The abolition of the Mandatory Provident Fund (MPF) offsetting arrangement took effect today.
This means employers can no longer use the accrued benefits of their mandatory MPF contributions to offset employees’ severance payment (SP) and long service payment (LSP) in respect of their employment periods after May 1.
However, the accrued benefits derived from employers’ voluntary contributions and contractual gratuities based on employees’ length of service can continue to be used to offset SP/LSP.
To tie in with the new arrangement, the Labour Department today launched a 25-year Subsidy Scheme for Abolition of MPF Offsetting Arrangement to share out employers’ SP/LSP expenses. Nonetheless, employers are required to pay SP/LSP to employees in accordance with the Employment Ordinance before submitting subsidy applications.
Separately, also starting today, the Statutory Minimum Wage rate has been raised from $40 per hour to $42.1 per hour.
As such, the monthly monetary cap on the requirement for employers to record the total number of hours worked by employees in a wage period under the Employment Ordinance has been raised from $16,300 to $17,200 per month, in tandem with the new Statutory Minimum Wage rate.
When wages payable to an employee in respect of a wage period are less than $17,200 per month, the employer is required to keep a record of the total number of hours worked by the employee in that wage period.
