Coronavirus: Hong Kong employer support scheme opens

Out-Law News | 27 May 2020 | 10:56 am | 2 min. read

A government support scheme to help employers in Hong Kong affected by the coronavirus pandemic to retain their employees is now open to applications.

Employers can apply for funding through the Employment Support Scheme (ESS) (13-page / 250KB PDF) to cover 50% of each employee’s salary for up to six months, capped at HK$9,000 (US$1,160) per employee per month. Applications for the first round of subsidies to be paid under the scheme, to cover wages from June to August, opened on 25 May and will close on 14 June. Subsidies will be paid out between three and four weeks after applications are made.

Hong Kong-based Paul Haswell of Pinsent Masons, the law firm behind Out-Law, said: “Whilst the scheme may not seem as generous as similar schemes announced in other jurisdictions, it makes up for this with its wide application”.

“The majority of companies in Hong Kong will be able to take advantage of this scheme, but should note the limited window for registration,” he said.

Haswell Paul

Paul Haswell

Partner

Whilst the scheme may not seem as generous as similar schemes announced in other jurisdictions, it makes up for this with its wide application.

The scheme is open to almost every employer in Hong Kong which has been making Mandatory Provident Fund (MPF) contributions for its employees, or which have set up MPF-exempted Occupational Retirement Schemes Ordinance (ORSO) schemes, provided the employer was making those for those employees contributions before 31 March 2020. Employers with employees whose salaries have not been impacted by the pandemic including the HKSAR government and statutory bodies are not eligible for the scheme.

Self-employed individuals with an active MPF account as of 31 March are also eligible for the scheme. They may apply for a one-off subsidy of HK$7,500.

Eligibility for the scheme has been extended from its initial announcement to employees aged over 65, provided that the employer has been making voluntary MPF contributions in respect of those employees. It has also been extended to construction and catering industry employees aged between 18 and 64, who were previously covered by industry-specific schemes, if employers have made MPF contributions for them.

As part of the application process, employers must authorise the scheme’s processing agent to receive MPF record certificates directly from the MPF trustees. They must also provide an undertaking not to make redundancies during the subsidy period, and to spend the full amount received under the ESS on paying wages to the employees. Penalties will be imposed if an employer fails to comply with these undertakings, and the unspent balance of the subsidy will be clawed back by the government.

The total subsidy provided to an employer will be calculated based on 50% of its employees’ salaries during a ‘specified month’, capped at HK$9,000 per employee. The employer can choose any month between December 2019 and March 2020 as the basis of the calculation.

A second tranche of the scheme will cover a percentage of employee salaries between September and November 2020. Application dates and arrangements will be announced at a later date.

The government intends to publish a list of employers which received subsidies under the scheme, as well as the number of employees who benefited.