Global Employer Services Newsletter June 2020

Hong Kong SAR Government unveils measures to support individuals and businesses to keep jobs and business going amid the COVID-19 pandemic

In response to the unprecedented challenges caused by COVID-19, the Hong Kong government announced on 8 April 2020 a HKD 137.5 billion package of relief measures aimed to help businesses stay afloat, keep employees in employment and relieve financial burdens of individuals and businesses as Hong Kong's economy is seriously affected by the COVID-19 pandemic.

The latest relief measure was announced after the first round of the Anti-epidemic Fund for HKD 30 billion and the HKD 120 billion relief package approved by the legislative Council in February 2020. The said fund would mainly use to provide one-off cash injections to retailers, food and drink service providers, transport companies, students, arts and cultural sector, guest houses and travel agents, property management companies and owners’ organizations, constructions and cleaning workers. 

The second round of relief measures include an HKD 80 billion employment support scheme to 1.5 million Mandatory Provident Fund (MPF) contributors. The Government will also provide one-off relief grants to 16 hard-hit sectors and proposals on relaxing the financial burden of businesses and individuals as well as various relief through government facilitation. Details about the relief measures are shown in sections I to IV below).

Section I

Preserving employment

  • Spending HKD 80 Billion to implement the Employment Support Scheme (ESS)
    • The government will provide subsidies to eligible employers to pay as much as 50% of employees' salaries for six months, with the monthly subsidy for each employee capped at HKD 9,000 (which is Hong Kong’s 2019 median monthly wage of HKD 18,000).
    • Employers have to select one month from December 2019, January, February or March, 2020 for calculation of salary subsidies and the total number of employees employed has to be from March 2020.
    • To eligible for the subsidy, the employers have to promise not to terminate the employees by means of redundancy upon receipt of the subsidy, and the subsidy must be fully utilised to pay employees’ salaries. The government will arrange to claw back the subsidy or levy a penalty on employers if they fail to meet the above undertakings.
    • The employers who have made MPF/ORSO contributions for employees are eligible for the subsidy (this subsidy excludes the government, statutory bodies and organisations funded by the government).
    • The subsidy will be released to eligible employers in two installments. The first installment of the subsidy would be released to employers by end of June 2020 and the second installment would be released by September 2020.
    • To release a one-off subsidy of HKD 7,500 to each self-employed person who has made MPF contributions for the past 15-month period. Expected to benefit about 215,000 persons.
    • The applications are being accepted via the online portal for the 1st installment of the subsidy under Employment Support Scheme, which was up and running from 7:00am 25th May 2020 until 11:59pm 14th June 2020 at https://application.ess.gov.hk/zh/apply
    • To provide wage subsidies to employers engaged in construction, catering and transport (mainly taxi and red minibus drivers) sectors which MPF contributions are not fully covered for the employees. Expected to benefit about 800,000 persons.

Job creation and job advancement

- To provide support to the unemployed

  • To loosen the asset limits of the Comprehensive Social Security Assistance (CSSA) Scheme temporarily and to provide an unemployment support scheme via the CSSA Scheme. The asset limits for non-disabled applicants will be doubled for a period of 6 months. Expected to benefit about 40,000 households.

- To create jobs

  • To release HKD 6 billion to create around 30,000 jobs in the public and private sectors in the coming two years for people who possesses different academic qualifications and skill sets (include professionals and Technicians, university graduates, middle-level and grassroots workers).
  • The HKSAR government would employ about 10,000 new employees and about 5,000 interns in the coming year.

- To uplift skill sets

  • To encourage employees to learn new skills
    • To invest HKD 100 million for provision of matching fund for employees of public and private sectors to participate to the training programs for uplifting of their skill sets
    • To inject additional funds of HKD 2.5 billion to the Employees Retraining Board (“ERB”) to optimise “Love. Upgrading Scheme” by increasing 10,000 quotas and retraining allowance to HKD 5,800 per month for each eligible trainees.
    • To provide subsidies of about HKD 90 million to Appointed Training Bodies (“ATB”) of the ERB to offer employment counselling and referral services to all trainees, to maintain the minimum operations of those ATB.
    • To provide training subsidies of about HKD 30 million to some 600 consulting firms registered under the Construction Industry Council.
    • To increase funding of HKD 30 million to optimise the Employment Program organised by the Labour Department by means of adjusting the maximum amount of the on-the-job training allowance.
  • To help enterprises to make use of latest technology by launching the below schemes:
    • Distance Business Programme: To provide about HKD 500 million to support enterprises and their employees by deployment of technologies and relevant training to sustain their businesses. Expected to benefit over 3,000 enterprises and 40,000 employees.
      The applications are being accepted via the online portal for Employment Support Scheme, which is now up and running from 18 May 2020 until 31 October 2020 at https://www.hkpc.org/en/distance-business-programme
    • Deployment of 5G Technologies: To subsidise the public and private sectors for deployment of 5G technologies with a cap of HKD 500,000 per project. Expected to benefit about 100 projects which cost a total amount of about HKD 60 million.
    • LAWTECH Fund: To assist legal firms/professionals to upgrade their information technology system and arrange relevant LAWTECH training for their staff to support the development of remote hearings. Expected to benefit about 700 legal firms/professionals which cost about HKD 40 million
    • COVID-19 Online Dispute Resolution (ODR) Scheme: To provide ODR services for disputes arising from COVID-19 which cost about HKD70 million

Section II

Provision of relief to 16 hard-hit sectors

The Government will also provide one-off relief grants to 16 hard-hit sectors include exchange participants and Securities and Futures Commission (SFC) licensed individuals, tourism industry, aviation sector, catering sector, creative industries, educational sector, construction industry, athletic associations and relevant registered trainers, teachers of interest groups sponsored by organized by the Social Welfare Department, businesses which have been ordered to close or put in place specified precautionary measures pursuant to the Prevention and Control of Disease, etc., costing HKD 21 billion.

Section III

Measures to reduce financial burdens of businesses and individuals

  • The Government propose to enhance the SME Financing Guarantee Schemes by increasing the maximum loan amount per enterprise, depending on the guarantee amount.
  • Provision of concessionary interest rates of up to 3% for one year for loans under 80% and 90% guarantees.
  • Other measures include providing tenants of government properties a 75% rent concession for six months, waiving registration fees for health care workers for three years and deferring due date for payment of salaries tax, personal assessment and profits tax in  April, May and June 2020 by another three months. Lowering the MTR fares by 20% for six months commencing from 1 July 2020. 

Section IV

Other relief measures through Government facilitation

  • The Government propose to provide further relief of HKD 2 billion to the Airport Authority, airlines and other aviation operators to release their liquidity pressure.
  • The Hong Kong Monetary Authority will increase its lending capacity to HKD 1 trillion enabling banks to lend and provide individual clients “Principal moratorium” for a specified period to help easing the liquidity of businesses.
  • A grace period of insurance premium payment for period from 30 to 180 days will be offered by the major insurance companies for policy holders of individual life and medical, critical illness. 

For details about the three rounds of Anti-epidemic fund relief measures to assist the affected industries and the public, please contact us.

Joseph Hong