News

1. 2015 Policy Address

Retirement Protection

As regards the future development of retirement protection in Hong Kong, there are divergent views in society. As set out in the 2015 Policy Address, the Commission on Poverty will devise a framework and set out the details for a public consultation in the latter half of year 2015. In exploring this issue, the adequacy, sustainability, affordability and robustness of various policy options need to be considered. The existing retirement protection system will be taken into account and possible necessary enhancement measures will be explored. The Government agrees that protection for needy citizens after retirement should be improved and has earmarked $50 billion to provide for future needs.

The Mandatory Provident Fund arrangements will continue to be improved, including the introduction of a “core fund” with fee control to address the concerns over “high fee” and “difficulty in making fund choices”.

Changes on Immigration Policy

1. The Capital Investment Entrant Scheme (CIES) has been suspended
   
   The CIES previously provided an avenue to obtain entry for residence in Hong Kong for individuals who are willing to make capital investment. However, the Chief Executive has announced in the 2015 Policy Address that since 15 January 2015 (the “Suspension Date”), the CIES would be suspended until further notice.
   
   The suspension will not affect applications submitted before the Suspension Date, whether already approved (including approval-in-principle and formal approval) or still being processed.
   
   According to a transitional arrangement, applications submitted after the Suspension Date will still be accepted only if they involve investment of no less than HK$10 million made within six months immediately before the Suspension Date and such applications are made within six months of the investment, subject to the applicant meeting the other eligibility criteria under the CIES.
2. Other enhancement measures to attract talent and professionals
   
   According to the Policy Address, the Government will take a more proactive approach to attract talent and professionals from outside Hong Kong by introducing the following enhancement measures:

1. Introduce a pilot scheme to attract the second generation of Chinese Hong Kong permanent residents who have emigrated overseas to return to work in Hong Kong;
2. Encourage talent and entrepreneurs to come and stay in Hong Kong by relaxing the stay arrangements under the General Employment Policy, the Admission Scheme for Mainland Talents and Professionals and the Quality Migrant Admission Scheme;
3. Adjust the General Points Test under the Quality Migrant Admission Scheme to attract more young talent with exceptional educational background or international work experience to come to work in Hong Kong;
4. Highlight the factors to be considered when processing applications to enter Hong Kong for investment under the General Employment Policy to attract more entrepreneurs from overseas to develop their business in Hong Kong; and
5. Study the feasibility of drawing up a talent list to attract high-quality talent to support Hong Kong’s development as a diversified and high value-added economy. 

The above enhancement measures would lead to changes and updates on the existing rules on visa applications in the near future. Further details of the changes are still to be announced by the Government.

2. New Paternity Leave under the Employment Ordinance

Effective from 27 February 2015, working fathers may be entitled to receive 3 days paid paternity leave under the Employment Ordinance at a daily rate of four-fifths of the employee’s average daily wages. A male employee who is the father of a newborn or a father-to-be is entitled to paid paternity leave only if he has been employed under a continuous contract for a period of not less than 40 weeks immediately before taking such leave and has given advance notice to his employer in accordance with the new law. Paternity leave may be taken consecutively or on discrete days. It can be taken during the period from 4 weeks before the expected date of delivery of the employee's child to 10 weeks from and inclusive of the actual date of delivery. Please refer to our Legal Alert titled “Paternity Leave for Working New Fathers” for further information.

3. Minimum wage

The Minimum Wage Commission (“MWC”) has reviewed the Statutory Minimum Wage (“SMW”) rate and submitted its recommendation report on the SMW rate to the Chief Executive in Council on October 31, 2014. The Chief Executive in Council has adopted the recommendation of the MWC to raise the statutory minimum wage rate from its current level of $30 per hour to $32.50 per hour, meaning an increase of 8.3 per cent.

The Minimum Wage Ordinance (Amendment of Schedule 3) Notice 2015 was published in the Government Gazette and tabled in the Legislative Council on 21 January 2015. Subject to the approval of the Legislative Council, the revised rate will come into force on 1 May 2015.

In line with the proposed increase in the statutory minimum wage rate, the monthly monetary cap on recording the total number of hours worked will also be amended from 1 May 2015. The employer will be exempted from the requirement of recording the total number of hours worked by an employee in a wage period if the wages payable for that wage period are not less than HK$13,300 (adjusted from the current level of HK$12,300) per month.

4. Mandatory Provident Fund Schemes (Amendment) Bill 2014

This Bill was gazetted on 27 June 2014 and was introduced to the Legislative Counsel on 2 July 2014. This Bill introduced certain significant changes into Hong Kong’s Mandatory Provident Fund (“MPF”) system. The Bill, with amendments, was passed on 21 Jan 2015. Except for certain sections that will come into operation on the day on which it is published in the Government Gazette, the Mandatory Provident Fund Schemes (Amendment) Ordinance 2014 will come into operation on a day to be appointed by the Secretary for Financial Services and the Treasury by notice published in the Gazette. Key provisions of the Bill are as follows:

Phased withdrawal and early withdrawal

• Allow phased withdrawal of accrued benefits upon a scheme member's retirement or early retirement;
• Require a trustee to process, free of charge, no more than 4 withdrawal requests made by each scheme
  member per year;
• Add “terminal illness” as a ground for the application of making early withdrawal;
• Clarify the terms “permanently ceased employment or self-employment” and “departs from Hong Kong permanently” for the purpose of making early withdrawal;

Approved criteria of MPF constituent funds

• Provide a legal basis for the Mandatory Provident Fund Schemes Authority (“MPFSA”) to refuse an application
  for introducing MPFs if the fund is not in the interest of scheme members;

Reduction of compliance duties on trustees and scheme members

• Reduce the compliance requirements on trustees and scheme members;

Disclosure arrangements

• Comply with the disclosure and reporting requirements in respect of foreign taxation and update the list of parties to whom the MPFSA and certain frontline regulators may disclose information;

Extension of time limit for instituting prosecution

• Extend the limitation period to institute criminal proceedings under the Mandatory Provident Fund Schemes Ordinance from 6 months to 3 years;

Others

• A clarification on the determination of the contribution day and permitted period in MPF schemes;
• Allow a committee of estate appointed under the Mental Health Ordinance to make a claim for early withdrawal of MPF accrued benefits on behalf of a mentally incapacitated scheme member;
• Allow certain scheme members under the Occupational Retirement Schemes Ordinance to make withdrawal on the ground of terminal illness and provide that the proposed clarification in respect of early retirement and permanent departure from Hong Kong will be applicable to such members; and
• Certain textual amendments.

5. Standard working hours

Policy Study

Responding to community concerns over employees’ long working hours in Hong Kong, the Labour Department has completed a policy study on standard working hours (“SWH”) in November 2012 which provides a solid and objective basis for further public discussion on the subject of SWH.

Standard Working Hours Committee

To follow up on the policy study on SWH, the Government has set up the Standard Working Hours Committee (“SWHC”) in April 2013. The SWHC comprises members drawn from the labour sector, business sector, academia, community and the Government. The SWHC will promote public understanding of SWH and consider whether to propose legislation on SWH.

SWH is a highly complex and contentious subject which involves a myriad of interrelated social and economic issues. Given the far-reaching implications that it will bring to our labour market and economy, it is necessary for the community to examine and discuss these issues thoroughly before the Government can come to a view on the matter. We need to stay tuned to see if any new law or regulations will be introduced in 2015 in this regard.

6. Contracts (Rights of Third Parties) Bill

The Bill has been passed by the Legislative Council on 26 November 2014. However, when this Bill will come into operation has not been confirmed yet. There is a possibility that it may come into operation in year 2015. Please refer to our Legal Alert titled “How may the Contracts (Rights of Third Parties) Bill and the New Companies Ordinance be relevant in the human resources/ employment context?” for further information.

7. Competition Ordinance

The Competition Ordinance (Cap. 619) was passed on 14 June 2012. On 18 January 2013, provisions of the Competition Ordinance broadly relating to the establishment of the Competition Commission came into effect first. Subsequently on 1 August 2013, provisions relating to the establishment of the Competition Tribunal came into effect. The substantive provisions are yet to take effect and will only become operative after the Competition Commission will have prepared the relevant implementing guidelines.

The Competition Ordinance prohibits and deters undertakings in all sectors from adopting anti-competitive conduct which has the object or effect of preventing, restricting or distorting competition in Hong Kong.

It provides for general prohibitions in three major areas of anti-competitive conducts, namely:-

1. Preventing anti-competitive agreements between undertakings (“First Conduct Rule”);
2. Prohibiting any abuse of substantial market power for the purpose of restricting competition (“Second Conduct Rule”); and
3. Preventing anti-competitive mergers involving telecommunications carrier licensees (“Merger Rule”)

The First Conduct Rule will have a direct impact on the employment field as it imposes restrictions on wage-fixing among competitors, concerted practices (e.g. exchanging of information amongst employers on intended pay rise), group boycott (e.g. a group of competitors ganging up to poach a competitor or a potential competitor’s key employees so as to hinder that competitor’s ability to compete), non solicitation agreements (i.e. agreement between competitors not to solicit employees from each other).

It is uncertain as to when the substantive provisions of the Competition Ordinance will come into operation and we have to stay tuned if it will come into play in year 2015.