To help deter the rising number of employers' wage defaults, the Government proposes raisinge the maximum penalty for wage offences. It would see the top fine rise to $350,000 from $200,000, and maximum prison sentence rise to three years from one.

The related Employment (Increase in Penalty for Offences under Section 63C) Bill 2005 will be gazetted on Friday and introduced into the Legislative Council for first reading on December 14.

Recently, employers' wage defaults have increasingly become a significant cause for labour disputes and claims the Labour Department handles. In 2004, non-payment and under-payment of wages accounted for 34% of all the labour cases it handled - up from 27% in 2000.

A spate of restaurants closing business and defaulting on wage payments earlier this year  heightened concern over the need for more effective sanctions under the Employment Ordinance against unscrupulous employers.

In the first 10 months of this year, 493 summonses on wage offences resulted in convictions. The number of such convicted summonses has been rising at an alarming rate, from 139 in 2002, to 445 in 2003 and 504 in 2004.

The department makes every effort to prosecute employers who have contravened wage provisions under the Employment Ordinance, where there is sufficient evidence and the employees are willing to testify in court.

Raising the maximum penalty will ensure the Employment Ordinance has effective sanctions against wage offences. The department considers the proposed $350,000 fine and three years' imprisonment an appropriate maximum penalty for wage offences, sending a clear message to employers that they must pay wages on time.

It is also on par with the maximum penalty for the employing people who are not lawfully employable under the Immigration Ordinance.