Government proposes MPF ordinance amendment targeting late payments

The government and the Mandatory Provident Fund Schemes Authority proposed amending the Mandatory Provident Fund Schemes Ordinance to strengthen the punishment mechanism for employers who fail to pay wages on time.

This as some lawmakers in the labour sector believe the measure should be harsher to increase its deterrence factor.

Currently, employers are responsible for making monthly MPF contributions for eligible employees.

This as the Mandatory Provident Fund Schemes Authority, or MPFA, issues an average of 31,000 payment notices each month to employers who miss MPF deadlines, with only 16 percent of them being paid within the subsequent two weeks.

Under the current ordinance, such employers will pay surcharges amounting to 5 percent of the outstanding payment regardless of how long they have missed the deadline.

Earlier, the government and the MPFA proposed amending the Mandatory Provident Fund Schemes Ordinance to increase the surcharges for outstanding payments.

The proposal called for surcharges to be raised to 10 percent of the outstanding payments if employers fail to pay up within 120 days, with the total amount set to be transferred to the employee's account.

The MPFA will also be able to issue payment notices to employers suspected of outstanding payments, and demand the latter to submit information on their employees' income in less than two weeks.

Offenders may be liable to a maximum fine of 50,000 dollars.

Addressing the proposal at the Legislative Council's panel on financial affairs, some lawmakers believe the measure's deterrence factor remains lacking.

Lawmaker Ken Lee from the Labour Functional Constituency questioned if the punishment mechanism would strengthen its tier system to target employers who deliberately delay payments.

Under Secretary for Financial Services and the Treasury Joseph Chan stressed additional tiers could potentially diminish the mechanism's effects, while emphasising that offenders are already liable to criminal prosecution.

Authorities are set to submit the proposal to Legco during the fourth quarter of this year.