Employment Support Scheme (ESS) Update

Employment Support Scheme (ESS) Update

Employment Support Scheme (ESS) Update 1200 800 Adam Hugill
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Further to our article published on 15 April 2020 “New Relief Measure During COVID-19 Pandemic: Hong Kong Launches Employment Support Scheme“, yesterday the Government issued further information and guidance, including a number of improvements to the much-awaited Employment Support Scheme (“ESS“).

4 Improvements

The improvement measures comprise:

  1. extending the coverage of the ESS to employees aged 65 or above provided the employee maintains a MPF account and employers have been making voluntary MPF contributions;
  2. extending the coverage of the ESS to apply to MPF construction and catering industry specific schemes that were previously excluded;
  3. relaxing the eligibility of self-employed persons to receive the one-off subsidy of HK$7,500 if they have set up an MPF account on or before 31 March 2020 and with that account remains open; and
  4. the ‘specified month’ against which wage subsidies may be claimed is extended to include December 2019 (or January, February or March 2020) but still preserving the wage cap at HK$18,000 per month.
Who May Apply

The ESS is intended to benefit all employers who have been making MPF or ORSO contributions with the exclusion of certain ineligible employers (for example, the Government and statutory bodies) schemes. Employers with the MPF accounts set up on or after 1 April 2020 will not be eligible to apply for the first tranche of the wage subsidy.

Legal Obligations

The recent announcement from the Government states that 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.

Previously the Government said that it would focus on monitoring headcount rather than monitoring each individual employee, which suggested that if an employee resigned from their employment or is dismissed for gross misconduct then that role would have to be refilled in order for an employer to maintain eligibility.

The discrepancy between monitoring headcount or reason for termination remains an open question.  The Government is expected to announce the full detailed arrangements for the ESS and launch a dedicated website early next week which will hopefully finally answer this.

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.  Further details of the enforcement mechanism will also be announced next week.

Applications for ESS

Applications for the first tranche of wage subsidy can be made during a three-week period starting from 25 May 2020 and running until 14 June 2020 via an online application.  Payment of the subsidy is expected three to four weeks after submitting the application.

 

If you would like to understand more on legal implications connected to Employment issues, you can contact the partner heading our Employment & Business Immigration practice – Adam Hugill.

This article is for information purposes only.  Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.

 

Adam Hugill

Adam Hugill

Adam advises on a wide range of contentious and non-contentious legal and commercial issues, with a special emphasis on employment law in Hong Kong and the Asia Pacific region.

All articles by : Adam Hugill
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