Starting on May 1, employers who lay off staff can no longer use the workers’ Mandatory Provident fund (MPF) savings to offset severance or long service payments.
The so-called offsetting mechanism, which had been in place since the MPF system came into operation in 2000, was abolished under a government bill passed in 2022.
On an RTHK radio programme, Chris Sun was asked if employers can save future payments by sacking existing employees and replacing them with new recruits who earn less.
“The labour market is quite tight now. Can employers really save money by sacking a worker who is resourceful and familiar with your operations, and employ a new one? I do not dare say so, as it depends on the job market situation,” he said.
“But think about this: the new worker needs training and takes time to understand the company’s operations, so employers may stand to lose more than they gain.
“Also, the existing worker’s length of service before today can be offset, but not for the new hires. Therefore by doing so, it does no good to the employers.”
Writing on his Facebook page, Chief Executive John Lee said the scrapping of the offsetting mechanism will benefit more than three million workers in Hong Kong.
He added the government is also rolling out a subsidy scheme to help employers shoulder the extra costs brought by the policy change.
The scheme, worth over HK$33 billion, will be spread across 25 years. The labour minister explained the figure was only an estimate, and if necessary authorities will seek additional funding to cover the applications.
