First tranche of wage subsidy will receive Application from 25th May

Funds

2020-05-13

The Government announced earlier the launch of the Employment Support Scheme (ESS). Planned to spend $81 billion to provide time-limited financial support to employers with wage subsidy to retain their employees. Hence maintaining the strength for Hong Kong. The Chief Executive, Mrs. Carrie Lam, announced on 12th May the first tranche of the ESS will receive application from 25th May.

After an intensive research, discussed with stakeholder, and listened to the views of different sectors. HK government has largely finalized the details of the ESS. The first tranche of the ESS will provide wage subsidies for 3 months from June to August 2020.  

Improvement measures in respect of the wage subsidy:

Firstly, Extending the coverage of the ESS to employees aged 65 or above under the Mandatory Provident Fund (MPF) schemes. At present, around 60 000 employees aged 65 or above are having MPF accounts. If employers have made voluntary MPF contribution for these employees, they may apply for wage subsidies for them;

Furthermore, extending the coverage of the ESS to 2 MPF Industry Schemes, tailor-made for the construction industry and catering industry.  Employers may apply for wage subsidies for “regular employees”. Employees who are 18 – 64 years of age,  and employers have employed for a continuous period of 60 days or more. Then employers have made MPF contributions for them;  

Thirdly, relaxing the eligibility of self-employed persons (SEPs) that they should have made MPF contributions between January 1, 2019 and March 31, 2020. After the relaxation, SEPs who have set up an MPF account on or before March 31, 2020 and with that account remaining opened as of the same date may apply for a one-off subsidy of $7,500; and

Nevertheless, the Government will calculate the amount of wage subsidies based on 50% of the actual wage paid in the “specified month”. The specified month at the choice of the employers based on the situation of the enterprises. The wage cap at $18,000 per month. After listening to the views of some of the sectors hard hit by the epidemic, the Government decided to allow the employers to choose December 2019 as the “specified month”. In other words, the “specified month” for the purpose of applying for the first tranche of wage subsidy can be any one month between December 2019 and March 2020, instead of between January and March 2020 as previously proposed.
 

The measures under the Anti-epidemic Fund should fulfill the following 5 principles:

  • Simple to understand;
  • Easy to access;
  • Quick to disburse funds;
  • Sufficiently broad-based benefitting large numbers of individuals and businesses;
  • Paving the way for economic recovery.

Eligibility

Generally speaking, with the exception of ineligible employers (mainly organisations whose employees’ salaries don’t affected by the epidemic, for example, the HKSAR Government, statutory bodies, subvented organisations with employees’ salaries subsidised by the Government). All employers has made MPF contributions for employees (including Master Trust Schemes and Industry Schemes) or who have set up MPF-exempted Occupational Retirement Schemes Ordinance (ORSO) schemes, may apply for ESS.

To further clarify eligibility and to prevent people from applying for wage subsidy by establishing a new company and opening MPF accounts. The MPF accounts of the relevant employers and employees applying for the wage subsidy should have been set up on or before 31st March, 2020 (i.e. cannot be backdated to that date or any earlier dates). In other words, employers with the MPF accounts set up on or after 1st April, 2020 will not be eligible for the first tranche of wage subsidy.

Employers’ Promises

Employers participating in the ESS must provide an undertaking not to make redundancies during the subsidy period. And to spend all the wage subsidies on paying wages to the employees. If an employer fails to comply with the undertaking, the Government will claw back the unspent balance of the wage subsidy or/and impose other penalty. 

Application & Disbursement

The application for the first tranche of wage subsidy under the ESS is starting from 25th May. Eligible employers and SEPs may submit online application from 25th May to 14th June. The subsidy expects to disburse to the majority of employers in 3 to 4 weeks after submitting application.

Procedure

In order to disburse the wage subsidy to employers as early as possible and hence prevent employers making redundancies. The Government will ensure the application procedures under the ESS are simple and easy to understand. Employers and SEPs applying for the ESS are required to authorise the ESS processing agent (appointed by the Government) to receive MPF record certificates directly from the MPF trustees. In order to confirm the information related to MPF contributions. Employers don’t need to submit such information at the time of application. And MPF trustees will not charge employers and SEPs any fees on the issue of the certificates.

The Government will announce next week other detailed arrangements about the ESS. Including the online application procedures, monitoring mechanism and calculation of penalty.

 

For further information, please contact us.

You may want to read: https://centreo.hk/hkd137-5b-financial-relief-hong-kong/

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