The Finance Committee of the Legislative Council approved the Hong Kong government’s HK$137.5 billion package of financial relief measures on 19 April 2020. These relief measures were proposed due to the stringent anti-pandemic measures taken by the government to contain the spread of the COVID-19 virus and the severe impact of these stringent measures on the livelihood of individuals and businesses. The relief measures are in addition to the relief package in the 2020-21 Budget and the first round of the Anti-epidemic Fund which involved HK$30 billion. The total relief has now reached HK$290 billion.
A brief overview of the Relief Package is as follows :-
1. Job retention, job creation and job advancement;
(a) Employment Support Scheme (“ESS”)
The Government will provide a time limited wage subsidy to eligible employers to retain employees. The wage subsidy to be provided is calculated based on 50% of the monthly salary capped at HK$18,000 for a period of six months i.e. a maximum of HK$9,000 per month per employee. Employers may choose any one month from January to March 2020 taking into account their own circumstances. If the number of employees and payrolls say in January are higher than those in subsequent months, the wage subsidies to be disbursed by the Government will enable employers to rehire employees to meet their operational needs.
Eligible employers applying for the ESS will be required to provide an undertaking not to implement redundancy during the subsidy period and to spend all the government wage subsidies in paying wages to their employees. In case of any reduction in the number of employees on the payroll within the Mandatory Provident Fund (“MPF”) and the Occupation Retirement Schemes framework during the period, the ESS subsidy will be adjusted with claw back and other penalties.
All employers who have been making MPF contributions or have set up Occupation Retirement Schemes for employees (except employees of the Government, statutory bodies and subvented staff in Government funded organizations etc) are eligible. It is expected that the wage subsidy will be disbursed to employers in two tranches and the application for the first tranche will be opened before end-May 2020, with the first payment expected before end-June 2020 for wages from June to August 2020.
The ESS is expected to provide relief to employers of about 1.5 million employees with MPF in Hong Kong.
(b) One-off grant to self-employed person
The government will grant a one-off subsidy of HK$7,500 to self-employed persons who have contributed to MPF in the past 15 months.
2. Sector-specific relief schemes;
Three sector-specific schemes for employees in taxi/red minibus sectors, the construction industry and the catering business are covered separately. There will also be financial support in the form of one-off relief to a wide range of specific sectors like private schools, travel industry, aviation industry, catering outlets, small and medium-sized exchange participants of the Hong Kong Stock Exchange and Securities and Futures Commission, licensed estate agents etc;
3. Government rental concessions, fee waivers, provisions of loans and loan repayment, deferral in limited circumstances to reduce financial burdens; and
4. COVID-19 Online Dispute Resolution (“ODR”) Scheme
Of interest to all our clients is the establishment of the ODR specialized scheme (“Scheme”) to provide speedy and cost effective means to resolve COVID-19 directly or indirectly related disputes (e.g. as a result of the disruption to the supply chain due to lockdown, dispute on payment terms on late delivery of goods etc) especially amongst small and medium-sized businesses. The Scheme is also in response to calls for a wider use of technology to facilitate court hearings and consistent to the latest development from 3 April 2020 that video conferencing facilities will be used for remote hearings for suitable cases in the High Court.
The Scheme will engage eBRAM Centre to develop and set up a platform to provide ODR services for COVID-19 related disputes and post-dispute resolution agreement between the private parties. The fee for mediators and arbitrators will be reimbursed by the Government in the first year and the number of cases is estimated to be 2,000. To be eligible for the Scheme, either one of the Claimants and Respondents must be Hong Kong residents/companies, they must sign a dispute resolution agreement and pay the registration fee of HK$200 each. The claim amount for each case should be less than HK$0.5 million unless by agreement otherwise of all parties involved (including the service provider).
Any one carrying on business in Hong Kong will likely benefit from some parts of the relief measures. As the economic relief measures are very extensive and cover multiple industries, please contact us if you require assistance or have any question relating to your specific industry.