Member Article

The statutory Minimum Wage Bill (the "Bill") was gazetted on 26 June 2009 and tabled at the Hong Kong Legislative Council on 8 July 2009.

The Bill will require every employer to pay employees minimum wage at an hourly rate, however it does not seek to regulate the number of hours that employees spend at work. Whenever an employee is "in attendance at a place of employment", they are entitled to a minimum wage whether or not the employee is required to be at work (i.e. regardless of contractual hours) and whether or not the employee is provided with work or training at that time (except meal breaks). Any time during which the employee is travelling in connection with work (except to and from place of residence) is also included.

The term "wages" under the Bill has the same meaning under the Employment Ordinance, therefore end of year payments and discretionary annual bonus are excluded from the minimum wage calculation, while commission and other fluctuating amounts are included. Contracting out of the will also be prohibited.

Certain categories of persons are excluded from the Bill and they include:

• Persons to whom the Employment Ordinance does not apply
  
• Student Interns
  
• Live-in Domestic workers (both local and foreign)
  
• Persons with disability - being partially excluded

Under the Bill, the prescribed hourly rate will apply to all employees except for those excluded abovementioned.

The justifications provided by the Legislative Council for excluding student interns are to avoid reduction in training opportunities, especially for student internship which forms a compulsory or elective part of their programs and is required for the award of the academic qualifications in full-time locally accredited programs as arranged by specified education institutions.

The justifications provided by the Legislative Council for excluding domestic workers are based on four main considerations:

• Distinctive working pattern (i.e. round-the-clock presence creates practical difficulties to ascertain actual hours worked so as to determine the wages to be paid)
  
• Enjoyment of in-kind benefits (i.e. free accommodation, meals, medical treatment and air fare; government prescribed minimum allowable wage for foreign domestic helpers, currently at $3,580)
  
• Possible significant and far-reaching socio-economic ramifications (i.e. causing financial hardship to families thereby forcing spouses to stay home to mind their children. The government is mindful of any measure that may reduce the labor participation rate of those within the economically active age brackets)
  
• Fundamental erosion of the foreign domestic helpers policy (i.e. prescribing "standard working hours" and removing the "live-in" requirement would dismantle the cornerstone of the foreign domestic helpers policy. It will also be difficult to ensure that there is no breach of conditions of stay in Hong Kong by foreign domestic helpers.)

For persons with disability, a mechanism will be in place to assess their productivity in the workplace during a trial period of employment (which must not exceed 4 weeks) to help determine whether the prescribed hourly rate should be discounted to a rate proportionate to the degree of their productivity.

According to the Bill, non-compliance may make the employer liable to a maximum fine of HK$350,000 and imprisonment for 3 years.

A Minimum Wage Commission will be established to make recommendations to the Chief Executive in Council the minimum hourly wage rate, the timing and frequency of rate reviews.

It is anticipated that the first minimum wage rate will come into force by the end of 2010 or early 2011. Currently, unionists are fighting for an hourly rate of around HK$35 whilst employer groups are looking for an hourly rate around HK$20. With business organisations seeking to protect employers' interests on the one hand, and labour organisations seeking to protect workers' interests on the other there will no doubt be much interesting discussion on this issue in the coming months.