The Protection of Wages Insolvency Fund (the "Fund") enables employees of insolvent employers to obtain payment of wages, payment for untaken annual leave and untaken statutory holidays, wages in lieu of notice and/or severance pay owed to them without having to wait until the end of insolvency procedures. In the absence of a payment from the Fund, as well as having to wait until the end of the insolvency procedures, employees may not be paid what they are owed if the insolvent company does not have enough assets.
The Legislative Council under the Protection of Wages on Insolvency Ordinance resolved on 16 June 2022 to increase the maximum levels of payment that may be made out of the Fund. Amongst the payment items to be increased,
- arrears of wages will be increased from $36,000 to $80,000;
- wages in lieu of notice from $22,500 to $45,000;
- severance payment from $50,000 plus 50% of any entitlement in excess of $50,000 to $100,000 plus 50% of any entitlement in excess of $100,000; and
- pay for accrued but untaken annual leave or untaken statutory holidays from $10,500 to $26,000.
The increased maximum levels will come into effect from 17 June 2022 and will apply in relation to those payment items for which the liability for payment arose on or after that date.
This strengthened relief to employees will no doubt be welcomed, particularly as the maximum levels of payment that may be made out of the Fund have not been increased for some time and the pandemic continues to affect the full recovery of Hong Kong’s economy.