The cancellation of the Mandatory Provident Fund (MPF) offsetting arrangement will take effect on May 1. Recently, there have been reports that some employers mistakenly believe they can save costs by terminating employees. Legislative Council member Bill Tang, along with Legislative Council member Kwok Wai-keung, reiterated that "laying off employees is not beneficial" and encouraged employers, employees, and HR personnel to reach out proactively.
Tang noted that there are various support measures in place to help businesses retain employees, such as the government's provision of over HK$33 billion in funding over 25 years. He illustrated that if an employee with a monthly salary of HK$18,000 has five years of service, the employer's contribution to the MPF would amount to HK$54,000 without any losses, yet they would need to cover an additional HK$6,000 to terminate the employee. Additionally, with the unemployment rate being relatively low, employers may struggle to find suitable replacements immediately.
He continued, stating that the cap for severance pay and long service payments is HK$390,000. For an employee with a monthly salary of HK$22,500 who has worked for 26 years, this amount applies. Terminating an employee and then rehiring could disrupt company operations and require recalculating service years, ultimately leading to losses for the employer.
Kwok added that the new measures are fair for both employers and employees. "Whether today or five years from now, the employer's portion of the MPF before May 1 will still be subject to offset, calculated based on the salary at that time. After May 1, it will be calculated based on the last month's salary." He specifically mentioned the "HK$500,000 threshold," indicating that government data shows 90% of employers pay amounts within this limit, which is expected to cover and assist the vast majority of SMEs.
Tang emphasized that the Labour Union has actively advocated for the cancellation of the MPF offset, and the new measures will be implemented without a retrospective period. This approach addresses past offset issues, protects workers' rights, and maintains stable labour relations. He encouraged employers, employees, and HR personnel to contact the union with any questions.
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