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Legal Changes Affecting HR

by Hong Tran, Partner, and Marilyn Tryde, Associate, Mayer Brown

This article discusses some of the legislative changes affecting HR introduced in the past year and other changes that are currently being considered. A major change in 2018 is the revision to the immigration policy to accept same-sex partnerships, which has been regarded as a breakthrough in LGBT rights in Hong Kong. Another important change in the pipeline is the proposed amendments to the Discrimination Ordinances offering further protection to employees. We will also discuss other potential reforms affecting HR.

1. Changes that Recently Came into Force

Hong Kong Immigration Policy now accepts same-sex dependant visas

The Immigration Department has revised its policy for entry of non-local dependants (the "Policy") to recognise overseas same-sex partnerships as eligible for dependent visa applications.

Under the revised Policy effective from 19 September 2018 a person who has entered into a recognised union is now eligible to apply for a dependant visa/entry permit to enter into Hong Kong. A recognised union is any:

  • Same-sex civil partnership;

  • Same-sex civil union;

  • "same-sex marriage";

  • Opposite-sex civil partnership; or

  • Opposite-sex civil union

outside of Hong Kong with the sponsor (of the dependent visa) in accordance with the local law in force at the place of celebration and with such status being legally and officially recognised by the local authorities of the place of celebration.

In order to be granted a dependant visa, a same sex spouse has to also meet the original eligibility criteria of the Policy, namely:

  • There is a reasonable proof of a genuine relationship between the applicant and the sponsor;

  • There is no known record to the detriment of the applicant; and

  • The sponsor is able to support the dependant's living at a standard well above the subsistence level and provide him/her with suitable accommodation in Hong Kong.

This change represents a major shift from the previous Immigration Departments' policy of not entertaining dependent visa applications from same sex spouses and is generally welcomed by employers who wish to attract and retain overseas talents.

Paternity leave increased from 3 days to 5 days

Male employees with a child born on or after 18 January 2019 will have their paid statutory paternity leave entitlement increased from 3 to 5 days if they have been employed under a continuous contract and have notified their employers in accordance with the law.

There is no change to other aspects of the statutory paternity leave including the rate of paternity leave pay.

2. Changes to Legislation in the Pipeline

Discrimination Legislation (Miscellaneous Amendments) Bill 2018

On 30 November 2018, the Government gazetted the Discrimination Legislation (Miscellaneous Amendment) Bill 2018 (the "Bill"). The Bill will amend the Sex Discrimination Ordinance ("SDO"), Disability Discrimination Ordinance ("DDO"), the Family Status Discrimination Ordinance ("FSDO") and the Race Discrimination Ordinance ("RDO").

The proposed amendments are:

  1. To provide for express provisions in the SDO to make discrimination on the ground of breastfeeding unlawful;

  2. To extend protection from harassment and direct racial discrimination to cover on the ground of the race of an associate;

  3. To expand the meaning of race and racial group in the RDO to include a race that is imputed to a person;

  4. To provide express provisions in the SDO, DDO and RDO expanding the scope of protection from sexual, disability and racial harassment in the workplace;

  5. To strengthen the protection to service providers against disability and racial harassment by customers under the DDO and RDO;

  6. To prohibit certain acts of disability and racial harassment between service providers and customers which take place outside Hong Kong but on Hong Kong registered aircraft and ships;

  7. To add provisions in the SDO and DDO to make sexual and disability harassment against members or applicants for membership of a club unlawful; and

  8. To remove the intention requirement for an award of damages for certain acts of indirect discrimination under the SDO, FSDO and RDO.

The First Reading of the Bill and the commencement of Second Reading Debate took place on 12 December 2018. If enacted, legislative protection for employees, women and ethnic minorities will be enhanced.

3. Potential Reforms

(a) Abolition of the MPF Offsetting Mechanism remains a potential

An employer is currently allowed to offset a part of its employee's accrued MPF benefits against the statutory severance or long service payment which may be payable to an employee. The proposal to abolish this MPF off-set mechanism, which has been the subject of prolonged debate, finally appears to be drawing close to an end.

In the Chief Executive's 2018 Policy Address, she put forward a revised proposal for abolition of the off-set mechanism with enhanced support for employers (especially small and medium-sized enterprises), including:

  • Increasing the subsidy amount from HK$17.2 billion to HK$29.3 billion to help employers pay for the originally offset payments;

  • Increasing the subsidy period from 12 years to 25 years; and

  • In the event that the aggregate benefit (Severance Payment/Long Service payment together with accrued MPF benefits) of an employee is smaller than the amount they would otherwise receive under the offset mechanism, the Government will make up for the shortfall.

The Government targets to secure the passage of legislative amendments by the Legislative Council by 2022 and fully abolish the MPF offsetting mechanism two years after.

(b) Increased Maternity Leave

The Chief Executive announced in her 2018 Policy Address a proposal to extend the statutory maternity leave ("ML") from the current 10 weeks to 14 weeks. The Labour and Welfare Bureau recently submitted a Review of Statutory Maternity Leave to the Legislative Council Panel on Manpower with details of the recommendations and the justifications.

The key recommendations are as follows:

  • The extension of ML should take effect in one go and become the 11th to 14th weeks of statutory ML;

  • The rate of ML pay remains at four-fifths of the employee's average daily wages;

  • The cost for this additional 4 weeks of ML pay be funded and reimbursed by the Government;

  • The additional 4 weeks ML pay is subject to a cap of $36,822 per employee.

The Government also proposed two technical amendments to the Employment Ordinance, namely:

  • To change the definition of “miscarriage” to mean “the expulsion of the products of conception which are incapable of survival after being born before 24 weeks of pregnancy”, as opposed to 28 weeks of pregnancy in the current definition;

  • To require the employer to pay sickness allowance to an employee who has attended pre-natal medical examination in relation to her pregnancy so long as she can produce relevant documentary proof of having attended that medical examination.

The Government will be drafting the relevant legal instrument to give effect to the proposed changes and aims to introduce a bill to amend the EO to the LegCo in late 2019.

(c) MPFA proposes to raise Thresholds for monthly MPF contributions

Under the Mandatory Provident Funds Schemes Ordinance ("MPFSO"), all employees and employers (unless exempt) are required to contribute 5% of the employee's relevant income into a registered MPF scheme. This requirement is subject to minimum and maximum relevant income levels ("Thresholds") which is currently set at HK$7,100 (minimum) and HK$30,000 (maximum) respectively.

An employee whose relevant monthly income is less than the minimum relevant income level is exempted from making any contribution, although the employer remains obliged to do so. If the employee's income exceeds the maximum relevant income level, both the employee and the employer are not required to contribute in respect of the portion in excess of the maximum relevant income level but are only required to contribute the maximum monthly contribution of HK$1,500.

Under the MPFSO, the Mandatory Provident Fund Schemes Authority ("MPFA") is required to conduct a review of the Thresholds at least once every 4 years. The MPFA recently submitted its review report in June 2018, proposing to raise both the minimum and maximum relevant income levels.

Under the MPFA's proposal, the Thresholds will increase from HK$7,100 to HK$8,250 (minimum) and HK$30,000 to HK$48,000 (maximum). The increase in the maximum threshold will take place in two stages. In the first two years after implementation of the proposal, the maximum income level will increase to HK$39,000. It will be further raised to HK$48,000 from the third year onwards. As the 5% contribution remains unchanged, the maximum monthly contributions of both employers and employees will be raised to HK$1,950 in the first stage and HK$2,400 in the second stage.

So far, the Government is still considering the proposal and has not made a decision. If adopted, the proposed changes will have cost impact on nearly 500,000 employees who's monthly wages exceed HK$30,000.

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