For discussion
EC(96-97)69
on 26 February 1997

ITEM FOR ESTABLISHMENT SUBCOMMITTEE OF FINANCE COMMITTEE

Various Heads of Expenditure

Members are invited to recommend to Finance Committee delegation of authority to allow Controlling Officers to create supernumerary posts, to be held againstagainst fill permanent posts of a lower pay scale by redundant staff from the Correctional Services Department and the transferees to retain their original salary scales on a personal basis, to enable as many such staff as possible of Correctional Services Department,Correctional Services Department (CSD) whose office will be abolished upon the closure of Vietnamese Migrants Detention Centres, to take up alternative employment within the Civil Service.

PROBLEM

We need to make suitable arrangements for staff of Correctional Services Department (CSD) whose office will be abolished upon the closure of the Vietnamese Migrants Detention Centres (VMDCs) later this year.

PROPOSAL

2. In the event that the redundant staff who wish to stay in the Civil Service are unable to find alternative jobs of the same or higher pay scale in CSD or other Government departments upon the closure of VMDCs, the staff may have to take up employment in posts with a lower pay scale, while retaining their current salaries and non-job related benefits. The Secretary for Security, with the support of the Secretary for the Civil Service, proposes that Controlling Officers employing the staff under these circumstances should have the delegated authority to create supernumerary posts, to be held againstagainst fill permanent posts of a lower pay scale, to accommodate them. by employing the redundant staff of the CSD and pay them according the transferees’ salary scales before transfer.Failing this, we will have to offer compulsory retirement to the surplus staff and pay them enhanced retirement benefits, and ex-gratia payments to compensate for the loss of fringe benefits.

JUSTIFICATIONS

3. As at 23 January 1997, there were about 5 700 Vietnamese Migrants (VMs) in Hong Kong. We have been repatriating over 1 000 VMs per month under the Orderly Repatriation Programme and Voluntary Repatriation Programme in the past few months. Should this rate continue, it should be possible to repatriate all the VMs in Hong Kong and close all the VMDCs by mid-1997.

4. As at 23 January 1997, there were 702 staff working in the VMDCs. The following is a breakdown by grade and number -

Grade


Number




General Grades staff


38








CSD staff (penal stream)





- officer


67

)


- rank and file


382

)

449






CSD catering staff


12








CSD staff (VM stream)



- officer


13

)


- rank and file


190

)

203


Total

702



5. Upon closure of the VMDCs, we shall return the 38 General Grades staff to Civil Service Branch for re-posting to other departments in the Civil Service.

6. The 449 CSD staff of the penal stream have been employed and trained for the management of penal institutions. We will redeploy them to work in the penal institutions and we have reserved sufficient vacancies in the penal institutions to accommodate their return.

7. The 12 catering staff have been employed and trained for general catering duties. Although we can redeploy them to work in the penal institutions, there will not be sufficient vacancies in the penal institutions to accommodate all of them. We estimate that eight catering staff will be surplus to requirement and they will have to either retire on abolition-of-office terms or look for other positions in the Civil Service.

8. The 203 CSD staff of the VM stream (VM staff) have been employed and trained for the management of the VMDCs. Under the terms of employment of the VM staff, we cannot instruct them to work in non-VM related duties. They can choose to either retire on abolition-of-office terms or apply for other positions in the Civil Service. Those wishing to join the penal stream of CSD must go through the normal recruitment and training procedures of CSD.

9. The senior management of CSD began to conduct career talks and consultation exercises with the staff in 1993 with a view to accommodating the affected staff within the Civil Service. In the past three years, CSD had issued 17 rounds of letters to the staff concerned, inviting them to apply for suitable positions in the Civil Service. To date, a total of 195 staff have joined the penal stream of CSD or other grades of the Civil Service. Among them, 16 VM staff and one catering staff are still on probation/trial in other posts. These 17 officers can revert to their former ranks in the VM stream in CSD at will and are entitled to the same abolition-of-office benefits as the other 211 affected staff (i.e. including 203 CSD staff of the VM stream, and eight catering staff who will be surplus to requirement).

10. CSD conducted a consultation exercise in December 1996. The results indicated that of the 211 affected staff -

- 65 would opt to retire on abolition-of-office terms and receive redundancy payment;

- 98 would apply to join other grades in the Civil Service provided that they could retain their personal pay scales and other non-job related benefits. They would opt to retire on abolition-of-office terms if they could not retain their personal pay scales and other non-job related benefits; and

- 48 would apply to join other grades in the Civil Service irrespective of whether they could retain their personal pay scales and other non-job related benefits or not.

11. There is a staff morale angle to this consideration as most of the staff have been working in the VMDCs for about ten years. We consider that the Hong Kong Government, as a responsible employer, should try to accommodate as many of them within the Civil Service as possible.

12. There is also a financial angle to this consideration. As indicated in the result of the staff consultation exercise, 98 staff would opt to retire on abolition-of-office terms if they were not allowed to retain their personal pay scales and other non-job related benefits. Under the Pensions Ordinance (Chapter 89) or the Pension Benefits Ordinance (Chapter 99), they are entitled to enhanced pension benefits. Details are at Enclosure 1. In addition, we will have to grant an ex-gratia payment equivalent to six times the officer’s final monthly salary in his substantive rank for loss of non-job related benefits. We have made similar ex-gratia awards to retired officers in other redundancy exercises, for example, in the contracting out of tunnel management which resulted in the redundancy of Transport Controllers and Transport Assistants. We estimate that the non-recurrent commuted pensions gratuity payable to these 98 staff will be about $35.2 million, comprising the enhanced portion of approximately $6.5 million and the normal portion of approximately $28.7 million, the non-recurrent ex-gratia award payable will be about $10.4 million, and the annual recurrent pension will be about $2.7 million. (See calculations at Enclosure 2.)

13. We shall continue to assist affected staff to find alternative employment with the same or higher pay scale. Failing this, we propose to allow the staff to retain their personal pay scales and other non-job related benefits on a personal basis until their promotion, transfer to another grade or leaving the service if they are otherwise suitable for appointment to other positions in the Civil Service with a lower pay scale, subject to there being no serious staff management or staff relations problem to the receiving departments or gradesgrade or leaving the service. employing these staff will need the authority to create supernumerary posts, to be held against permanent posts of the lower pay scale to accommodate them. To effect this arrangement, Controlling Officers employing these staff will need the authority to create supernumerary posts, to be held against permanent posts of the lower pay scale, to accommodate them. Upon transfer to a post with a lower pay scale, the CSD officer holding personal pay scale will continue to receive salaries in accordance with his current pay scale. They will continue to be entitled to non-job related benefits such as medical and dental treatment, leave of absence, e.g. vacation leave, sick leave, and maternity leave, education allowances, housing benefits, school passages, and retirement benefits. However, they will cease to be entitled to job-related benefits such as extra duty allowances for disciplined services, special allowance for overnight on-call duty, standby allowance, disciplined service overtime allowance and CSD departmental quarters.

FINANCIAL IMPLICATIONS

14. The payment of personal salaries to the officers concerned will result in additional expenditure mainly on salaries, allowances, housing benefits and retirement benefits, since some officers will be entitled, by virtue of their personal salaries, to benefits or higher rates of allowances which are not normally available to officers serving in the new ranks. We are unable to ascertain the exact amount at this point in time as this will depend on the number of staff who will opt to take up this package, their ability to find suitable positions in the Civil Service and the difference in remuneration (salary plus benefits) between their existing positions and their future positions.

BACKGROUND INFORMATION

15. The large and sudden influx of asylum-seekers from Vietnam in the 1980s presented the Government with a very difficult situation in arranging accommodation for them. CSD had to employ additional staff to manage the VMDCs. These staff were employed and trained specifically for the management of the VMDCs. These staff were employed on temporary month-to-month terms initially. As the VM population remained, and faced with the then retention difficulty, we transferred some of the VM staff to permanent terms from 1987. With the gradual decline of the VM population, we stopped to transfer VM staff to permanent terms since 1992.

16. In redundancy situations, it is normal practice to offer personal pay scale and non-job related benefits to staff who transfer to another post with lower pay scale and benefits. Officers on transfer to other posts in the Civil Service have an option period of one year during which they may revert to their substantive rank and retire on abolition-of-office terms, and to receive enhanced pension benefits and an ex-gratia payment to compensate for the loss of fringe benefits.

CIVIL SERVICE BRANCH COMMENTS

17. The Civil Service Branch supports the proposal to offer personal pay scales and non-job related benefits to the affected staff who are appointed on transfer to other posts within the Civil Service with lower pay scales in order to reduce the size of the redundancy. This is the normal practice in dealing with redundancy situations.

Security Branch
February 1997

Enclosure 1 to EC(96-97)69

Formulae for calculating enhanced pensions benefits

1. Formula for calculating annual pension is -

Highest annual pensionable emoluments

x

Length of pensionable service in months

x

Pension
factor*

* 1/675 for New Pension Scheme

1/600 for Old Pension Scheme

2. Formula for commuted pension gratuity under New Pension Scheme is -

Annual pension

x

50% *

x

14

* maximum percentage

3. Formula for commuted pension gratuity under Old Pension Scheme is -

Annual pension

x

25% *

x

14

* maximum percentage

4. Enhanced pension benefits due to abolition of office -

New Pension Scheme

An additional sum is added to the annual pension of an officer who retires from service on abolition of office if he has completed qualifying service of not less than two years. The rate of the additional sum is -

10/675 of an officer’s highest annual pensionable emoluments for each complete three-year period of his pensionable service

Old Pension Scheme

An additional sum is added to the annual pension of an officer who retires from service on abolition of office irrespective of the period of qualifying service completed. The rate of the additional sum is -

1/60 of an officer’s highest annual pensionable emoluments for each complete three-year period of his pensionable service

Enclosure 2 to EC(96-97)69

Calculations of the financial implications

Non-recurrent

Recurrent

Grade

Number 1

Ex-gratia awards payment

Maximum commuted pension gratuity

Reduced annual pension

(1997-98 and beyond)

CSD catering staff

5

541,050

2,204,405

188,497

CSD staff (VM stream)





- officer

6

1,420,860

4,654,979

332,500

- rank and file

87

8,388,270

28,382,300

2,212,873

Total

98

10,350,180

35,241,684 2

2,733,870

Note

1 Based on the result of the staff consultation exercise conducted by CSD in December 1996, 98 affected staff would apply to join other grades in the Civil Service provided that they could retain their personal pay scales and other non-job related benefits. They would opt to retire on abolition-of-office terms if they could not retain their personal pay scales and other non-job related benefits.

2 The enhanced portion of maximum commuted pension gratuity is approximately $6.5 million.

(E5638/P.1-P.7/WIN100)

Last Updated on 12 August 1999