Information Paper for the Panel on Manpower of the
Provisional Legislative Council

Results of the review of five labour-related ordinances

Introduction

This paper informs the Provisional Legislative Council (PLC) Panel on Manpower of the Administration's legislative proposals arising from the review of the five labour-related ordinances which were passed by the former Legislative Council on 26 June 1997

Background

2. At the meeting of the Panel on 19 August 1997, Members were briefed on the recommendations of the Labour Advisory Board(LAB) arising from its deliberations on each of the following five labour-related ordinances:

  1. The three ordinances suspended under the Legislative Provisions (Suspension of Operation) Ordinance 1997

    1. Employment (Amendment) (No.4) Ordinance 1997
    2. Employee's Rights to Representation, Consultation and Collective Bargaining Ordinance
    3. Trade Unions (Amendment) (No.2) Ordinance 1997

  2. The two ordinances which were not suspended

    1. Employment (Amendment) (No.5) Ordinance 1997
    2. Occupational Deafness (Compensation) (Amendment) Ordinance 1997

Proposals

3. In the light of the advice of the LAB, the Administration has now completed a review of these five ordinances, and as a result proposes to repeal two and amend three of them.

4. The recommendations are summarised below:

A. Suspended Ordinance: Employment (Amendment) (No.4) Ordinance 1997

Relevant proposed legislative item: Employment and Labour Relations (Miscellaneous Amendments) Bill 1997

Taking into account the recommendation of the LAB, we propose that this Amendment Ordinance should be repealed, on the following grounds:

  1. There is no need to bring this Amendment Ordinance into effect, as similar protection for employees against dismissal on the ground of anti-union discrimination has already been provided for under the Employment (Amendment) (No.3) Ordinance 1997, which came into operation on 27 June 1997.
  2. Owing to the similarities between the provisions of the Amendment Ordinance and those contained in the Employment (Amendment) (No. 3) Ordinance 1997 relating to anti-union discrimination, the concurrent operation of these two ordinances will create unnecessary confusion amongst employers, employees and the Labour Tribunal.
  3. This proposal was unanimously agreed by all the employer and employee members of the LAB at its meeting on 15 August 1997. On the advice of the LAB, the LAB Committee on Labour Relations will review the provisions on re-instatement under the Employment (Amendment) (No. 3) Ordinance 1997--the major area of difference between the above two ordinances--after the latter has come into effect for one year.

Clause 3 of the Employment and Labour Relations (Miscellaneous Amendments) Bill 1997 at Annex A seek to repeal this (Amendment) Ordinance.

B. Suspended ordinance: Employee's Rights to Representation, Consultation and Collective Bargaining Ordinance

Relevant proposed legislative item: Employment and Labour Relations (Miscellaneous Amendments) Bill 1997

Having regard to the advice of the LAB and the following factors, we propose to repeal this Ordinance:

  1. There is no need at this stage for Hong Kong to introduce mandatory collective bargaining by legislation because -

    1. the existing practice of voluntary and direct negotiation between employer and employee(s) at the enterprise level, underpinned by the conciliation service rendered by the Labour Department, has been working well; and
    2. Hong Kong enjoys harmonious labour relations. With the current system of dispute resolution, the average number of working days lost through labour disputes in the past three years was 0.5 day per 1,000 wage earners and salaried employees--one of the lowest in the world. There is no need to change this system.

  2. While the law may force the parties concerned to go through the ritual of collective bargaining, there is no guarantee that it can result in an agreement. Thus, compulsory collective bargaining by statute, especially in the face of strong opposition from employers, may result in a more confrontational and legalistic system of labour relations which may not be beneficial to Hong Kong.
  3. Compulsory collective bargaining by law will inevitably reduce the role of market forces in the existing wage setting process, especially during the downswing of an economic cycle, causing distortions to the labour market which will in turn undermine the responsiveness of the economy to changes in the market. In the UK, for example, the difference between union and non-union wages (1985-1987) has been estimated to be 10%, with its unemployment rate at 8.3% (10-year average from 1987 to 1996).
  4. To the extent that the increase in rigidities in the labour market will weaken Hong Kong's attractiveness to overseas investors, this ordinance will ironically be disadvantageous to the employees themselves by way of reduced employment opportunities in the long run. It is no coincidence that the European Union economies which are plagued by high and persistent unemployment typically have strong labour union representation. For example, in Germany and Finland where works councils command extensive co-determination rights in the setting of working conditions, the average unemployment rate amounts to around 9% and 10.7% respectively (10-year average from 1987-1996).
  5. When it is the trend in many other economies in the world to reduce, and not to compound, restrictions and impediments in the labour market, it would be most unwise for Hong Kong to move in the reverse direction.

Whilst objecting to compulsory collective bargaining at this juncture, we are not rejecting all forms of collective bargaining. We have applied in full the International Labour Convention No. 98 concerning the right to organise and collective bargaining since 1975, and have fully complied with it by promoting voluntary negotiation and good communication between employers and employees.

To further promote direct and voluntary negotiation between employers and employees, the Labour Department will be setting up a special unit. The unit will be tasked to promote effective communication and good management practices, conduct regular surveys on the practices of voluntary negotiation in Hong Kong, encourage and assist target establishments to set up a machinery for voluntary negotiation and effective communication, and draw up codes of practices/guidebooks on the subject for reference by employers and employees.

Clause 13 of the Employment and Labour Relations (Miscellaneous Amendments) Bill 1997 at Annex A seek to repeal this Ordinance.

C. Suspended ordinance: Trade Unions (Amendment) (No.2) Ordinance 1997

Relevant proposed legislative item: Employment and Labour Relations (Miscellaneous Amendments) Bill

The Administration recently conducted a comprehensive review of the Trade Unions Ordinance, taking into account the provisions under the Amendment Ordinance. The recommendations of this review were subsequently endorsed by the LAB. We propose to adopt these recommendations in full. In effect, this will mean retaining some of the provisions of the Amendment Ordinance whilst amending some as follows:-

  1. To retain the following provisions of the Amendment Ordinance:

    1. To lower the age requirement for becoming a member of the executive of a trade unions from 21 to 18 years of age;
    2. To lower the requirement in voting for change of trade union name from two-thirds of all voting members to a majority of voting members present at a general meeting;
    3. To remove the prohibition against federation of trade unions belonging to different trades, industries and occupations; and
    4. To repeal the requirement for officers of a trade union federation to be engaged in the trade concerned.

  2. To reinstate the original provisions of the Trade Unions Ordinance which were amended by the Amendment Ordinance (i.e. to repeal the corresponding provisions under the Amendment Ordinance), namely:
      the requirement for officers of a trade union to be engaged in the trade concerned;
      the requirement of the Chief Executive's approval for a trade union to contribute or donate funds to any trade union or similar organisation outside Hong Kong;
      the restrictions on the use of funds for any purpose and the need to seek approval of the Chief Executive; and
      the restrictions on the application of trade union funds for political purpose.

  3. To maintain the original age requirement that a person under the age of 16 may be a member of a registered union, but shall not be a voting member.

  4. To amend the previous provision concerning the affiliation of local trade unions with overseas organisations under the Trade Unions Ordinance (before they were deleted under the Amendment Ordinance) as follows:

    1. To allow a trade union to be a member of related organisations (i.e. organisations of workers, employers and relevant professional organisations) in foreign countries and to pay the necessary membership fees without the need for prior approval from the Government but to require it to:
        notify the Registrar of Trade Unions of the Labour Department within one month after becoming a member of the organisation.
        seek approval of the majority of its voting members present at a general meeting by secret ballot before proceeding to become a member of the organisation.

    2. To restore the previous requirement to seek the Chief Executive's prior approval for being a member of foreign organisations other than those of workers, employers and relevant professional organisations, and to require such membership arrangements to be authorised by the majority of voting members present at a general meeting by secret ballot.

  5. To provide a new right of appeal against refusal by the Registrar of Trade Unions to register the amended, altered or new rules.
    Clauses 5 to 11 of the Employment and Labour Relations (Miscellaneous Amendments) Bill 1997 Annex A seek to give effect to these proposals.
D. Ordinance not suspended: Employment (Amendment) (No.5) Ordinance 1997 Relevant proposed legislative item: Employment (Amendment) (No.6) Bill 1997

We have conducted an overall review of the provisions on statutory holidays under the Employment Ordinance, in the light of the effects of the change of sovereignty and the Amendment Ordinance. Having regard to LAB's advice, we propose the following changes:

  1. To make 1 July and 1 October statutory holidays in place of the existing two floating holidays under the Employment Ordinance.
  2. To make 1 May an additional statutory holiday with effect from 1999, instead of 1998 under the Amendment Ordinance.

These proposals have been endorsed by the majority of members of the LAB at its meeting on 15 August 1997.

The reason for proposing to make 1 May an additional statutory holiday with effect from 1999, instead of 1998 under the Amendment Ordinance is because the list of general holidays for 1988 which has already been decided and published does not include 1 May. General holidays apply to banks, schools and government offices whilst statutory holidays apply to all employees other than civil servants (since the Employment Ordinance does not bind the Government), including those of banks and schools. The addition of 1 May as a statutory holiday in 1998 will lead to the undesirable situation whereby banks and schools will have to grant holidays to their employees although, for operational reasons, they may need to maintain business as usual. Although employers can assign an alternative holiday to their employees, they may have difficulties in staff deployment. This problem will also occur to non-governmental bodies which, because of trade practice or other operational reasons, have to continue their business on 1 May which is not a general holiday.

To make 1 May a statutory holiday from the year 1999 instead of 1998 onwards will afford the Administration time to resolve this anomaly. This will also enable the Administration to consider carefully:

    whether to cap the total number of general holidays under the Holidays Ordinance at the existing level of 17 and if so, to review, in consultation with the concerned parties, which of the six general holidays which do not currently overlap with the statutory holidays should be replaced by 1 May;
    whether we should simply add an extra general holiday to the current list, hence making a total of 18 days; and
    whether we should entertain the request of making Buddha's Birthday which falls on the 8th of April of the Chinese calendar, a public holiday.

We have also taken the opportunity to make several technical and textual amendments to the provisions on statutory holidays.

The Employment (Amendment) (No.6) Bill at Annex B seeks to give effect to the above proposals.

E. Ordinance not suspended: Occupational Deafness (Compensation) (Amendment) Ordinance 1997 Relevant proposed legislative item: Occupational Deafness (Compensation) (Amendment) (No.2) Bill 1997

The Administration has conducted a comprehensive review of the Occupational Deafness Compensation Scheme which has also taken into account the effects of the Amendment Ordinance. Having consulted both the Occupational Deafness Compensation Board(ODCB) and the LAB, we propose to retain part of the provisions of the Amendment Ordinance, replace its Schedule 4, and incorporates a series of improvement measures arising from the comprehensive review as follows:-

  1. To retain the provision to lower the minimum deafness threshold from 50dB to 40dB.
  2. To implement a series of improvements arising from the Government's review of the Scheme. Major improvements include-

    1. to add eight noisy occupations to the existing list of 17 specified noisy occupations for which compensation is payable under the Scheme (about 8,900 employees are employed under these eight occupations) which will enable a larger number of claimants to become eligible to compensation under the Scheme; and
    2. to waive the requirement for claimants to pay for the cost of hearing test and medical examination

  3. To put in place a transitional arrangement to allow those persons who have at any time been employed under a continuous contract of employment in noisy occupations on or after 1 July 1989, but would not be qualified for compensation because they have left employment for more than 12 months, to apply for compensation within a certain period.

  4. To increase the rate of levy on employees compensation insurance premium by 0.8 percentage point from the existing 1.5 % to 2.3% so as to enable the Occupational Deafness Compensation Board to pay compensation as they are due and to implement a series of improvement proposals mentioned at (a), (b) above and (g) below.

  5. To revise the Amendment Ordinance to the effect that the scale of permanent incapacity with reference to different levels of hearing loss for the purpose of compensation will be adjusted downwards as shown in Annex C.

    This is to ensure that the ODCB will have sufficient resources (taking into account the increase of 0.8% to the levy rate) to implement the series of improvement measures proposed as a result of the review of the Scheme;

  6. To review the Scheme two years after the implementation of the package of improvement measures; and

  7. To implement other measures to improve the operation of the Scheme which are summarised at Annex D:

The above proposals have been endorsed by all the members of the LAB at its meeting on 15 August 1997.

We also propose a transitional arrangement whereby those who have put in their claims before our proposed amendments come into effect will continue to enjoy the higher rate of compensation in accordance with the existing Amendment Ordinance.

A summary of the entire package of proposed improvement measures is at Annex E.

The Occupational Deafness (Compensation) (Amendment) (No.2) Bill 1997 at Annex F seeks to give effect to the above proposals.

Next Steps and the Legislative Timetable

5. We intend to publish the three bills in the Gazette on 9 October 1997 and introduce them into the PLC for first and second readings on 15 October 1997. If the PLC is able to complete the scrutiny of the bills in the next few weeks, we should be able to resume second reading at the sitting on 29 October 1997, hence meeting the expiry date of 31 October 1997 set for the three suspended ordinances under the Legislative Provisions (Suspension of Operation) Ordinance 1997. If the PLC requires more time to examine any of these bills, especially the Employment and Labour Relations (Amendment) Bill 1997 relating to the three suspended ordinances beyond 31 October 1997, the Administration will move a resolution under the relevant sections of the Legislative Provisions (Suspension of Operation) Ordinance 1997 in the PLC to suitably extend the suspension period of the three ordinances.

Education and Manpower Bureau
30 September 1997


Annex D

Summary of other proposed measures to improve the operation of the Occupational Deafness Compensation Scheme

a) Simplification of arrangements relating to the assessment of hearing loss

In line with the proposal that the cost of hearing tests should be borne by the Board, it is considered appropriate to give the Board greater flexibility in arranging screening and diagnostic hearing tests and/or medical examination so as to reduce the examination time and number of visits required of the claimants.

b) Giving the Board greater flexibility in the assessment of hearing loss by removing the restriction to tests by pure tone only

This, together with the proposal at (i) above, will facilitate the Board in the determination of the hearing loss of claimants and will reduce the number of visits a claimant may otherwise be required to make to the hearing test centre.

c) Making it clear that the Board has the power to extend the time limit in respect of applications for review of the Board's previous decisions

This seeks to remove doubts arising from the lack of any explicit provision on this power of the Board under the Ordinance, other than a general provision to allow the Board to extend the time limit of any act under the Ordinance.

d) Clarifying the provisions on earnings for calculating compensation

This aims to clarify that a claimant's employment period covered by the documentary evidence about his average monthly earnings in noisy occupations for 12 months in aggregate immediately preceding the date of application (for the purpose of compensation under the Scheme) should exclude specified periods of prolonged absence from work such as those arising from injury at work during which the claimant has not received any earnings.

e) Empowering the Board to issue reports on hearing loss assessment as soon as practicable after it has made a decision on an application

This seeks to avoid the problem caused by the current practice whereby the person who performs the hearing test or medical examination should issue a report of the test or examination to the claimant within 21 days after it has been conducted, i.e. causing confusion to claimants who have gone through several hearing tests with dissimilar results.

f) Implementing the following two measures to prevent abuse of the Scheme which is necessitated by the proposal to provide free hearing tests to claimants --

    stipulating that any person who has failed to meet the disability requirement may re-apply only after he/she has been employed in any specified noisy occupations for not less than 24 months in aggregate after the last application which has been refused; and
    empowering the Board to continue to process a claim and to make a determination on the claim once a claimant has undergone any hearing tests or medical examinations even if the claimant has withdrawn his application so as to prevent claimants from withdrawing their applications in anticipation of increase in the levels of compensation and re-applying again when the new levels come into effect.

g) Empowering the Board to use its funds for educational activities for employees in noisy occupations in order to promote the public awareness of the importance of hearing preservation in the prevention of occupational deafness

h) Highlighting in the Board's publicity activities its flexibility in the processing and application procedures so as to induce employees suffering from occupational deafness to apply for compensation early.

Last Updated on 24 October 1997