On 18 August 2020, the Hong Kong government announced details of the second tranche of the Employment Support Scheme (the "Scheme").
Applications for the second tranche of wage subsidies supporting payment of wages from September to November 2020 will open from 31 August to 13 September 2020. Launched under the second round of the Anti-epidemic Fund announced in April this year, the Scheme provides time-limited financial support to employers in exchange for undertaking to retain employees.
Details of the second tranche of the Scheme
1. Eligible employers and employees
The eligibility requirements are the same as those of the first tranche:
- With the exception of ineligible employers (including amongst others the government, government-owned companies and subvented organisations), employers who have been making Mandatory Provident Fund ("MPF") contributions or have set up Occupational Retirement Schemes ("ORSO") for employees are eligible; and
- Relevant accounts should have been set up on or before 31 March 2020.
Employers can apply for wage subsidies in respect of:
- Regular employees (i.e. employees who are at least 18 but under 65 years of age and have been employed for a continuous period of 60 days or more) under the Master Trust Schemes and Industry Schemes, for whom MPF mandatory contributions have been made by their employers;
- Employees aged 65 or above under the Master Trust Schemes and Industry Schemes; and
- Employees who are members of the ORSO schemes.
2. Required undertakings
In receiving the second tranche of subsidies for September to November 2020, an employer must undertake that:
- The number of paid employees in September, October and November 2020 should not be less than the total number of paid and unpaid employees in March 2020 (i.e. the "committed headcount of paid employees"); and
- All wage subsidies should be spent on paying wages to employees.
Under the second tranche of the Scheme, additional undertakings are imposed on the following employers should they decide to apply for the Scheme:
- Major property management companies should undertake to give back at least 80% of the amount equivalent to the Scheme wage subsidies to the owners or owners' association, for example, by offering time-limited waiver or reduction in management fees.
- Two major chained supermarkets, namely ParknShop and Wellcome, should undertake to provide cash coupons or extra discounts to customers and non-governmental organisations during the wage subsidy period.
3. Calculation of monthly subsidy
The calculation method of wage subsidies is the same as that in the first tranche. The amount of subsidies for September, October and November 2020 will be calculated based on 50% of the actual wages paid in the "specified month", capped at HK$18,000 per employee per month. The maximum wage subsidy per employee is HK$9,000 per month.
A "specified month" is a month between December 2019 and March 2020 as selected by the employer. For the second tranche, employers who have received wage subsidies in the first tranche of the Scheme may choose another month as the "specified month" when making an application.
Employees aged 65 or above
Under the second tranche, there is an improved arrangement to benefit more employees aged 65 or above who have MPF accounts:
- If information on the employment of employees aged 65 or above (but not their wages nor MPF voluntary contributions made for them by the employers, which is required under the first tranche) is shown on the employer's MPF record certificates, the amount of wage subsidies will be calculated based on the number of such employees aged 65 or above engaged in the "specified month", with a subsidy of HK$5,000 per employee per month.
- If the amount of wage subsidy for employees aged 65 or above calculated based on 50% of the actual wages or 10 times of the voluntary MPF contributions is below HK$5,000 per month, the employer may still receive a wage subsidy of HK$5,000 for each of such employee per month.
4. Application and disbursement arrangements
Employers can submit online application (on www.ess.gov.hk) from 7am on 31 August to 11:59pm on 13 September 2020. Employers who have applied for the first tranche of wage subsidies must submit a new application irrespective of the application result.
For employers applying for the second tranche only, apart from scanned copies of bank statements, they are further required to submit scanned copies of the Business Registration Certificates and any documents issued by the MPF trustees documenting all the MPF schemes participated by the employer.
Eligible employers who have provided accurate information can expect to receive wage subsidies three to four weeks after submission of their application.
5. Consequences for breaching the undertakings
A breach of the undertakings will result in claw back and/or penalty, the calculation methods of which remain the same as under the first tranche (please see our previous article).
If employers violated the undertakings within the subsidy period of the first tranche of wage subsidies, they are required to return the unspent balance of subsidies and/or pay a penalty to the government. The relevant amount will be deducted from the subsidies of the second tranche to be disbursed to these employers, if applications are approved.
The government has also announced additional penalties to be included under the Terms and Conditions of the second tranche of the Scheme. Under the new Terms and Conditions, the government shall reserve the right to reject an employer's application for the second tranche of wage subsidies and/or claw back the first or second tranche of subsidies (in full or in part) if the Secretariat considers that:
- The magnitude of redundancies made by the employer in its company/organisation during the first or second subsidy period was substantial, and the employer fails to prove its intention to employ persons to replace those being laid off and/or re-employ those who have been laid off, or there is no reasonable explanations provided for the "redundancies made" by it; or
- The employer has during the first or second subsidy period engaged in conduct which directly or indirectly violates the objective of retaining employment under the Scheme, or is contrary to public interest.
6. Auditing and monitoring mechanisms
The auditing and monitoring mechanisms will remain the same as under the first tranche. After disbursement of the wage subsidies, the Secretariat will upload onto the Scheme website the list of employees who have received subsidies, the amount of subsidies received and the committed headcount of paid employees.
Should an employer be found to have abused or violated the conditions of the Scheme, employees or members of the public may report to the authorities and follow-up actions will be taken by the Secretariat and the Scheme Processing Agent.
- Employment Support Scheme website
- Powerpoint with implementation details
- Employment Support Scheme (ESS) Frequently Asked Questions
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.