The Economic Development & Labour Bureau has proposed measures to shield the Protection of Wages on Insolvency Fund from abuse, with focus on the catering industry which accounts for the largest share of the fund's payment.

The trade has, over the past decade, consistently accounted for the major share of fund applications, making up 39% of last year's 13,631 applications, and 55% of this year's 2,930 applications, representing a surge of 34%.

The trade also accounted for $116 million or 30% of the $382 million payment from the fund last year.

The bureau said 25 of the 65 cases of suspected abuse since November 2002 were from the catering sector.

Proposed improvements 

To better protect the fund and ensure employees' rights to their statutory entitlements, the bureau proposes:

* recruiting retired police officers with criminal investigation experience to reinforce Labour Department investigative and intelligence capacity;

* strengthening the department's early warning system on non-payment of wages in the catering industry;

* stepping up enforcement against restaurants;

* helping restaurants with a record of labour disputes to improve their management; and,

* mobilising the catering industry in adopting good management practices.

Longer-term measures are:

* mandatory requirement for all restaurant proprietors to provide bank guarantees for the statutory entitlements of employees when obtaining or renewing licences;

* mandatory requirement for restaurant proprietors who have been involved in cases requiring payment from the fund to provide bank guarantees for the statutory entitlements of employees as a pre-condition for licensing;

* scaling the levy rates of Business Registration Certificates by industries, with employers in industries that account for significant portions of claims to the fund will be required to pay a higher Business Registration Certificate levy;

* separate funds for certain industries, with employers in the selected industries to support their own funds on a self-sufficient basis;

* requiring employers to recognise the contingent liability for severance payment; and,

* introducing the Companies (Corporate Rescue) Bill which covers legislative proposals on corporate rescue procedures and insolvent trading.

The bureau said in devising any possible new preventive measure, it must be careful not to fetter the local business environment and unduly add to the cost of doing business.

The five immediate measures will be implemented shortly, while the proposed longer-term measures, most of which will entail legislative amendments, will require thorough study.