Tough Measure to Enforce Unpaid Labour Tribunal Awards

The Government has decided to introduce a tough new measure to deter defaults of awards by the Labour Tribunal (LT) --- a long-standing issue that has caused grave public concern.

The Employment (Amendment) Bill 2009, which seeks to criminalise the non-payment of the awards, is gazetted today and will be introduced into the Legislative Council on July 8.

The Government takes a serious view on safeguarding employees' statutory entitlements. The Labour Relations Division of Labour Department (LD) provides voluntary conciliation service in resolving employment claims and labour disputes, with a view to facilitating parties to the dispute to reach an amicable settlement.

Labour disputes usually include arrears of wages, annual leave pay, holiday pay, severance payment, long service payment or other contractual payments. Where conciliation fails to yield mutually acceptable outcomes, LD will facilitate employees in their recourse to the LT for adjudication.

The Bill marks a great step forward in enhancing the protection of employees' statutory rights and benefits. Indeed, this represents a significant breakthrough in coming to grips with a thorny problem which has beset the labour sector for many years.

This move is not only favoured by the labour sector. Even some employer representatives also agree that irresponsible employers who are financially able but unwilling to pay the awards should be sanctioned.

Under the Bill, an employer who fails to pay any sum awarded by the LT comprising wages and entitlements underpinned by the criminal elements under the Employment Ordinance (EO) "wilfully and without reasonable excuse" will be liable to prosecution.

The maximum penalty for this new offence will be $350,000 and three years' imprisonment, same as the highest penalty for wage offences under the EO.

To enable effective enforcement against corporate employers, a director or responsible person proven to have consented to, connived in or been neglectful of non-payment of award committed by a body corporate will also be liable for the same offence. Similar liability is already applicable under wage offences of the EO and is proven an important deterrent.

Currently, the modes of execution of LT awards are no different from the enforcement of any other civil judgments. Specifically, it is for the successful party to enforce the judgment if it is not complied with.

Some employers who are financially capable have taken advantage of this situation to evade deliberately their responsibility to comply with the awards by LT.

Many employees, especially those at the grassroots level and without financial means, are often deterred by the time and costs involved in seeking to have awards in their favour enforced. They have thus been put into a difficult position and ended up losing what they rightly deserve.

The proposed measure should provide a strong deterrent and send a clear message to the community that defaulting LT awards is a serious offence.

I must stress that most employers in Hong Kong are law-abiding and aware of their responsibility to remunerate their employees punctually and fully. The proposal only targets at those who do not have genuine financial difficulty but are unwilling to pay.

The Bill proposes that the new offence should only apply to non-payment of LT awards comprising wages and entitlements underpinned by criminal elements of the EO as failure to pay wages and other statutory benefits as well as to comply with the LT award regarding severance payment are already offences under the EO.

This helps to distinguish employment-related civil debts under LT awards from other types of civil debts.

As a corollary, the new offence extends to the non-payment of awards made by the Minor Employment Claims Adjudication Board, which has similar jurisdiction of LT regarding employment-related claims of not more than ten claimants for a sum of money not exceeding $8,000 per claimant.

Harmonious labour relations underpin Hong Kong's present-day success as an international financial and business centre. The Government will continue to review our labour policies from time to time to keep abreast of the pace of Hong Kong's socio-economic development and take account of the needs of both employers and employees.

Ends/Friday, June 26, 2009