The Hong Kong government has put forth a groundbreaking proposal that could significantly impact employees who face job loss due to their company’s bankruptcy. The ceiling for severance pay in such cases may potentially reach a staggering HK$200,000, doubling the existing limit.
Enhanced Protection for Workers
Under this new proposal, individuals who find themselves unemployed as a result of their company’s insolvency will not only be entitled to a severance payment of up to HK$200,000, but they will also receive half of any additional amounts owed to them. This comprehensive package also encompasses ex-gratia payments from the Protection of Wages on Insolvency Fund (PWIF), covering various outstanding dues such as unpaid wages, untaken annual leave, statutory holidays, and payment in lieu of notice.
Financial Stability and Support
The Labour and Welfare Bureau, in a recent submission to the Legislative Council, expressed confidence in the financial robustness of the PWIF. With an accumulated surplus exceeding HK$7.2 billion as of December 2023, the fund is well-equipped to handle a potential surge in applications. It is estimated that approximately 86 percent of applicants will be able to receive their full severance payment under the proposed changes.
Positive Reception and Future Outlook
The proposal has garnered support from key figures such as Lam Chun-sing, the chairman of the Legislative Council’s manpower panel. Speaking on an RTHK radio programme, Lam expressed his approval of the initiative, highlighting the importance of preventing any misuse of the fund. He anticipates a consistent number of applications, ranging from 3,000 to 5,000 annually, even during economic downturns. With the PWIF boasting a substantial reserve, estimated at over HK$7 billion, its financial sustainability in the long run remains secure.
As members of the Legco panel on manpower gear up to delve into discussions on this pivotal matter, the potential impact of this proposal on Hong Kong’s workforce and economy looms large. The enhanced protection and support offered to employees facing job loss due to bankruptcy could serve as a crucial safety net in challenging times, ensuring that individuals are provided with the necessary financial assistance during periods of uncertainty and upheaval.
