2. The Chairman welcomed representatives of the deputations and the Administration to the meeting. She explained that the main purpose of the meeting was to deliberate on the Employment (Amendment)(No.2) Bill 1996. However, if the deputations would like to present their views on the Employment (Amendment) Bill 1996 as well, they might do so but the latter Bill would not be discussed at length at the meeting.

The Law Society of Hong Kong (LSHK)

(LegCo Paper No. CB(1)707/96-97(04))

3. In presenting the views of the LSHK on the Employment (Amendment)(No.2) Bill 1996 as detailed in its written submission, Mr Adrian WONG stressed the non-partisan stance of the Society on the Bill and highlighted the following concerns:

the presumption under Clause 7 of the Bill would place an unfair burden of proof on the employer to show that an annual payment was of a gratuitous nature and payable at the discretion of the employer. Whether an annual payment was contractual or gratuitous should depend on the facts of each case and it was up to the employer and employee to produce evidence to substantiate their respective claim;
as the usual purpose of an end of year payment (EYP) was to reward an employee for his hard work during the year and for his loyalty, the proposal under Clause 8 to reduce the qualifying period for pro-rata payment from 26 weeks to three months might induce higher turnover in staff; and
it should be noted that many of the proposed amendments were in fact the codification of common law concepts, the final interpretation of which rested with the court.

Employers Federation of Hong Kong (EFHK)

(LegCo Paper CB(1)1247/96-97 (01))

4. Miss Jodi KOON presented the Federations position paper and confirmed that in principle, the EFHK was in support of both Bills as they represented the tripartite consensus reached at the Labour Advisory Board (LAB). Nevertheless, the EFHK was concerned about the cost implications of the expanded definition of wages under the Employment (Amendment)(No.2) Bill 1996 on employers.

The Federation of Hong Kong & Kowloon Labour Unions (FHKKLU)

(Submission tabled at the meeting and circulated vide LegCo Paper No. CB(1)1351/96-97(01))

5. Mr CHAN Wai-lun informed the meeting that the FHKKLU by and large supported the two Bills but would like to make the following suggestions :

pursuant to the proposed section 15AA(3) of the Employment (Amendment) Bill 1996, the employer should, at the request of the employee and where medical opinion so certified, remove the pregnant employee from such heavy, hazardous or harmful work as soon as practicable but in any case not later than 14 days after the receipt of the request. To better protect the pregnant employee, the 14-day period should be removed;
on the Employment (Amendment)(No.2) Bill 1996, it might be necessary to re-examine whether the proposed wordings seeking to widen the coverage of "wages" would have the contrary effect of limiting the expanded scope of "wages" to the allowances/payments listed therein, thus defeating the intention to provide a more widely-embracive definition; and
the probationary period should not be excluded from the qualifying period of service for pro-rata EYP.

The Hong Kong Federation of Trade Unions (FTU)

6. The FTU was in support of both Bills as these had been discussed and endorsed by the LAB. Nevertheless, representatives of the FTU raised the following concerns on the Bills :

the Administrations proposal to remove the limitation on the number of surviving children for a pregnant employee to qualify for maternity leave pay was unwarranted. This amendment might indirectly lead to more child births and worsen the poverty problem, particularly of new immigrant families; and
an employees EYP entitlement should also be included as "wages" under the revised definition.

Hong Kong Confederation of Trade Unions (CTU)

(Written submission provided after the meeting and circulated vide LegCo Paper No. CB(1)1351/96-97(02)))

7. Representatives of the CTU considered that on the whole, the Bills were beneficial to the workforce and suggested the following improvements:

employers should not be allowed 14 days to remove their pregnant employees from hazardous work. This should be done without delay;
the percentage reduction in long service payment (LSP) for employees under 45 years of age was discriminatory and should be removed all at once, not by two phases as proposed by the Administration;
the probationary period should be included in the qualifying period of service for pro-rata EYP;
the proposal to include overtime pay of a constant character or accounting not less than 20% of the employees average monthly wages in the definition of wages might be unfair to those employees who were required to work overtime frequently but who were not paid an enhanced rate of overtime pay. Consideration should be given to using "the hours of overtime work equivalent to or exceeding 20% of the working hours" as one further criterion in determining whether the overtime pay concerned should be included as wages; and
to reduce hardship, an employee should be entitled to deem his contract of employment as being terminated by the employer if wages were not paid after 14 days from the due date, instead of one month as proposed under the Bill.

Discussion with the Administration

(LegCo Paper No. CB(1)1247/96-97(03), Chinese version tabled at the meeting)

End of year payment

8. The Assistant Commissioner for Labour (AC for L) said that the proposed amendments did not seek to create new obligations on employers but to remove ambiguities and avoid unnecessary disputes over the nature of the EYP. Section 11AA, if enacted, would only apply to contracts entered into after its commencement. In reply to the Chairman, he also informed the meeting that the number of claims for EYP was 2,865, 3,069 and 3,730 for 1994, 1995 and 1996 respectively.

9. Responding to suggestions that the proposed section 11AA might result in employers stipulating explicitly in future contracts of employment that the EYP would be discretionary or gratuitous, AC for L considered that such a provision could be resorted to by employers even in the absence of the proposed section 11AA. He and some members shared the view that since pro-rata EYP was only payable upon dismissal, it was unlikely for staff turnover to increase as a result of the proposed amendments.

10. In this connection, Mr LEE Cheuk-yan informed the meeting that he had advocated the proposed presumption under section 11AA so as to improve protection for those employees without a written contract of employment.

Admin
CONS(LS)

11. On the qualifying period for pro-rata EYP, AC for L clarified that the probationary period (subject to a maximum of three months) would be excluded from the proposed three-month qualifying period only for the purpose of determining whether an employee would be entitled to pro-rate EYP. However, once the employee is qualified, he would be entitled to pro-rata EYP in respect of his entire period of service including such probationary period. The Chairman took note of a deputations concern and requested assurance that the provisions in section 11F after amendment would accurately reflect the said entitlement. AC for L also confirmed that in line with its usual practice, the LD would issue explanatory leaflets and publicise amendments to labour legislation in its Labour Relations Newsletters.

Definition of wages

12. AC for L said that the present definition of "wages" was already very embracive and the proposed amendments would serve to illustrate in clearer terms the forms of allowances which would be included in the definition. Regarding concerns that the revised definition might receive a restrictive interpretation, the Chairman directed that this point be looked into.

Admin
CON(LS)
Admin

13. Consultant (Legal Services) expressed concerns about the consistency and normative standard over the interpretation of the expression "of a non-recurrent nature" in respect of any travelling allowance. The Chairman echoed his concerns and said that it would be helpful if the Administration could elucidate the intended difference between clause 3(a)(ii)(cb) and (cc) and the test, if any, to determine whether any travelling allowance was of a non-recurrent/recurrent nature.

Admin

14. Commenting on an earlier suggestion of using the hours of overtime work, instead of the overtime pay, as one possible criterion in determining whether the overtime pay concerned should be reckoned as wages, AC for L indicated that these were practical difficulties. For example, when ascertaining the aggregate working hours of the employee, there might be doubt as to whether absence from work for reasons of sickness or typhoon should be included. Nevertheless, the Administration would consider more thoroughly the feasibility or otherwise of the proposal. The Chairman also requested the Administration and the Law Society of Hong Kong to provide the Bills Committee with copies of relevant court judgements, if available.

Deemed termination of contract under section 7

15. Some members shared the concerns of the deputations that an employee should be entitled to deem his contract as being terminated by the employer without notice if wages were not paid after 14 days from the due date. In reply, AC for L reiterated that the present proposal had been agreed by the LAB after extensive negotiation between employers and employees. Apart from employees hardship, due consideration had to be given to employers cashflow problems. Too short a period might have the effect of forcing employers to dismiss their employees. He added that the proposed period of one month had sufficiently balanced the interests of both parties. In this connection, the Chairman asked the Administration to provide more information, such as the worries expressed by employers, to justify its present proposal.

Admin

Long service payment

16. AC for L explained that the proposal to remove the percentage payment to younger workers was a consensus reached at the LAB having regard to improved entitlement for employees and the cost implications on employers.

17. Referring to the LSHKs comments on the policy intent of introducing LSP, Miss CHAN Yuen-han informed the meeting that when the law on LSP was first enacted in 1985, it was agreed that improvements to the relevant provisions would be introduced incrementally and hence, the present proposal of removing percentage payments for workers below 45 years of age was compatible with the objective of the LSP.

Other concerns

18. While reckoning that the Employment (Amendment) (No.2) Bill sought to codify a number of common law concepts, Mr LEE Kai-ming remarked that it would be in the interest of both employers and employees to stipulate the relevant provisions clearly in law so as to avoid unnecessary litigations.

19. On the suggestion that the proposed removal of the limit on the number of surviving children to qualify for paid maternity leave under the Employment (Amendment) Bill 1996 might be incompatible with the Governments family planning policy, AC for L did not envisage such a problem in view of the trend of reduced family size. Moreover, there was a need to comply with the spirit of the Convention on the Elimination of All Forms of Discrimination Against Women.

Any other business

20. Members agreed to hold the next meeting on 29 April 1997 at 4:30 pm to continue discussion of the Employment (Amendment) Bill on maternity protection. The Chairman also advised the deputations that they would be welcomed to join the meeting again.

21. The meeting ended at 6:15 p.m.

Legislative Council Secretariat
6 May 1997

Last Updated on 11 December 1998

Bills Committee on Employment (Amendment) Bill and Employment (Amendment) (No.2) Bill 1996

Minutes of Meeting held on Monday, 14 April 1997, at 4:30 p.m. in the Chamber of the Legislative Council Building

I. Confirmation of minutes of meeting

II. Meeting with deputations