The Hong Kong Employment Support Scheme (ESS)
Businesses around the world are making staff redundant to cut costs as company revenue takes a hit. As governments globally are facing unemployment issues, many have taken the initiative to implement schemes to protect jobs. Singapore has introduced its “Job Support Scheme”, while both Australia and New Zealand have also launched their own wage subsidy schemes.
Following in their footsteps, the Hong Kong government also intend to introduce their “Employment Support Scheme” to offer financial support to employers and help employees retain their jobs. In order to avoid further redundancies, the government will offer wage subsidies for all eligible employers as part of the second round of Anti-Epidemic Fund Measures.
Amount, Application Process, Timing of Payment and Summary of the Employment Support Scheme
The ESS is currently being discussed in LegCo and as such is still subject to change. However, in its current state the proposed legislation provides for:
| Eligible: |
• Employers who’ve made MPF contributions or set up Occupational Retirement Schemes for their employees, and who have made a commitment not to implement redundancies.
• Employers must undertake that they will not implement redundancies measured based on their employee headcount during either January, February or March 2020 (chosen by the Employer).
• Subsidies must be fully spent on employee wages.
• Employers must apply for the ESS subsidy which will be paid in 2 tranches, with the 1st tranche targeted to be paid to employers in June 2020. The application window for employers in respect of the first tranche of funding is expected to be end of May to early June 2020.
• 50% of the employee’s monthly wages capped at a monthly wage of $18,000 in respect of the 6 month period from June to November 2020. This means that the maximum monthly subsidy will $9,000 per employee. For example, an eligible employer with 10 employees all earning $18,000 HKD per month or over, will be eligible for funding of $540,000 HKD in respect of the 10 employees during the 6 month period.
|Payment Timing: |
• The ESS subsidy will be paid over two tranches, with the first payment in June 2020. The second payment expected to be made in September 2020.
*Updated 12th May 2020
The Hong Kong Government has announced updates to the Employment Support Scheme (ESS). The newest update expands to include the elderly and vulnerable, covering some additional 290,000 workers.
| Eligible: |
• Employees over 65 who have an MPF account are now eligible for the subsidy.
• Catering and construsction sectors previously excluded will now be eligible.
• Relaxations will be given to self-employed people. Ones that have opened MPF accounts before March 31st 2020 will be eligible for one-off $7,500 payment.
• Application of subsidies can be based on wages of any one month between December 2019 and March 2020, instead of January 2020 to March 2020.
|Application Process & Payment Timing: |
• Applications will be accepted from May 25th 2020.
• Applicants need to submit online with the Government covering administation fees.
• Payments to employers will be made three to four weeks after application submission.
• First tranche application window ends on June 15th 2020.
How Businesses Should Make Their Cost Cutting Measures
While the ESS will be introduced to relieve some of the economic burden on employers, smart businesses will still need to make their own cost saving measures. With a growing emphasis on employer branding, companies should not make any decisions that will hurt them in the future.
Outsourcing your HR and payroll should be considered for companies that want to protect their brand while benefiting from cost cutting. Leaving your payroll to professional HR outsourcing companies not only saves you money on systems and compliance penalties but most importantly time spent on administration. Focus your energy on growing your company and expanding your business globally.
3 Key Takeaways
Introduction to the Employment Support Scheme
Following in the footsteps of governments around the world, Hong Kong is planning to launch its own wage subsidy scheme similar to Singapore’s Job Support Scheme. HK aims to support businesses and protect employee jobs.
Outsource Your Payroll to Save
Save on time, salaries and compliance issues. Outsourcing your payroll and HR can provide benefits during this period where businesses need to cut costs and elevate the impact their HR team have in their business.
Protect Your Brand
Revenue and profits are important, but your employer branding is equally as important. Ensure you don’t hurt your business in the future during this difficult period.
- Singapore’s COVID-19 Stimulus Payments & HR Cost Cutting Measures
- What is Employer Branding at a Time of Economic Downturn?
- How To Maintain Business Productivity During COVID-19
- 4 Global HR Practice Secrets to Crisis Management
- Redundancy Laws in Hong Kong – What Employers Need to Know
Links International is an industry leader in innovative HR outsourcing with services such as payroll outsourcing, visa application, Employer of Record (EOR), outplacement, recruitment and more! Contact us for more information on how we can help leverage your HR function.