Human Resources and Pensions Newsletter
SUMMARY OF CONTENTS
Disability Discrimination Ordinance - Code of Practice on Employment 2011
The Equal Opportunities Commission ("EOC") introduced an updated Code of Practice on Employment on 3 June 2011.
In view of the enforcement experience accumulated by the EOC, it has revised this updated Code of Practice to give more detailed explanations on the key legal concepts in the Disability Discrimination Ordinance ("DDO") and to provide real case illustrations in order to help readers understand the practical application of the DDO. This Code of Practice also includes reference to the Minimum Wage Ordinance (which has become effective since 1 May 2011) regarding the assessment of the statutory minimum wage applicable to persons with disability.
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Industry-Specific Reference Guidelines on Minimum Wage Ordinance
In June 2011, the Labour Department has published the English version of the industry-specific reference guidelines on the Minimum Wage Ordinance ("MWO") in respect of the real estate agency, logistics, property management, securities services and cleaning services, hotel and tourism, catering and retail industries.
In this article, we will highlight some of the subjects covered in the guidelines which are intended to address the characteristics and mode of operations of the relevant industries.
"Leaving the Field" Period
In the hotel and catering industries, it is quite common for the employers to grant employees off-duty time during non-peak hours. There is a question as to whether such time will be counted as hours worked in the calculation of the minimum wage.
During the "leaving the field" period, if an employee is in attendance at his post for the purpose of doing work in accordance with the employment contract or with the agreement or at the direction of the employer, such time will be considered as hours worked whether or not the employee is provided with work.
On the other hand, if the employee is not required to remain in attendance at his post and is free to go out to attend to personal matters or take a rest or engage in his own activities, such time will not be considered as hours worked.
However, if the time for "leaving the field" is considered as hours worked under the employee's employment contract with the employer and is specified as such under the employment contract, such time will be included as hours worked in the computation of minimum wage.
In deciding whether to regard the meal break as hours worked or not, the same principle as in the case of "leaving the field" period can be applied in all industries.
Some employers in the hotel and catering industries provide free meals to the employees in the staff canteens or at the employers' own restaurants. If the employee is not required to remain in attendance at his post and can decide whether to have meal at the staff canteen/employer's restaurant or not, then such time will not be considered as hours worked.
On the other hand, if a tour escort, when taking his own meal, is required to attend to the tour group and their meal arrangements, then the meal time will be considered as hours worked as he is in attendance at his post in the restaurant in accordance with the employment contract or with the agreement or at the direction of the employer.
In the tourism industry, a tour guide is required to set off from home and then meet the tour group at the airport or other designated places to commence the trip and check-in arrangements, etc. According to the MWO, travelling time from an employee's place of residence to his place of employment in Hong Kong will be excluded as hours worked. In this case, the airport or other designated meeting places will be regarded as the place of employment in Hong Kong and the travelling time from the place of residence to such place will not be considered as hours worked.
In case the tour escort is required to accompany an outbound tour group and take the flight, the flight time will be considered as hours worked.
In the logistics industry, some employees will be required to work in both the Hong Kong office and the employer's warehouse in the Mainland (say two days in a week), the travelling time from the employee's place of residence to the Mainland warehouse will generally not be counted as hours worked as the Mainland warehouse will be considered as the usual place of employment outside Hong Kong. However, if such travelling time is regarded as hours worked under the employment contract, then it will be included as hours worked.
On the other hand, if an employee is required to attend to a client office in the Mainland which is not the usual place of employment, the travelling time from the employee's place of residence to such client office outside Hong Kong will be considered as hours worked.
Substituted holiday / rest day / overtime arrangement
If an employee is required to work on a statutory holiday or statutory rest day in a month (say in July) with the alternative holiday or substituted rest day taken in the following month (i.e. in August), the worked hours on the statutory holiday or statutory rest day will be counted as hours worked in July. Similarly, if a salesperson has overtime work in July at the direction of the employer and will be compensated by time-off-in-lieu in August, the overtime work in July will also be counted as hours worked in the month of July.
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The Minimum Wage Ordinance: Consequential Amendments to the Employment Ordinance and the Disability Discrimination Ordinance
A number of amendments have been made to the Employment Ordinance and the DDO as a result of the MWO commencing operation on 1 May 2011.
1. Employment Ordinance
In addition to the amendments which require employers to keep records of the total number of hours worked by an employee in a wage period, amendments have also been made in respect of employees who are student interns or work experience students.
For an employee who is a student intern and to whom the MWO does not apply, an employer has to keep records issued by an institution showing that the period of work is arranged or endorsed by the institution in connection with a programme being provided by the institution to the employee.
For an employee who is a work experience student and to whom the MWO does not apply, an employer has to keep a statutory declaration provided by the employee verifying the fact that no period during another contract of employment to which the work experience student was a party and that commenced in the same calendar year as the current contract with the employer was a period of exempt student employment; and a document issued by an institution showing that the employee is at the commencement of the employment enrolled in a programme being provided by the institution that is of a kind covered by the definition of "work experience student".
i. to request only persons who hold a valid Registration Card for People with Disabilities issued by the Central Registry for Rehabilitation established by the Government to be assessed in relation to their degree of productivity;
ii. to pay a minimum wage to a person with a disability that is less than that payable to a person without such a disability;
iii. to dismiss a person with a disability on account of the outcome of an assessment made under the MWO.
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Minimum and Maximum Relevant Income for MPF to Increase
On 30 June 2011, the Legislative Council approved the Government's proposal to increase the minimum relevant income ("Min RI") under the Mandatory Provident Fund Schemes Ordinance ("MPFSO") for the purpose of employee's contribution. As a result, with effect from 1 November 2011 ("Effective Date"):-
i. the monthly Min RI will be increased from $5,000 per month to $6,500 per month (applicable to employees remunerated on monthly basis or less frequently than monthly basis as prorated or self-employed persons);
ii. the daily Min RI will be increased from $160 per day to $250 per day (applicable to employees remunerated more frequently than monthly basis or casual employees of an industry scheme); and
iii. the annual Min RI will be increased from $60,000 per year to $78,000 per year (applicable to self-employed persons).
The effect of these amendments is that starting from the Effective Date, if the monthly relevant income of an employee is less than $6,500 or the daily relevant income of an employee is less than $250, the employee will not be required to make the employee's contribution, whilst his employer remains obliged to make the employer's contribution. As regards a self-employed person, if the relevant income of a self-employed person is less than $6,500 per month or $78,000 per year, the self-employed person would not be required to make contributions.
The Government has also proposed to increase the maximum relevant income ("Max RI") under the MPFSO. The proposal is yet to be approved by the Legislative Council, but it is intended that with effect from 1 June 2012 ("Proposed Effective Date"):-
i. the monthly Max RI will be increased from $20,000 per month to $25,000 per month (applicable to employees remunerated on monthly basis or less frequently than monthly basis as prorated or self-employed persons);
ii. the daily Max RI will be increased from $650 per day to $830 per day (applicable to employees remunerated more frequently than monthly basis or casual employees of an industry scheme); and
iii. the annual Max RI will be increased from $240,000 per year to $300,000 per year (applicable to self-employed persons).
Subject to approval by the Legislative Council, the effect of these amendments is that starting from the Proposed Effective Date, the maximum level of contribution required from both the employer and the employee or a self-employed person whose relevant income is more than the current income cap (i.e. more than $20,000 per month or $650 per day or $240,000 per year, as the case may be) will be increased.
For example, for an employee whose monthly relevant income is $22,000, the level of contribution required from both the employer and employee will be increased from $1,000 (i.e. $22,000 capped at $20,000 x 5%) to $1,100 (i.e. $22,000 x 5%). For an employee whose monthly relevant income is $25,000 or more, the maximum level of contribution required from both the employer and the employee will be capped at $1,250 per month (i.e. 25,000 x 5%).
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Highlights of the Personal Data (Privacy) (Amendment) Bill 2011
On 13 July 2011, the Personal Data (Privacy) (Amendment) Bill 2011 (the "Bill") was first read in the Legislative Council. No date has been fixed for the further readings of the Bill.
A number of amendments have been proposed in the Bill to the Personal Data (Privacy) Ordinance including, among others, imposing restrictions on the sale of personal data and on the provision and use of personal data in direct marketing by data users. The aforesaid may not have direct impact on data users in the capacity as employers.
In this report, we will highlight the proposed changes that are more likely to have an impact on employers as data users.
1. Data Protection Principle ("DPP") 1
As a result of the amendments, the person from whom personal data are to be collected (e.g. job applicants) may be provided with the job title (instead of the name) of the individual who is to handle a request for access to and correction of personal data.
2. DPP 2 and DPP 4
Amendments may be made to DDP 2 and DDP 4 such that if a data user engages a data processor to process personal data on its behalf, the data user must adopt contractual or other means to prevent any personal data transferred to the data processor from being kept longer than is necessary for the processing of the data, unauthorized access, processing, erasure, loss or use of the data transferred to the data processor.
We will provide further when there are any updates to the Bill.
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PRC Social Insurance Legislation Update
After being reviewed for four times in three years, the Social Insurance Law of the People's Republic of China (the "Social Insurance Law") was finally adopted by the Standing Committee of the National People's Congress of China on 28 October 2010 and came into force on 1 July 2011. Subsequent to the promulgation of the Social Insurance Law, the Ministry of Human Resource and Social Security released Several Rules on the Implementation of the Social Insurance Law of the People's Republic of China (the "Implementation Rules") on 29 June 2011, which also came into force on 1 July 2011.
Social Insurance for Foreigners
According to Article 97 of the new Social Insurance Law, a foreigner working in China shall participate in the social insurance scheme by referring to provisions as set forth under the Social Insurance Law, which provides that all workers shall be entitled to five forms of social insurance, i.e. basic pension insurance, basic medical insurance, work injury insurance, unemployment insurance and maternity insurance.
Given that the uncertainty as to how foreign nationals will benefit under the Social Insurance Law, the Ministry of Human Resource and Social Security of China later released for public comment its draft on the Interim Measures on Participation in Social Insurance by Foreigners Working in China (the "Interim Measures") on 10 June 2011. As the deadline for comments collection (i.e. 17 June 2011) was very tight, it appears that the draft may be very close to finalize.
According to the draft Interim Measures, it is mandatory that the following two types of foreigners working in China shall participate in the social insurance scheme of China (except for nationals of foreign countries that have entered into bilateral or multilateral treaties with China for bilateral/multilateral social insurance exemption):
a. foreigners who are legally employed by enterprises, public institutions, social groups, privately owned non-enterprise units, foundations, law firms, and accounting firms etc. in China; and
b. foreigners who enter into employment contracts with overseas employers and are then seconded to work in branch or representative offices incorporated or registered in China.
According to the draft Interim Measures, citizens from Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan who are working in the mainland China shall also participate in the social insurance scheme by referring to the provisions as set forth under the Interim Measures.
It is advisable to take a closer look at the Interim Measures when they are formally promulgated to have a better understanding of the rights and obligations towards foreign expatriates thereunder.
Closer Supervision and Harsher Penalties
Obligations for Making Social Insurance Contribution
Clause 63 of the new Social Insurance Law provides that if the employer fails to make full payment of social insurance contribution in time and refuses to rectify the situation within the prescribed time limits, the in-charge authority can adopt the following measures:
a. to check the employer's deposit account with banks or other financial institutions;
b. to apply for approval from the relevant administrative authority to deduct the outstanding social insurance contributions directly from the employer's account opened with banks or other financial institutions;
c. to require a guarantee from the employer in case its account balance is insufficient to pay the outstanding social security contributions; and
d. to apply to the People's Court to detain, seize and auction the employer's assets at a value equivalent to the outstanding social insurance contributions in case no guarantee is given under the situation as described in item (c) above.
In addition, according to Clause 86 of the Social Insurance Law, a late fee of 0.05% per day shall be charged on the overdue amount and if the employer still fails to make the payment in time, a penalty ranging from 1-3 times of the outstanding social security contributions may be imposed.
Obligation for Issuing Proof on Termination of Employment Relationship
Clause 19 of the Implementation Rules provides that if the employer refuses to issue the proof on termination/release of the employment relationship to the employee when the employment contract is terminated or released, which results in the employee's failure to enjoy social insurance benefits, the employer shall make compensation to the employee.
Obligation for Withholding Social Insurance Contribution
Clause 20 of the Implementation Rules provides that if the employer fails to withhold the payable social insurance contribution from the employee's salary, the employer will be demanded to make up for the contribution on behalf of the employee within prescribed time limits and a late fee of 0.05% per day shall be charged. Moreover, the employer shall not require the employee to bear such late fee.
In light of the above stipulations, companies and entities operating in China shall pay more attention to comply with the obligations for making/withholding social insurance contribution for their employees (including expatriates) and issuing proof on termination of employment relationship in due course, given the more stringent requirements and the higher costs involved due to violation.
Having said the above, if the employer's business operation is in severe difficulty due to force majeure, Clause 21 of the Implementation Rules provides a grace period (which shall normally not exceed one year), where the employer's contribution to social insurance may be suspended. After the lapse of the grace period, the employer shall make up for the corresponding social insurance contribution but no late fee will be charged.
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Whilst every effort has been made to ensure the accuracy of this publication, it is for general guidance only and should not be treated as a substitute for specific advice.