News & Events

Deacon's Employment and Pensions Newsletter - January 2015

Submitted By Firm: Deacons

Contact(s): Cynthia Chung

Author(s):

Cynthia Chung and Iris Cheng

Date Published: 1/29/2015

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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.

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Client Successes

Altra Industrial Motion Inc.

Altra Industrial Motion Inc. has multiple locations in the U.S., as well as Central America, Europe, and Asia. The Employment Law Alliance has proved to be a great asset in assisting us in dealing with employment issues and matters in such diverse venues as Mexico, Australia, and Spain. We have obtained excellent results using the ELA network for matters ranging from a multi-state review of employment policies to assisting with individual employment issues in a variety of foreign jurisdictions.

In one instance, we were faced with an employment dispute with a former associate in Mexico that had the potential for substantial economic exposure. The matter had been pending for over a year, and we were not confident in the employment advice we had been receiving. I obtained a referral to the ELA counsel in Mexico, who was able to obtain a favorable resolution of the dispute in only a few days. Based on our experiences with the ELA, we would not hesitate to use its many resources for future employment law needs.

American University in Bulgaria

In my career I have been a practicing attorney, counsel to the Governor of Maine, and CEO of a major public utility. I have worked with many lawyers in many settings. When the American University in Bulgaria needed help with employment litigation in federal court in Syracuse, New York, we turned to Pierce Atwood, the ELA member we knew and trusted in Maine, for a referral. We were extremely pleased with the responsiveness and high quality of service we received from Bond Schoeneck & King, the ELA's firm in upstate New York. I would not hesitate to recommend the ELA to any employer.

David T. Flanagan
Member of Board of Trustees 

Arcata Associates

I really enjoyed the Conducting an Effective Internal Investigation in the United States webinar.  We are in the midst of a rather delicate employee relations issue in California right now and the discussion helped me tremendously.  It also reinforced things that you tend to forget if you don't do these investigations frequently.  So, many, many thanks to the Employment Law Alliance for putting that webinar together.  It was extremely beneficial.

Lynn Clayton
Vice President, Human Resources

Barrett Business Services, Inc.

I recently participated in the ELA-sponsored webinar on the Employee Free Choice Act.  I was most impressed with that presentation.  It was extremely helpful and very worthwhile.  I have also been utilizing the ELA's online Global Employer Handbook.  This compliance tool is absolutely terrific. 

I am familiar with several other products that purport to provide up-to- date employment law information and I believe that this resource is superior to other similar compliance manuals.  I am delighted that the ELA provides this free to its members' clients.

Boyd Coffee Company

Employment Law Alliance (ELA) has provided Boyd Coffee Company with a highly valued connection to resources, important information and learning. With complex operations and employees working in approximately 20 states, we are continually striving to keep abreast of specific state laws, many of which vary from state to state. We have participated in the ELA web seminars and have found the content very useful. We appreciate the ease, cost effectiveness and quality of the content and presenters offered by these web seminars.  The Global Employer Handbook has provided our company with a very helpful overview of legal issues in the various states in which we operate, and the network of attorneys has helped us manage issues that have arisen in states other than where our Roastery and corporate headquarters are located in Portland, Oregon.

Capgemini Outsourcing Services GmbH

As an international operating outsourcing and consulting supplier Capgemini has used firms of the Employment Law Alliance in Central Europe. We were always highly satisfied with the quality of employment law advice and the responsiveness. I can really recommend the ELA lawyers.

Hirschfeld Kraemer

Stephen HirschfeldAs an employment lawyer based in San Francisco, I work closely with high tech clients with operations around the globe. Last year, one of my clients needed to implement a workforce reduction in a dozen countries simultaneously. And they gave me 48 hours to accomplish this. I don't know how I could have pulled this off without the resources of the ELA. I don't know of any single law firm that could have made this happen. My client received all of the help they needed in a timely fashion and on a cost effective basis.

Stephen J. Hirschfeld
Partner 

Hollywood Entertainment Corporation

As the Vice President for Litigation & Associate General Counsel for my company, I need to ensure that we have a team of top-notch employment lawyers in place in every jurisdiction where we do business. And I want to be confident that those lawyers know our business so they don't have to reinvent the wheel when a new legal matter arises. With more than 3400 stores and 35,000 employees operating in all 50 U.S. states and across Canada, we rely on the ELA to partner with us to help accomplish our objectives. I have been delighted with the consistent high quality of the work performed by ELA lawyers. I encourage other in-house counsel to use their services, as well.

Ingram Micro

Ingram Micro is the world's largest technology distributor, providing sales, marketing, and logistics services for the IT industry around the globe. With over 13,000 employees working throughout the U.S. and in 35 international countries, we need employment lawyers who we can count on to ensure global legal compliance. Our experience with many multi-state and multi-national law firms is that their employment law services are not always a high priority for them, and many do not have experts in many of their offices. The ELA has assembled an excellent team of highly skilled employment lawyers, wherever and whenever I need them, and they have proven to be an invaluable resource to our company.

Konami Gaming

Our company, Konami Gaming, Inc., is growing rapidly in a very diverse and highly regulated industry. We are aggressively entering new markets outside the domestic U.S., including Canada and South America. I have had the recent opportunity to utilize the services provided by the ELA. The legal advice was both responsive and professional. Most of all, the entire process was seamless since our Nevada attorney coordinated the services and legal advice requested. I look forward to working with the ELA in the future, as it serves as a great resource to the legal community.

Jennifer Martinez
Vice President, Human Resources

Nikkiso Cryo, Inc.

Until recently, I was unaware of the ELA's existence. We have subsidiaries and affiliates throughout the United States, as well as in Asia, the Middle East and Europe. When a recent legal issue arose in Texas, our long-time Nevada counsel, who is a member of the ELA, suggested that this matter be handled by his ELA colleague in Dallas. We are very pleased with the quality and timeliness of services provided by that firm, and we are excited to now have the ELA as an important asset to help us address employment law issues worldwide.

Palm, Inc.

The ELA network has been immensely important to our company in helping us address an array of human resources challenges around the world. I strongly encourage H.R. executives who have employees located in many different jurisdictions to utilize the ELA's unparalleled expertise and geographic coverage.

Stacy Murphy
Former Senior Director of Human Resources

Rich Products

As the General Counsel for a company with 6,500 employees operating across the U.S. and in eight countries, it is critical that I have top quality lawyers on the ground where we do business. The ELA is an indispensable resource. It has taken the guesswork out of finding the best employment counsel wherever we have a problem.

Jill K. Bond
Senior Vice President/General Counsel, Shared Services and Benefits

Ricoh Americas Corporation

We have direct sales and service offices all over the U.S., but have not necessarily had the need in the past for assistance with legal work in every state where we have a business presence. From time to time, we suddenly find ourselves facing a legal issue in a state where we have no outside counsel relationship. It has been a real benefit to know that the ELA has assembled such an impressive team of experts throughout the U.S. and overseas.

A few years ago, we faced a very tough discrimination lawsuit in Mississippi. We had never had to retain a lawyer there before. I was absolutely delighted with the Mississippi ELA firm. We received an excellent result. They will no doubt handle all of our employment law matters in Mississippi in the future. I have also obtained the assistance of several other ELA firms around the U.S. and have received the same outstanding service. The ELA is a tremendous resource for our company.

Roberts-Gordon LLC

Our affiliated companies have used the Employment Law Alliance in connection with numerous acquisitions, and have always been extremely pleased with our ability to obtain the highest quality legal advice on due diligence issues from jurisdiction to jurisdiction. We have found the Employment Law Alliance firms to be not only first rate with respect to their legal advice but also responsive and timely in assisting us with federal and state law issues critical to our due diligence efforts. We consider the Employment Law Alliance to be an important part of our team.

Rockwell Collins, Inc.

We have partnered with many ELA firms on the development and execution of case management strategies with very positive results. We have been very pleased with the legal advice and counsel provided by the law firms we have utilized who are affiliated with the Employment Law Alliance. The ELA firms we have worked with are customer focused, responsive, and thorough in their approach to handling labor and employment law matters.

Elizabeth Daly
Assistant General Counsel

Sanmina-SCI

Sanmina-SCI has facilities strategically located in key regions throughout the world. Our customers expect that we will provide them with the highest quality and most sophisticated services in the marketplace. We have that same expectation for the lawyers with whom we do business. With operations in 17 countries, we need to be certain that we have a team of lawyers working together to address our employment law needs worldwide. The ELA has delivered exactly what it promised-- seamless and consistent high quality services delivered in each locale around the globe. It has quickly become a key asset for our human resources department.

Starwood

We own, manage, and franchise hotels throughout the U.S. and in more than 90 countries. With more than 145,000 employees worldwide, ensuring that we comply with the complex web of local labor and employment laws in every one of these jurisdictions is a daunting task. The Employment Law Alliance has served as an important resource for us and we have benefited greatly from its expertise and long reach. When a legal dispute or issue has arisen in some far-flung place, Employment Law Alliance lawyers have always provided responsive, practical, and cost-effective assistance.

Wilmington Trust Corporation

Wilmington Trust has used the ELA to locate firms in California, Washington State, Georgia, and Europe. Our experience with the ELA lawyers with whom we have worked has always been one of complete satisfaction and prompt, practical advice.

Michael A. DiGregorio
General Counsel