Hong Kong Government Listens to Employers and Enhances the Proposed Employment Support Scheme

Following numerous comments from various stakeholders, the Hong Kong government has announced certain refinements to the next round of Employment Support Scheme (ESS). 

The proposed changes will result in the number of employees benefiting from the ESS to increase to around 1.74 million from 1.3 million. The key proposed changes are: 

• Removal of the salary cap of HK$30,000, such that employers may apply for wage subsidy for higher-paid employees; 
• Employers can elect to use the number of employees for which they received a subsidy under the 2020 ESS or the actual headcount during the fourth quarter of 2021 to determine the number of employees eligible for the subsidy;
• Employers in sectors that are less affected by the fifth wave of the COVID-19 outbreak are included in the “Restricted List” (instead of the “Exclusion List”). Employers in the "Restricted List" are eligible for the subsidy but the number of subsidised employees is capped at 100;
• Employers, except for those in the "Restricted list", may apply for the subsidy for a maximum number of 1,000 employees; 
• Employees with monthly salary less than HK$8,000 will receive a subsidy of HK$4,000 per month; 
• The scope of the 2022 ESS will be expanded to cover employees aged 65 with an active MPF account and self-employed persons.

The refined ESS will now look like this:

1. Employer eligibility: All employers, except those in an "Exclusion List", who have been making Mandatory Provident Fund (MPF) contributions or have set up Occupational Retirement Schemes for their employees will be eligible for the subsidy. The "Exclusion List" will include government and statutory bodies, public institutions, government-funded organisations and government outsourced contractors including hotels used for isolation or quarantine purposes. 
   
   
2. Subsidy period: The subsidy will apply for three months from May 2022 to July 2022.
   
   
3. Payment of the subsidy: The subsidy will be paid to an Eligible Employer.
   
   
4. Amount of subsidy: Each Eligible Employer may claim a subsidy for its employees (including employees aged 65 or above and whether full time or part time and casual employees in the catering and construction industries) with an existing active MPF account at the end of 2021. 
   
   There will be a two-tier subsidy: 
   
   
   • a fixed amount of HK$8,000 per month for each employee with a monthly income of at least HK$8,000;
   • a fixed amount of HK$4,000 per month for each employee with a monthly income of at least HK$3,000 but less than HK$8,000. 
   
   Self-employed persons with an active MPF account at the end of 2021 will be granted a one-off subsidy of HK$8,000.
   
   
5. Number of subsidised employees: Employers can elect to use (a) the number of employees for which they received a subsidy under the 2020 ESS or (b) the employer's actual headcount during the fourth quarter of 2021 (Subsidised Employees). The number of Subsidised Employees in each subsidy month may vary. Employers who opt for (b) should expect a longer processing time for the application. 
   
   The number of Subsidised Employees is capped at 1,000 per employer save for those employers on the "Restricted List" (see below), where the cap is 100 employees. (Note: The stated reason for the cap is that this ESS is intended to support more small-and-medium sized enterprises).
   
   Employers on the "Restricted List" are those in industries that the government considers less affected by the fifth wave of the COVID-19 outbreak and will include supermarkets and convenience stores, pharmacies and medicine companies, business-to-consumer e-commerce platforms (including retail product, food and beverage takeaway, vehicle booking), property management, cleaning and security services companies, insurance, banking, asset management businesses, local courier and delivery services, public utility companies, theme parks, private hospital and medical groups, principal contractors of construction industry, property and real estate development business, real estate agencies and human resources outsourcing agencies. 
   
   It remains unclear whether the "Restricted List" applies to employers with businesses belonging to the sectors in the list or only those with core business belonging to the sectors in the list. 
   
   
6. Obligations of an employer: An Eligible Employer who claims the subsidy must employ no less than the relevant number of Subsidised Employees in each subsidy month. It must also ensure that the salaries of the Subsidised Employees are not less than HK$4,000 or HK$8,000 as the case may be. 
   
   The government will check the records of MPF contributions to ensure compliance with the 2022 ESS obligations. Non-compliance will result in clawback of subsidies and financial penalty. Details of any clawback arrangement and penalty are not available yet. 
   
   
7. Application and payment: The Finance Committee of the Legislative Council will meet on 12 April 2022. Subject to the approval of the Finance Committee, the government targets to invite applications in late April 2022 over a two week period and disburse payments to the first batch of successful applicants in early May 2022.

See below for the latest government press releases and submissions to the Legislative Council on the 2022 ESS:

• 行政长官抗疫记者会答问内容（附图／短片） (info.gov.hk) (7 April 2022)
• Proposed changes to the 2022 ESS P2022040700465_390577_1_1649321829110.pdf (info.gov.hk) (7 April 2022)
• Legislative Council of the Hong Kong Special Administrative Region - Finance Committee (Agenda) 12 April 2022 (legco.gov.hk)