as well as the information on the Mandatory Provident Fund (MPF) contributions only serve as the basis for calculating wage subsidies instead of the maximum subsidies that the employers can use for paying wages for each employee.


Applications for the second tranche of the ESS will be accepted from 7am on August 31 to 11.59pm on September 13.


Employers, regardless of whether they applied for the first tranche, can submit their applications here during the period.


Self-employed people with MPF self-employed person accounts as of March 31 can also submit applications during the same period if they have not received the subsidy in the first tranche.


Additionally, the ESS Secretariat has notified a further batch of successful applicants that disbursement of wage subsidies will commence next week.


About 400 employers and about 900 self-employed people were involved. The total wage subsidies amount to about $100 million.


To date, the wage subsidies disbursed in the first tranche amount to about $44 billion, covering around 149,000 employers with a total committed paid headcount of about 1.9 million.

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