COVID-19 HK: HK$81 bn Employment Support Scheme: Implementation details announced/applications open
On 18 August 2020, the Hong Kong government announced details of the second tranche of the Employment Support Scheme (the "Scheme").
Applications for the second tranche of wage subsidies supporting payment of wages from September to November 2020 will open from 31 August to 13 September 2020. Launched under the second round of the Anti-epidemic Fund announced in April this year, the Scheme provides time-limited financial support to employers in exchange for undertaking to retain employees.
The eligibility requirements are the same as those of the first tranche:
With the exception of ineligible employers (including amongst others the government, government-owned companies and subvented organisations), employers who have been making Mandatory Provident Fund ("MPF") contributions or have set up Occupational Retirement Schemes ("ORSO") for employees are eligible; and
Relevant accounts should have been set up on or before 31 March 2020.
Employers can apply for wage subsidies in respect of:
In receiving the second tranche of subsidies for September to November 2020, an employer must undertake that:
Under the second tranche of the Scheme, additional undertakings are imposed on the following employers should they decide to apply for the Scheme:
The calculation method of wage subsidies is the same as that in the first tranche. The amount of subsidies for September, October and November 2020 will be calculated based on 50% of the actual wages paid in the "specified month", capped at HK$18,000 per employee per month. The maximum wage subsidy per employee is HK$9,000 per month.
A "specified month" is a month between December 2019 and March 2020 as selected by the employer. For the second tranche, employers who have received wage subsidies in the first tranche of the Scheme may choose another month as the "specified month" when making an application.
Employees aged 65 or above
Under the second tranche, there is an improved arrangement to benefit more employees aged 65 or above who have MPF accounts:
Employers can submit online application (on www.ess.gov.hk) from 7am on 31 August to 11:59pm on 13 September 2020. Employers who have applied for the first tranche of wage subsidies must submit a new application irrespective of the application result.
For employers applying for the second tranche only, apart from scanned copies of bank statements, they are further required to submit scanned copies of the Business Registration Certificates and any documents issued by the MPF trustees documenting all the MPF schemes participated by the employer.
Eligible employers who have provided accurate information can expect to receive wage subsidies three to four weeks after submission of their application.
A breach of the undertakings will result in claw back and/or penalty, the calculation methods of which remain the same as under the first tranche (please see our previous article).
If employers violated the undertakings within the subsidy period of the first tranche of wage subsidies, they are required to return the unspent balance of subsidies and/or pay a penalty to the government. The relevant amount will be deducted from the subsidies of the second tranche to be disbursed to these employers, if applications are approved.
The government has also announced additional penalties to be included under the Terms and Conditions of the second tranche of the Scheme. Under the new Terms and Conditions, the government shall reserve the right to reject an employer's application for the second tranche of wage subsidies and/or claw back the first or second tranche of subsidies (in full or in part) if the Secretariat considers that:
The auditing and monitoring mechanisms will remain the same as under the first tranche. After disbursement of the wage subsidies, the Secretariat will upload onto the Scheme website the list of employees who have received subsidies, the amount of subsidies received and the committed headcount of paid employees.
Should an employer be found to have abused or violated the conditions of the Scheme, employees or members of the public may report to the authorities and follow-up actions will be taken by the Secretariat and the Scheme Processing Agent.
For employment-related advice in light of COVID-19 and the implementation of the Scheme, please contact your usual Clyde & Co contact.