Hong Kong SAR Government will start receiving applications for this year’s round of pandemic relief from eligible employers today (“ESS 2022”). The application period runs from 29 April to 12 May 2022 and relates to employers (or self-employed individuals) that have participated in MPF schemes or ORSO schemes on or before 31 December 2021.
Dr Law Chi Kwong – Secretary for Labour & Welfare – reiterated that the mechanism applied relies on MPF contribution records in order to evaluate the number of employees and monitor the receipt of the subsidy from their employers.
As with ESS 2020, ESS 2022 requires that the entire amount of any subsidy received is applied to payment of wages. It is understandable and expected that employers will have staff turnover during the assessment period, with new staff being hired and others having resigned, hence the assessment will take place on an overall headcount basis and not based on individual employees.
Organisations on the Exclusion List are excluded from the subsidy scheme – e.g. government organisations, consulates and universities.
The Government has also published a Restricted List, which includes supermarkets, pharmacies, property management firms that will have their applications limited to only 100 employees. Employers that are not part of the Exclusion List or Restricted List will be entitled to apply for wage subsidies for their first 1,000 employees only.
The wage subsidies are structured and calculated as follows:
- Employers may choose the reference month from which the MPF/ORSO records are applied to calculate the wage subsidies. Successful ESS 2020 applicants can choose between (i) the month selected by them under the ESS 2020 or (ii) a month between October and December 2021 which can produce the highest level of subsidy according to the prescribed formula. Applicants that did not apply under ESS 2020 must apply under the second option which will involve a longer processing time.
- The wage subsidies will fall into one of three categories:
- Full subsidy – HK$8,000 for each employee with wages of HK$8,000 per month or more;
- Half subsidy – HK$4,000 for each employee with wages of at least HK$3,000 but less than HK$8,000 per month; and
- Elderly subsidy – HK$4,000 for each employee aged 65 or above with wages of less than HK$3,000 per month.
Applicants must undertake that during the subsidy period that the (i) number of employees in each category is not less than the specified headcount; and (ii) total number of employees eligible is not less than the total number of the specified headcount.
Similar to the ESS 2020, if applicants are not able to fulfil the above undertaking in any month during the subsidy period, it will be required to (i) return the relevant subsidy amount; and (ii) be subject to a penalty equivalent to 10% of the subsidy amount to be returned. Details related to penalties have been published on the ESS website Terms and Conditions section.
If any employer is subject to a clawback / penalty under ESS 2020, it must fully settle the same by 10 May 2022 in order to submit an application under ESS 2022.
Subsidies to successful applicants will be paid in four instalments directly to the employer’s bank account – May and June subsidies will be paid in full after successful completion of the application, while the subsides for July will be paid with a 70/30 split in July and August 2022 to take into consider any potential deductions / penalties.
Wage subsidies are exempted from tax and need to be fully utilised during the subsidy period.
A list of employers, which includes the breakdown of subsidies received, will be published by the Hong Kong Government after the ESS 2022 final roll out.
If you would like to understand more on legal implications connected to employment and HR issues, you can contact the partner heading our Employment 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.
