On May 18, 2020, the Hong Kong Government announced an updated version of the implementation plan for the Employment Support Scheme (“ESS”), with an approved fund of HKD 80 billion, which provides wage subsidies to eligible employers to retain their employees, with the goal of avoiding lay-offs. Parts of the Hong Kong ESS program may resemble the United States’ Small Business Association’s (“SBA”) Payment Protection Program (“PPP”).
Eligible employers are those that have been making Mandatory Provident Fund (“MPF”) contributions or have set up Occupational Retirement Schemes (“ORS”) for their employees.
The key elements of the employment subsidy are summarized below:
- Only wages subject to the MPF or ORS mandatory pension contribution schemes qualify for ESS benefit.
- The subsidy is limited to 50% of a maximum of $18,000 of monthly wages, or a subsidy of a maximum of $9,000 per employee per month.
- Wages paid in a one-month measurement period determines the amount of the subsidy.
- Employers are allowed to choose which month’s payroll to use as the measurement period for the application, limited to a choice of any month from December 2019 to March 2020.
- Subsidy must be spent only on wages during the three-month period of June to August 2020 (the “first tranche”).
- The wage subsidy is expected to be disbursed within three to four weeks after submission of the application.
- Online application for the first tranche of the ESS to be made during May 25, 2020 to June 14, 2020. The website is expected to be up and running by May 25, 2020.
- Employers are required to certify that there will be no lay-offs during the subsidy period and to spend all of the wage subsidies on paying wages to employees.
- Subsidy received for a month must be spent on wages for that same month or will be subject to claw back.
- Employers will be assessed a penalty if the number of employees on the payroll in any one month of the subsidy period is less than the number of employees in March 2020.
- A second tranche has been approved to pay wage subsidies for the months of September 2020 to November 2020. The application period for this second tranche is yet to be announced.
- A third tranche may be considered, depending on the economy in the latter part of the year.
Please contact a Friedman advisor with any questions you may have as it pertains to your unique situation.