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Hong Kong Wage Subsidy Update – Overview of Employment Support Scheme 2022

27Apr2022

The full details of the new round of the Employment Support Scheme (“ESS 2022”) have been announced by the Hong Kong Government.

Under the ESS 2022, the eligible Employers may apply for wage subsidies in respect of the relevant employees during the subsidy period from May to July 2022 (the “Subsidy Period”). This article summarises the relevant details and rules.

  1. Application period

    The application period opens from 29 April 2022 at 8am to 12 May 2022 at 11:59pm.
     
  2. Eligibility:
     
    1. Employers in the Exclusion List are not eligible (either entirely or partially);
       
    2. All other employers (including those in the Restricted List) are eligible if they:-
       
      1. participated in MPF Schemes or ORSO Schemes on or before 31 December 2021;
         
      2. have not been involved in winding up, deregistration, or striking off process or has not become dormant; and
         
      3. have fully settled any clawback/ penalty under the 2020 Employment Support Scheme (“ESS 2020”) on or before 10 May 2022.

       
    • Exclusion List: part 1 covers government organisations, statutory bodies and government-owned companies where all employees are not eligible; part 2 covers organisations which have received notifications where part of their employee are not eligible (see details)
       
    • Restricted List: supermarkets, pharmacies, e-commerce platforms, property management, specific financial institutions, deliver services, public utility companies, theme parks, private health care businesses, principal construction contractors (see details)

     
  3. Wage Subsidy Calculation
     
    1. Employers may choose the reference month (“RM”) from which the MPF/ ORSO Schemes records are applied to calculate the wage subsidies.
       
      1. For successful applicants in ESS 2020, they can choose between:-
         
        the month selected by them under the ESS 2020;

        or

        a month between October and December 2021 which can produce the highest level of subsidy according to the prescribed formula.
         
      2. Other employers may only choose the second option above.
         
      Processing time for application chosen the second option may be longer.
       
    2. There are 3 categories of wage subsidies based on the monthly wages of the employee:-
       
      1. Full subsidy – HK$8,000 for each employee with wages of HK$8,000 or more;
         
      2. Half subsidy – HK$4,000 for each employee with wages of at least HK$3,000 but less than HK$8,000; and
         
      3. Elderly subsidy – HK$4,000 for each employee aged 65 or above with wages of less than HK$3,000.
         
      The quota of each category is determined by the number of employees within the above wage range in the RM.
       
    3. At the time of application, the Employers may decide the number of headcounts receiving wage subsidies within the Subsidy Period (the “Chosen Headcounts”) so long as the number does not exceed the quota of that category based in the RM.

      If there is unutilised quota for full subsidy, the Employer may choose to distribute it to the quota for half subsidy (and can only receive half subsidy in respect of the converted quota).
       
    4. The total amount of wage subsidies to be received by an employer is subject to both of the following:-

      1. a subsidised quota cap (“SQC”) of an employer, which is calculated by adding up the number of employees in each category above; and
         
      2. a sector-specific cap (“SSC”), which is 100 employees for employers in Restricted List and 1,000 employees for any other eligible employers.
         
      Some examples given in the official webpage of ESS 2022 are summarised below for reference.
       
      • Example 1

        SQC based on RM is 608
        (500 full-subsidy quota, 100 half-subsidy quota and 8 elderly-subsidy quota)

        Employer may choose to receive subsidy based on 450 full-subsidy quota, 150 half-subsidy quota (adding the converted 50 full-subsidy quota) and 8 elderly-subsidy quota.
         
      • Example 2

        SQC based on RM is 610
        (500 full-subsidy quota, 100 half-subsidy quota and 10 elderly-subsidy quota)

        Employer is in the Restricted List and thus subject to SSC of 100.

        Employer may only receive subsidies based on 100 full-subsidy quota (where priority is given).
         
      (Please refer to the FAQ of the ESS 2022 here)

     
  4. Undertaking and Penalty
     
    1. Employers applying for ESS 2022 are required to undertake that during the Subsidy Period,

      1. the number of employees in each category of subsidy is not less than the Chosen Headcounts in each category;
         
      2. the total number of employees eligible for ESS 2022 is not less than the total number of Chosen Headcounts.

       
    2. If the employers cannot fulfil the above undertaking in any month of the Subsidy Period, they are required to:-
       
      1. return the relevant subsidy amount; and
         
      2. pay a penalty equivalent to 10% of the subsidy amount to be returned.

        3.  
      (The full terms and conditions of ESS 2022 can be found here)

     
  5. Other Points to Note
     
    1. Employers who intend to apply should complete and submit the application form online. If they had been granted subsidies under ESS 2020, they should submit using their application number of that scheme and business registration number.
       
    2. Any review of the application result needs to be submitted within 7 days from the date of notification of the application result after which it shall become final.
       
    3. Subsidies will be disbursed in 4 trances to the successful applicants’ bank account in the application form.
       
      1. 100% of subsidies of May 2022
         
      2. 100% of subsidies of June 2022
         
      3. 70% of subsidies of July 2022
         
      4. 30% of subsidies of July 2022 (after deduction of any penalty)

       
    4. The Chosen Headcounts in June and July 2022 can be amended after application submission at the designated period, but the number in May 2022 cannot be amended.
       
    5. Wage subsidies are exempted from taxation and cannot be spent outside the Subsidy Period.
       
    6. The Government may conduct reviews, random verification of the submitted information and on-site audits at the employers’ location during and after the vetting process of the application.
       
    7. The Government will also publish the names of the employers receiving wage subsidies under the ESS 2022 with breakdown of each category of subsidies and the Chosen Headcounts.

      8.  

    Employers can find more details at the main official webpage of ESS 2022. In particular, they should review the terms and conditions carefully to ensure full compliance with them.

    Please refer to our earlier updates about ESS 2022 here and about ESS 2020 here. For other employment-related measures announced by the Government, please refer to our update here.

    Russell Bennett and Mark Chiu

    To contact the Tanner De Witt Employment Practice, please reach out to our Employment partner Russell Bennett at: 

    Russell Bennett 
    Partner | E-mail 

    Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

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