Protection of Wages on Insolvency(Amendment) Bill 1999

Amend the Protection of Wages on Insolvency Ordinance in relation to provisions concerning severance payment.

Enacted by the Legislative Council.

1. Short title

This Ordinance may be cited as the Protection of Wages on Insolvency (Amendment) Ordinance 1999.

2. Payment

Section 16 of the Protection of Wages on Insolvency Ordinance (Cap. 380) is amended by adding---

"(2B) (a) Where it appears to the Commissioner that---

(i) an applicant's wages have been reduced during the period of 12 months immediately before he is dismissed or laid off; and

(ii) before the wage reduction took effect, the employer of the applicant had given an undertaking in writing to the applicant to the effect that if the applicant was dismissed or laid off after the wage reduction, the severance payment payable to him would be calculated in a manner more favourable to him than that provided for in section 31G of the Employment Ordinance (Cap. 57), then, for the purposes of subsection (2)(f)(i), the applicant's entitlement to severance payment may, if it is more favourable to the applicant, be calculated---

(A) subject to paragraph (c), in accordance with section 31G of the Employment Ordinance (Cap. 57); or

(B) in the manner specified in the undertaking, whichever results in a lesser amount.

(b) If the calculation under paragraph (a)(A) and that under paragraph (a)(B) result in the same amount, the applicant's entitlement to severance payment for the purposes of subsection (2)(f)(i) shall be that amount.

(i) "his last full month's wages" in section 31G(1)(a) of the Employment Ordinance (Cap. 57) shall be construed to mean his full month's wages immediately before the wage reduction took effect;

(ii) "his last 30 normal working days" in section 31G(1)(b) of that Ordinance shall be construed to mean his 30 normal working days immediately before the wage reduction took effect; and

(iii) "the relevant date" in section 31G(2) of that Ordinance shall be construed to mean the date when the wage reduction took effect.

(d) If a wage reduction in respect of which an undertaking as described in paragraph (a)(ii) has been given has occurred in relation to an applicant more than once during the period of 12 months immediately before he is dismissed or laid off---

(i) "the undertaking" in paragraph (a)(B) shall be construed to mean the undertaking given in respect of such a wage reduction that occurred nearest to the dismissal or lay-off of the applicant; and

(ii) "the wage reduction" in paragraph (c)(i), (ii) and (iii) shall be construed to mean such a wage reduction that occurred nearest to the dismissal or lay-off of the applicant.".

3. Transitional

(1) For the purposes of section 16(2B)(a)(ii) of the principal Ordinance if---

(a) before the commencement of this Ordinance an applicant's employer who before reducing the wages of the applicant had given him an oral undertaking to the effect that if he was dismissed or laid off after the wage reduction, the severance payment payable to him would be calculated in a manner more favourable to him than that provided for in section 31G of the Employment Ordinance (Cap. 57); and

(b) within 2 months after the commencement of this Ordinance that oral undertaking is confirmed to the applicant by the applicant's employer by an undertaking in writing to the same effect, the undertaking in writing may be deemed by the Commissioner to have been given before the wage reduction to which the undertaking in writing relates took effect.

(2) This Ordinance shall not apply in respect of a severance payment the liability for payment of which arose before the commencement of this Ordinance.

(3) The principal Ordinance as in force immediately before the commencement of this Ordinance shall apply in respect of a severance payment the liability for payment of which arose before the commencement as if this Ordinance had not been enacted.

Explanatory Memorandum

The purpose of this Bill is to enable the Commissioner for Labour to, under certain circumstances, make an ex-gratia payment in respect of a severance payment under the Protection of Wages on Insolvency Ordinance (Cap. 380) on the basis of an employee's wage level before a wage reduction, or on a basis specified in a written undertaking given by his employer before the wage reduction, whichever results in a lesser amount.