The Government gazetted the Employment & Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Ordinance 2022 today.

The ordinance seeks to abolish the use of the accrued benefits derived from employers' mandatory contributions under the Mandatory Provident Fund (MPF) System to offset severance payment and long service payment.

However, employers may continue to use the accrued benefits of their voluntary contributions and gratuities based on employees' length of service to offset the two payments.

The Government said that abolishing the offsetting arrangement is a significant milestone in enhancing the retirement protection of employees.

After extensive and in-depth consultation with all sectors of the community, especially the Labour Advisory Board, employer associations and labour unions, the current-term Government put forth the final proposal as enshrined in the law upon passage of an amendment bill by the Legislative Council on June 9.

The abolition of the offsetting arrangement has no retrospective effect. If an employee's employment commenced before the effective date of the ordinance, the employer can continue to use the accrued benefits of the MPF contributions to offset the employee's severance/long service payment in respect of the employment period before that transition date.

The abolition of the offsetting arrangement will also be applicable to occupational retirement schemes under the Occupational Retirement Schemes Ordinance, the two school provident funds under the Grant Schools Provident Fund Rules and Subsidized Schools Provident Fund Rules and overseas occupational retirement schemes joined by employees from outside Hong Kong which are exempted from the MPF System.

The Employment (Amendment) Ordinance 2022 also took effect upon gazettal today.

The ordinance strengthens the protection of the employment rights and benefits of employees when they are absent from work due to compliance with specific anti-epidemic requirements and encouraging them to receive COVID-19 vaccination.

It stipulates that employees' absence from work due to compliance with an isolation order, a quarantine order or a requirement under restriction-testing declaration which imposes a restriction on movement will be deemed as sickness days.

Employees who have fulfilled the relevant criteria under the Employment Ordinance will be entitled to sickness allowance. Additionally, the dismissal of an employee by reason of his/her absence due to compliance with the aforesaid anti-epidemic requirements will be considered as unreasonable.

The ordinance also stipulates clearly the conditions to be met if an employer makes a COVID-19 vaccination request to his/her employee. If an employee is dismissed due to non-compliance with such request, the dismissal will not be considered as unreasonable.