New plan to scrap mpf offsetting hits a snag

Top News | Phoenix Un Jun 16, 2017
Chief Executive Leung Chun-ying's attempt to solve the Mandatory Provident Fund offsetting mechanism problem has hit a snag after the Executive Council failed to reach consensus on a new plan to abolish it by stages.

The government suggested the new plan at an Exco special meeting yesterday in which offsetting of severance payment would be abolished first, followed by the long-service payment later.

The formula for calculating severance and long-service payments would remain unchanged at two-thirds of one month's wage as compensation.

Under the new plan, those who have been employed for at least two years would benefit as they would be eligible to receive severance, but those who have worked for the same employer for five years or more may still suffer as their long-service payment could be offset.

The new plan also attracted criticisms from labor and employer sides. The labor representative in the Labour Advisory Board, Bill Tang Ka- piu, confirmed that members received calls from the government days before consulting their opinions.

Tang agreed that Leung had responded to their concerns to retain the two-thirds calculation of severance.

"Severance should be paid for layoffs for the companies' operational purpose, so for employers, they might sack the employees one by one, in order to avoid paying severance," Tang said.

"For those who had worked for more than five years, they might be subject to such sacking as their long-service payment could be offset."

Two labor sector legislators, Ho Kai-ming and Michael Luk Chung- hung, believed the government should abolish offset of both severance and long-service payment simultaneously.

"The government shouldn't mince matters and should propose a plan that the labor sector can support - to fulfill Leung's campaign promise," Luk said.

The business sector also found the new plan unacceptable.

Liberal Party leader Felix Chung Kwok-pan said the goal of the government is still to abolish the offset.

"It's meaningless to split the policy into stages, for the offsetting mechanism will still be abolished, which we won't find endurable," Chung said.

The Liberal Party would vote against both plans, he said.

With the new plan rejected by labor and employer sides, it is expected that the old plan will be revived.

A one-off fund, estimated at HK$6 billion, will be set up by the government to help employers.

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June 2017