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Hong Kong Wage Subsidy Update 6 – Application process for 2nd tranche of Employment Support Scheme (ESS) to start on 31 August 2020 until 13 September 2020
24Aug2020The Hong Kong Government has announced that the application process for the second tranche of the ESS will commence on 31 August 2020 until 13 September 2020. The second tranche of the ESS is expected to be disbursed within three to four weeks after submission of the application (once approved) and will provide wage subsidies for three months from September to November 2020.
Additional Penalties to be imposed
The Hong Kong Government has also announced additional penalties on the ESS website. It reserves 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 wage subsidies (in full or in part) if the Secretariat considers that:
- the magnitude of “redundancies made” by the employer during the first or second subsidy period (as the case may be) was substantial and the employer fails to satisfy the Secretariat of its intention to employ persons to replace or re-employ those being laid off and/or if there is no other reasonable explanations provided for the “redundancies” made by it; or
- the employer has during the first or second subsidy period (as the case may be) engaged in conduct which directly or indirectly violates the objective of retaining employment under ESS, or is contrary to public interest.
The above penalties may be applied in addition to the other penalties earlier notified.
Other points to note
Whilst the terms and conditions of the second tranche have yet to be confirmed, the ESS website also contains the following information:-
- Employers who have applied for the first tranche of wage subsidies (whether the application is successful or not) must submit a new application for the second tranche.
- The eligibility requirements for employers remain unchanged.
- All employers applying for wage subsidies are required to undertake and guarantee:-
- not to make redundancies during the subsidy period, i.e. the total number of employees on payroll (excluding those on no-pay leave) in any one month of the period from September to November 2020 should not be less than the total number of paid and unpaid employees in March 2020; and
- to spend all wage subsidies for a particular month on paying wages of their employees in the same month.
- not to make redundancies during the subsidy period, i.e. the total number of employees on payroll (excluding those on no-pay leave) in any one month of the period from September to November 2020 should not be less than the total number of paid and unpaid employees in March 2020; and
- Eligible self-employed persons who did not receive the one-off lump-sum subsidy of HK$7,500 under the first tranche of ESS can apply in the second tranche. Self-employed persons who have already received the one-off lump-sum subsidy in the first tranche cannot make a second application.
- The calculation of wage subsidies remains unchanged and is as follows:-
- For regular employees (i.e. an employee who is 18 – 64 years of age and has been employed for a continuous period of 60 days or more), the amount of wage subsidy will be calculated as 50% of the actual wages paid to each employee in the “specified month”, with a wage cap of HK$18,000 per month i.e. the maximum subsidy per employee per month is HK$9,000.
- For employees aged 65 or above who have MPF accounts, the wage subsidy is calculated based on 50% of the wages paid to the employee in the “specified month” or 10 times the employer’s voluntary contribution, with the maximum wage subsidy capped at HK$9,000 and the minimum of HK$5,000 per employee per month.
- Employers can choose any month between December 2019 to March 2020 as the “specified month”. Employers who applied for the first tranche of subsidies may choose another month as the “specified month” in the second tranche. However, the employer must choose the same “specified month” for calculating wage subsidies in respect of all employees.
- For regular employees (i.e. an employee who is 18 – 64 years of age and has been employed for a continuous period of 60 days or more), the amount of wage subsidy will be calculated as 50% of the actual wages paid to each employee in the “specified month”, with a wage cap of HK$18,000 per month i.e. the maximum subsidy per employee per month is HK$9,000.
- In respect of the penalties imposed by the Government, the calculation of the clawback (applicable where the employer fails to use all subsidies to pay the wages of employees) and the penalty to be paid to the Government (applicable where there is a “redundancy” situation) remains unchanged.
Details on the ESS website can be found at https://www.ess.gov.hk/en/index.html
The Government’s press release can be found at https://www.info.gov.hk/gia/general/202008/19/P2020081901110.htm
Kim Boreham / Joni Wong
To contact our Employment practice, please email:
Kim Boreham
Partner | E-mail
Russell Bennett
Partner | E-mail
Earlier announcements:
19 May 2020 – Hong Kong Wage Subsidy Update 4 –Employment Support Scheme (ESS) Application details announced
20 April 2020 – Hong Kong Wage Subsidy Update – Further details on Employment Support Scheme (ESS) provided in Finance Committee Discussion Paper
9 April 2020 – Wage subsidy and employment relief announced in second round of Anti-epidemic fund
Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
