Employees Retraining Levy to be suspended for two years

Employees Retraining Levy to be suspended for two years

The Chief Executive-in-Council has decided that the Employees Retraining Ordinance (Amendment of Schedule 3) Notice 2008 should be made under the Employees Retraining Ordinance (ERO) to suspend the obligation on employers of all imported labour, including foreign domestic helpers (FDHs), to pay the Employees Retraining Levy (levy) for a period of two years with effect from August 1.

Making the announcement this afternoon (July 30), the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, said that seeking the Chief Executive-in-Council' s approval for the Amendment Notice and bringing it into immediate effect upon gazettal was the speediest way to introduce the levy suspension scheme within the confines of the current legislative framework.

"As the law currently permits, the scheme is premised upon a prospective application of the $0 levy regime to new contracts, that is contracts involving grant of visa on and after August 1, 2008," he said.

The levy suspension will be applicable to all employment contracts for which visas for the imported labour/FDH concerned are issued by the Immigration Department between August 1, 2008 and July 31, 2010, including renewal of existing new contracts.

Accordingly, employers of pre-existing contracts, i.e. contracts with visa granted before August 1, 2008, are required to continue to pay their levy as provided under the ERO. That said, they would be able to enjoy levy suspension for the new contract period when visas for contract renewal of their serving FDHs or for the hiring of new FDHs are granted at any point in time during the two-year levy suspension period.

Mr Cheung said: "We note the FDH community' s concerns about their position in the event that their contracts are terminated prematurely. We are conscious of the need to introduce mitigation measures as appropriate to protect the FDHs and minimise the possible impact of premature termination of contracts on them.

"As a special arrangement to protect the interests of the FDHs, the Director of Immigration will exercise discretion during the suspension period and allow the advanced renewal of FDHs' contracts with the same employers without requiring FDHs to leave Hong Kong after the existing contracts have been terminated. In accordance with the established guidelines of the Immigration Department, if an employer has prematurely terminated his FDH, he is required to pay the instalment(s) covering the period of employment only."

Mr Cheung stressed that the two-year levy suspension was introduced as a temporary measure to provide relief to the middle class, taking into account the healthy financial condition of the Employees Retraining Board (ERB).

"The role of the ERB is of paramount importance to Hong Kong. Since its establishment in 1992, the board has provided more than 1.3 million training places to assist local workers in acquiring new or enhanced skills so that they may adjust to changes in the economic environment."

"In the long run, levy collection is essential in ensuring steady and sufficient financial resources for the board to enhance the employability of the local workforce so as to maintain Hong Kong' s economic competitiveness," Mr Cheung said.

A spokesman for the Immigration Department said a quota system would be introduced during the aforesaid period to ensure smooth and orderly processing of submission of visa applications or collection of visas on August 1 and the following few days.

The spokesman reminded visa applicants and collectors that there might still be congestion and extended waiting time notwithstanding the fact that the department would flexibly deploy their staff and other resources and adopt contingency measures to handle the cases.

The temporary suspension of the levy forms part of the anti-inflationary package announced by the Chief Executive on July 16. It aims to ease the financial burden and inflationary pressure on employers of foreign domestic helpers who are mostly from the middle class.

Enquiries on the levy suspension can be made with the Immigration Department at 2824 6111 (phone) or 2877 7711 (fax). More information on employment of foreign domestic helpers and imported workers is available at Immigration Department' s homepage at (www.immd.gov.hk) and Labour Department' s homepage at (www.labour.gov.hk).

Ends/Wednesday, July 30, 2008